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Monthly Archives: August 2012

Tax Fraud Against Preparers Affirmed by the Fifth Circuit

August 8, 2012

The convictions of a couple that committed tax fraud were affirmed by the Fifth Circuit Court of Appeals. The husband and wife were the owners and operators of a firm that prepared personal income tax returns in Texas.
A husband and wife were indicted for offenses arising out of their business
of preparing federal income tax returns. The indictment alleged one count of
conspiring to defraud the United States by obstructing the collection of income
taxes and by assisting in the preparation of false income tax returns, see 18
U.S.C. § 371, and 25 counts of aiding and assisting in the preparation of false
income tax returns. See 26 U.S.C. § 7206(2). Thirteen of the counts charged the A husband and wife were indicted for offenses arising out of their business of preparing federal income tax returns. The indictment alleged one count of conspiring to defraud the United States by obstructing the collection of income taxes and by assisting in the preparation of false income tax returns, see 18 U.S.C. § 371, and 25 counts of aiding and assisting in the preparation of false income tax returns. See 26 U.S.C. § 7206(2). Thirteen of the counts charged the husband, while the remaining twelve charged the wife. A jury convicted themon every count.
Donald and Tonya Womack were the owners and operators of Front Door Tax Services, a small company that prepared personal income tax returns in Houston, Texas. Originally, Donald was the only person who prepared returns for the business. Donald misrepresented that he was an accountant who had worked previously for the IRS. As business grew, he sought assistance in preparing the returns from his wife, Tonya. The couple used the same electronic filing identification number (EFIN).
The IRS first noticed the Womacks based on the unusual deductions that were claimed on their clients' returns. Several of the Womack's clients testified against the couple, including one man who testified that Mr. Womack offered to provide false mileage logs to substantiate vehicle mileage deductions. Other former clients stated that they had never given the Womacks any information that would support the deductions that the couple claimed, such as charitable or mortgage-interest deductions. These clients are probably lucky they didn't get charged with tax evasion themselves!
The government also used an undercover IRS special agent, who brought in his tax information to the couple. Although he had calculated that he owed $300, the Womacks gave him a choice of three tax refund amounts, ranging from $3,200 to $4,200. Mrs. Womack claimed that, although she had taken a tax preparation course, all of her errors were accidental. Mr. Womack did not offer any theory as to the cause of his inaccuracies.
A jury indicted the couple on 26 counts of conspiracy and aiding and assisting in the preparation of false tax returns. Mr. Womack was ordered to serve five years in prison, plus three years of supervised release. Mrs. Womack got off with three years of prison time, plus three years of supervised release. The court also ordered them to pay over $160,000 in restitution. This is over and above any civil tax preparer penalties that may be assessed against them under Internal Revenue Code (IRC) Section 6694.The Fifth Circuit affirmed their convictions in an unpublished opinion.
Contact our experienced criminal tax attorneys at 800-Tax-Litigator for a confidential consultation to discuss available options if you have been contacted by the IRS in connection with civil or criminal tax fraud.
Contact our Experienced Criminal Tax Attorneys at Marini & Associates, P.A. for a FREE Tax Consultation at www.TaxAid.us or www.TaxLaw.ms or Toll Free at 888-8TaxAid (888 882-9243).

Read more at: Tax Times blog

Ecuador Declares “US LLCs” as a Preferential Tax Regime – Tax Haven!

August 8, 2012

                  

Preferential tax regimes are jurisdictions where income is subject to tax at a rate 60% lower than in Ecuador (Ecuador current corporate income tax is 23%).
US LLCs have been declared to be a preferential tax regime if owned by US non resident aliens and if income is not subject to federal income tax either at the entity level or that of its members. 
Preferential tax regimes are treated in the same manner as tax haven jurisdictions. As a consequence, dividends distributed to this type of entities will bear a 13% withholding at source and expenses from certain transactions between Ecuador and this regime may be disqualified as deductibles.
Furthermore, thin capitalization rules will apply to loans granted from US LLCs and transfer pricing regulations and compliance may be triggered.

Read more at: Tax Times blog

U.S./U.K. Treaty Does Not Override Code Requirements for Tax-Deferred Rollover

August 6, 2012

Office of Chief Counsel
Internal Revenue Service


Memorandum


Number: AM2008-009
Release Date: 8/29/2008


CC:INTL:B01:QPHuynh
PRENO-136253-08
UILC: 9114.03-42


date

: August 21, 2008

to

: Michael Julianelle

Director, Employee Plans
(Tax Exempt and Governmental Entities)


from

: Associate Chief Counsel (International)

subject

: UK Pension Rollovers

This memorandum addresses the possible application of Article 18 (Pension Schemes)
of the U.S.-U.K. income tax treaty to a rollover distribution from a U.K. pension scheme
to a U.S. retirement plan. This document may not be used or cited as precedent.
ISSUE
Whether an individual who is a resident of the United States may rely on the
parenthetical language in Article 18(1) of the U.S.-U.K. income tax treaty

1 (the “Treaty”)

to make a tax-deferred rollover distribution from a U.K. pension scheme to a U.S.
retirement plan in circumstances where the distribution would not qualify as an “eligible
rollover distribution” within the meaning of section 402(c)(4).

2

CONCLUSION
No. Nothing in Article 18(1) of the Treaty overrides the requirement that the distribution
must qualify as an “eligible rollover distribution” within the meaning of section 402(c)(4).
FACTS


1

Convention Between the Government of the United States of America and the Government of the United

Kingdom of Great Britain and Northern Ireland for the Avoidance of Double Taxation and the Prevention
of Fiscal Evasion with Respect to Taxes on Income and Capital Gains, signed on July 24, 2001, as
amended by a Protocol signed on July 19, 2002.


2 All references to “section” are to sections of the Internal Revenue Code of 1986, as amended.

Read more at: Tax Times blog

Jail & Big Fines for Undeclared Swiss Accounts!

August 6, 2012

Two former clients of UBS AG were sentenced on Monday to a year and a day in prison, matching what records show as the longest prison term ordered so far in a sprawling investigation of offshore tax avoidance involving the Swiss banking giant.

Sean and Nadia Roberts of Tehachapi, California, were also ordered to pay $3.2 million in restitution and fines, the U.S. Justice Department said. He is 77 years old and she is 64.
The couple pleaded guilty in 2011 to filing a false income tax return. From 2004 to 2008, they failed to report interest income from millions held in offshore accounts, falsely deducted bank transfers and under-reported income, prosecutors said.

One other former UBS client, Richard Werdiger, has received a prison term that long, according to an Internal Revenue Service-maintained list of UBS cases. Other clients have received a combination of probation, home confinement and fines.

The Robertses had requested probation, and their lawyer Nina Marino on Monday called the prison sentence "a travesty of justice" because of their age, restitution and other factors.

The sentence is likely to discourage restitution in future cases and reflects the Justice Department's "rigid and barbaric approach to these matters," Marino said.

Prosecutors asked the court to impose a two-year prison sentence because, according to court papers, the couple took steps to keep their offshore holdings secret after the investigation into UBS became publicly known.

The tax returns in question covered both individual income and the couple's income from two corporations they ran, a pilot-testing school and an aircraft-maintenance company.

If you have a Swiss Bank Account, contact the Tax Lawyers at Marini & Associates, P.A. for a FREE Tax Consultation at www.TaxAid.us or www.TaxLaw.ms or Toll Free at 888-8TaxAid (888 882-9243).

For more information on this story go to Reuters

Read more at: Tax Times blog

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