Anikeev vs. Commissioner MS methodology discussion

I’m working on an article for my blog to discuss Anikeev vs. Commissioner (the recent MS decision made by Tax Court) but would like some confirmation with things related to MS as of 2013. I am avoiding posting the entire stipulation online as it has the addresses of innocent parties (basically anyone who ever wrote a check that the Anikeevs deposited).

Regarding the MS component, are these $500.89 and $499.89 charges going to be direct purchases of MOs? (In other words, what card ended in $x.89?) At that time I know VGC and Walgreens and CVS were $4.95; MyVanillas and Vanilla Reloads were $3.95, and perhaps the $2.95 were Netspend or Greendot cards. The IRS opener clearly states they were doing Green Dots and not Serves or anything else (Serve/BB would never be able to handle their volume anyway).

How much were money orders at Stop and Shop, Hannaford, and other stores? The 89 cent ones are clearly Rite Aid and the 70 cents Walmart Money Grams but I think they may be the $1 money orders.

Assuming $5.50 average fee per $500 GC - $6,335,000 in GC spend, MO average fee 0.091% per sample of $4,028,743 in MO and $3,685.78 fee - $11,018,484 in MO in 2013 and 2014. Does this sound right? I saw them possibly HH TD Bank and Citizens Bank and they seemed to be in the process of HH Wells Fargo as well. (By HH I mean I saw significant, five figure payments to TD and Citizens Bank from the posted Chase and BoA statements and there is a balance transfer check from Discover over $10,000 specifically stating it was a Wells Fargo check). To me this means there were significant points gained outside of the OBC framework.

Note that in the record were only the Chase and BoA bank statements - I could see transfers to River Valley (Incredible) Bank, Ally, TD Bank, etc. but those were not included in this record. Towards the end they had a simple system of buy GC -> convert to MO -> $10k+ deposit to BoA ATM -> transfer to Chase -> pay off OBC. Unfortunately the IRS chose December 2013 as their representative month when in reality by March they were comfortably heavy hitting Stop and Shop, Rite Aid, and CVS.

There also seemed to be a period from June to August 2013 (you can see it in the records for card 1005) where CVS didn’t seem to be paying the bonus. (It is evident in the statements, which again I didn’t post due to privacy concerns.) But it mysteriously started again in August. The IRS did a simple calculation to assume that 100% of purchases over $400 were 100% MS but roughly $52,000 would not have paid out the 5% - of course a small part of the $1.2 million in over $400 spending in 2013.

I see random small purchases at Stop and Shop which I’m implying might have been when they were shut down that day, but on other days they purchase the $5,049.50 maximum.

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That is a crazy story. How did they get busted?

If you read the transcript there were dozens of SARs and CTRs triggered. You had to investigate.

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Cliff’s notes version about what happened? Is this related to the IRS going after miles, other deposit accts bonus?

Basically it’s the IRS ruled that OBC from VGC purchases is not taxable since it’s purchasing a “product” but direct money order purchases and direct reloads are taxable since they are purchases of cash equivalents.

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calwatch, where is your blog? You write lots of good content, I’d enjoy following it.

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Definitely like to see your blog. We know the guy and could make an introduction if you want to interview him, although I doubt he wants the additional publicity. He may also be here already.

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Bump for calwatch’s blog–inquring minds want to know. :slight_smile:

I haven’t had time to write it due to other things coming up. I put a lot of the detail up on the post above and the main thing left would be to count the money orders, Kaspersky rebates, and other MS type activity, which is going to take time and focus that I don’t have.

I think I understand, calwatch, and no criticism of this useful thread is implied at all.

I thought you were referring to a blog you’d already created with legacy content. I (and TMSY?) were just thinking if you did have on ongoing concern like that, it would be worth visiting.

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The 499.89 purchases were likely HIGC, that was a really good method until Bowtie ruined it in 2013.