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Monthly Archives: September 2012

Bradley Birkenfeld awarded $104 million (13% ) as UBS tax case whistleblower

September 11, 2012


U.S. tax authorities have awarded $104 million to a whistleblower in a major tax fraud case against Swiss bank UBS AG that widened a government crackdown on Americans avoiding taxes in Switzerland, his lawyers said on Tuesday. This approximately 13% of the amount the Government recovered from UBS ( $780 million in fines, penalties, interest and restitution).

We first posted that Bradley Birkenfeld was freed last month from prisonon August 1, 2012. His attorneys announced the $104 million reward made under an Internal Revenue Service whistleblower program.

Birkenfeld had sought a large payout for his role in a tax-dodging case that resulted in early 2009 in UBS entering into a deferred prosecution agreement and paying $780 million in fines, penalties, interest and restitution.

Birkenfeld turned over information about UBS to the authorities, but later he was jailed after the government said he withheld other information.

UBS entered into a deferred prosecution agreement in early 2009 and paid $780 million in fines, penalties, interest and restitution. The case was a key turning point in a U.S. effort to combat tax evasion in Switzerland and elsewhere overseas.

If you have unreported income from Foreign Banks and you want to Get Right with the IRS, 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).

Source:

Rueters



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Last Chance for Voluntary Disclosures before FATCA becomes effective in 2013!

September 11, 2012

 

January 1, 2013 is the effective date of the Foreign Account Tax Compliance Act (FATCA) and with its implementation the associated FATCA disclosures.  FATCA ends historical bank secrecy as previously relied on by many US depositors. 

In anticipation of FATCA implementation, the IRS, revised its Frequently Asked Questions (FAQs), clarifying many uncertainties in the current OVDP, tightening some areas and relaxing others. In addition, the IRS released, updated versions of some of the documentation that taxpayers will be required to file as a part of their acceptance into the OVDP.

The clarifications establish that the OVDP is available to taxpayers who have both offshore and domestic issues that require disclosure. Additionally, the IRS clarified which years are to be included or covered in the required eight-year voluntary disclosure period: for taxpayers who submit voluntary disclosures prior to the due date or extended due date for 2011, the disclosure period includes 2003–2010. For taxpayers who submit disclosures after the due date or extended due date for 2011, the disclosure period is 2004–2011.

The IRS added two new categories of persons ineligible for the OVDP. Under the OVDP, a taxpayer is required to notify the U.S. Attorney General of any appeal or document submitted in connection with an appeal of a foreign tax administrator's decision to provide account information to the IRS and any such a person who fails to provide the required notice will no longer be eligible to make a voluntary disclosure. Second, the IRS may announce that certain taxpayer groups that have or had accounts at specific financial institutions will be ineligible due to U.S. government actions in connection with the specific financial institutions. Each announcement is to provide notice of the prospective date upon which eligibility for the specific taxpayer group ends.

The IRS also revised certain documentation, the Offshore Voluntary Disclosure letter used to make the formal application to the OVDP has significantly changed and now has a required attachment/questionnaire which, to some extent, replaces an earlier document known as the Foreign Financial Institution Statement and further expands upon the details of the offshore account and the persons involved in the creation of the account. The disclosure letter and the attached questionnaire now call for information regarding deposits/withdrawals, entities affiliated with the account, and a host of information relating to communications with representatives of the foreign financial institution.
 
The OVDP in response to situations involving U.S. citizens,including dual citizens, residing abroad added two new provisions.The first, which previously posted as Tax amnesty offered to Americans in Canada, describes the IRS giving Canada persons the opportunity to request an extension of time to make the election to Canada to defer U.S. income tax on income earned in, but not yet distributed from, Canadian registered retirement savings plans (RRSPs), pursuant to  the U.S.-Canada Income Tax Treaty. If the election is granted, the RRSP balance will not be included in the offshore penalty base upon which the 27.5% penalty attaches.
 
The second which previously posted as Instructions - New Streamlined Filing for Non-Resident & Non-Filer U.S. Taxpayers! which describes the IRS' new procedure (to take effect September 1, 2012) that will allow U.S. citizens, including dual citizens, residing abroad to become tax-compliant, without necessarily facing penalties, if they are low-compliance risk taxpayers who owe little or no back taxes (generally, those persons who have simple tax returns and owe $1,500 or less in tax for each of the covered years).
 
If you have unreported income from Foreign Banks and you want to Get Right with the IRS, 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).

 

 

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Severance Pay not subject to Employment Tax Says 6th CA

September 10, 2012

The U.S. Court of Appeals for the Sixth Circuit today affirmed a federal district court decision that severance payments are not wages for purposes of the Federal Insurance Contributions Act (FICA) tax. In re Quality Stores, Inc., No. 10-1563 (6th Cir. September 7, 2012)

This tax decision could have wide business implications since the U.S. appeals court ruled that employment taxes should not have been imposed on severance pay in an involuntary layoff.

The 6th Circuit Court of Appeals said Quality Stores Inc, a retailer, and employees who participated in the suit, could claim a refund for employment tax imposed on the severance pay.

The taxes at issue were Federal Insurance Contributions Act, or FICA, taxes that help pay for the U.S. Social Security retirement pension program and the Medicare health program. FICA taxes are paid by a company and its employees.

This decision could trigger a flood of claims for severance-pay employment-tax refunds by companies that had involuntary layoffs.

This issue is one that has been is dispute for years and could end up before the Supreme Court because there is a split between appeals courts over it.  In 2008, a separate court ruled against railroad company CSX Corp, saying it was liable for FICA taxes on severance packages.
In CSX Corp., 518 F.3d at 1346, the Federal Circuit adopted the IRS’s eight-part administrative definition of SUB pay set out in Rev. Rul. No. 56-249 and Rev. Rul. 90- 72 rather than the express statutory definition provided by Congress in §3402(o). That court characterized the payments before it as “dismissal pay” subject to FICA tax.  

By contrast, we resolve the tension between the statutory enactments and the IRS revenue rulings in favor of the expressed will of the legislature.

In doing so, the 6th Circuit admitted their ruling created a conflict. "We acknowledge that this issue of statutory construction is complex and that the correct resolution is far from obvious".  "While the Supreme Court may ultimately provide us with the correct resolution ... only Congress can clarify the statutes concerning the imposition of FICA tax."

 
If you have Payroll Tax Problems, 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).
 
UnitedStates v. Quality Stores Inc, No. 10-1563.

 

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No Summary Judgement on Resonsible Party Penalty – CA 6

September 10, 2012

The Court of Appeals for the Sixth Circuit has reversed a district court's Summary Judgment decision that a company's President and CEO/Chairman were liable for the Code Sec. 6672 penalty, finding that there were legitimate factual disputes regarding whether they acted recklessly in failing to pay the trust fund taxes. 

Notably, although the two were clearly “responsible persons,” it was unclear at what point they became aware that the taxes weren't being paid and to what extent they actually controlled the company's finances.

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

BYRNE v. U.S., Nos. 10-2080, 10-2319. United StatesCourt of Appeals, Sixth Circuit. Filed September 4, 2012.


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