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Monthly Archives: March 2012

FL TAX LEGISLATION ALERT – FELONY TO EVEN POSSESS SALES SUPRESSION SOFTWARE

FLORIDA LEGISLATION CRIMINALIZING AUTOMATED SALES SUPRESSION SOFTWARE (aka "ZAPPER SOFTWARE") AWAITS GOVENOR'S SIGNATURE

In March 2012, the Florida legislature passed a rather unique piece of legislation aimed specifically at a new type of tax fraud software moving into the United States. The software is known as "Automated Sales Suppression Device," "Zapper," or "Phantom-ware."

The purpose of the software is to suppress the cash sales from the business's accounting records – at the cash register level. The sales are simply eliminated from the system and the user of the software pockets the cash. You can imagine this practice is not only tempting for morally questionable business owners, but that it would also be highly fraudulent for federal income tax and state sales tax purposes as well. The software might be used by an unscrupulous business owner or even an employee (turning the cash register into his personal ATM machine).

Upon signature by the Governor, Section 213.295, Florida Statutes, will be created to criminalize Zappers. After the approved legislation becomes law, a person who knowingly sells, purchases, installs, transfers, possesses, utilizes, or accesses any automated sales suppression device is guilty of a felony of the 3rd degree. It is expected that the Governor will sign this piece of legislation and, unlike like most of the other sales and use tax legislation approved by the Florida Legislature, this statute will take effect immediately after it is signed.

Posted By James Sutton on Mar 26, 2012 12:40pm EDT

Read more at: Tax Times blog

Florida Passes Captive Insurance Legislation


The Florida Legislature has passed HB 1101, an omnibus insurance bill that has carried language to allow Florida to become a Captive Insurance domicile state. A captive insurance company is a business or a group of businesses that form their own insurance subsidiary to finance their retained losses in a formal structure.


Captive insurance companies are established with the specific objective of financing risks emanating from their parent group or groups. The adopted language would allow for captive insurance companies to provide commercial insurance only on their own risks and does not allow for captive insurance companies to provide workers compensation, health, homeowners, and private passenger auto insurance.

Florida’s captive insurance laws have been antiquated serving as a regulatory barrier to the formation of captive insurers in this state.

The newly adopted language would allow Florida to compete nationally with other states for captive insurance business. There are approximately 37 other states that have adopted legislation to allow for captive insurance companies.

Read more at: Tax Times blog

Bank Deposit Reporting Rule Reciprocal For Tax Treaty Partners?

Information gleaned from a controversial Internal Revenue Service regulation that would require U.S. banks to report interest on deposits held by nonresident aliens could lay the groundwork for reciprocation as the United States continues its efforts to build cooperation with other countries to stop global tax evasion, IRS Commissioner Douglas Shulman told a House subcommittee March 21.

“This regulation lays the groundwork for some reciprocation” Shulman said at a hearing on IRS's fiscal year 2013 budget request before the House Appropriations Subcommittee on Financial Services and General Government.  

Shulman mentioned reciprocation in that context, but said such reciprocation would only occur with countries with which the United States already has tax treaties.

The commissioner stressed that the main goal of the nonresident alien bank deposit interest regulation is to collect the information. “We don't have the intention of endangering taxpayers.

Shulman said he worries that federal budget cuts could start to erode tax enforcement and voluntary compliance.

Read more at: Tax Times blog

Australian Tax Prosecution Figures – 2011


Almost 1,200 people were prosecuted and convicted for tax and superannuation offences in Australia last year, new figures show.

The statistics were released by Tax Commissioner Michael D'Ascenzo, who said that: “The ATO's use of sophisticated data matching technology is helping to close the net around those exploiting the tax and super systems.”

In total, 48 people were prosecuted and convicted of serious tax crime offences, with sentences ranging from three months to nine years and 11 months. Six of these convictions occurred under Project Wickenby, a cross-agency task force established in 2006 to prevent the promotion of or participation in illegal offshore structures.

From its launch to January 31, 2012, Project Wickenby has resulted in AUD1.26bn (USD1.32bn) in tax liabilities raised, and AUD597.14m in tax collected. 65 people have been charged under the project with serious offences, with 22 people convicted.

1,149 people and 370 companies were prosecuted and convicted for other tax offences in 2011. Such offences included failing to lodge a tax return, providing false and misleading information, or receiving a fee for preparing an income tax return when not being a registered tax agent.
As part of its Compliance Program the ATO is also increasing its focus on non-complying taxpayers in the goods and services tax (GST) system. Last year’s budget provided AUD337m in funding for this project over the next four years. The emphasis is on identifying people who do not lodge their business activity statements, and detecting businesses that over-claim entitlements or deliberately under-report taxable supplies that they make. In 2011, the ATO prosecuted 545 individuals and 211 companies for over AUD12.55m worth of GST offences.

Also increased is the ATO’s scrutiny of businesses deliberately not reporting cash income. Over 1.9m small businesses were evaluated against the ATO's risk detection systems during 2011. Last year, the ATO prosecuted 41 individuals and nine companies for over AUD3.22m worth of cash economy offences.
Commenting on the figures, D'Ascenzo said:
“People deliberately committing tax evasion are often caught by the sharing of information between government departments and other third parties. Cooperation across government departments has led to increased intelligence sharing and improved information gathering which is driving our data matching capabilities to new levels."

"We use advanced technology to bring together information from a range of government departments and other third parties to cross check personal and business records such as car registrations and supply orders for businesses. The ATO also undertakes risk profiling to identify people and businesses that may have not declared all their earnings or overinflate their deductions."
"We can see how personal and business claims compare to other tax payers. If alarms are raised the ATO investigates those claims and taxpayer records more closely."

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Read more at: Tax Times blog