August 13, 2013
Are the increase in FBAR Filing a Result of :
Read more at: Tax Times blog
August 13, 2013
John D. Stanton III stalled an Internal Revenue Service audit for four years, promising he would submit corporate tax returns for his company while secretly diverting tens of millions of dollars to himself.
The deception caught up to him, when a federal judge sentenced him to 10 years in prison for tax evasion. Stanton III, who was also ordered to pay $37 million in restitution, declined to speak at the hearing.
He was once the co-owner of Cast-Crete Corp. of Seffner, one of the nation’s biggest manufacturers of precast concrete materials. Between 2005 and 2007, the company made a profit of $108 million and owed taxes amounting to $37 million, which was never paid because tax returns for those years were never filed.
He was siphoning off millions of dollars from Cast-Crete during those three years, according to court documents, paying himself or his shell company $12 million in 2005, $22 million in 2006 and $9 million in 2007.
“His plan was to drive the corporation into bankruptcy and clean up the tax mess in bankruptcy court,” U.S. Attorney Robert Monk said.
Stanton, who has a masters of business administration degree and was a certified public accountant, “made a pretense of cooperating” with the IRS audit “but in fact he stalled and impeded the agent’s ability to get at the truth,” court documents said.
Stanton created fake promissory notes, board resolutions and other documents to hide the deceit, prosecutors said. Stanton also tried to place the blame on Cast-Crete co-owner Ralph Hughes, a conservative power broker who died in 2008, Monk said.
The IRS said Stanton eventually owed a total of $60 million in taxes.
When he was arrested, Stanton said he was broke; prosecutors said they believe Stanton has hidden his money, perhaps millions of dollars.
Read more at: Tax Times blog
August 12, 2013
The Treasury unit called FinCEN, the Financial Crimes Enforcement Network, already has rules about Bitcoin. The IRS is likely to follow.
FinCEN says Bitcoin exchanges and Bitcoin miners should register as Money Services Businesses (MSBs) and comply with anti-money laundering regulations.
Still, ordinary Bitcoin users don’t have to register just to purchase goods and services. The IRS treats it as pay in kind, just as if you paid in groceries or anything else of value. You must value what’s provided, withhold income and employment taxes in cash and send the money to the IRS. You also must issue a Form W-2.
With no banking or government involvement, Bitcoin may be anonymous. It may even be ideal for someone who intentionally tries not to pay tax. That may be a small piece of the Bitcoin payment universe.
But for most people who file tax returns and report their income whether or not it shows up on a Form W-2 or 1099, it probably isn’t the tax haven some are suggesting it is.
The IRS will most certainly take steps to regularize tax reporting.
Read more at: Tax Times blog
August 12, 2013
The Internal Revenue Service disagrees with four major banks over structured transactions done a decade ago with Barclays Plc, which the IRS lacks "Economic Substance."
In the first STARS case to go to trial, the U.S. Tax Court ruled that the transactions lacked "economic substance," meaning they were done solely for tax purposes. A judge called them "a subterfuge for generating, monetizing and transferring the value of foreign tax credits."
The U.S. Tax Court held Feb. 11 in a case of first impression that a structured trust advantaged repackaged securities (STARS) transaction lacked economic substance and the taxpayers were not entitled to claim foreign tax credits (Bank of New York Mellon Corp. v. Commissioner, T.C., No. 26683-09, 140 T.C. No. 2, 2/11/13).
Judge Diane L. Kroupa determined that, while the STARS transaction was structured to meet the relevant tax code requirements and the regulations for claiming the disputed foreign tax credits, the STARS transaction was in essence “an elaborate series of pre-arranged steps designed as a subterfuge for generating, monetizing and transferring the value of foreign tax credits among the STARS participants.”
An affiliated group composed of Bank of New York Mellon Corp. and its subsidiaries entered into a structured trust advantaged repackaged securities (STARS) transaction with Barclays Bank in London.
As part of the STARS transaction, Bank of New York transferred income-producing assets to a trust with a U.K. trustee, and the trust was subject to U.K. tax on its income. The STARS transaction generated $199 million in foreign tax credits. Bank of New York had claimed foreign tax credits and expense deductions on its 2001 and 2002 federal consolidated tax returns. It also reported income from assets transferred to the trust as foreign source income.
Three other banks - BB&T Corp, Santander Holdings and Wells Fargo - are challenging the IRS in separate STARS disputes.
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Read more at: Tax Times blog
