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Monthly Archives: June 2018

Donald Trump Used His Charity As Campaign Checkbook Says NY AG

June 14, 2018

According to Law360, the New York state attorney general's office accused the Trump Foundation on Thursday of self-dealing in a suit seeking a ban on President Donald Trump from operating any Empire State nonprofit for 10 years, one-year bans for three of his children and $2.8 million of restitution.
The Manhattan Supreme Court lawsuit, which also seeks to dissolve the foundation, comes after what New York Attorney General Barbara Underwood called an extensive investigation of the Trump Foundation's payments to political allies on behalf of the president and for-profit ventures grouped under his Trump Organization.

 
“The Trump Foundation Was Little More Than a Checkbook for Payments from Mr. Trump or His Businesses to Nonprofits, Regardless of Their Purpose or Legality,”
Underwood Said in a Statement.
 

Underwood's office said it has sent referral letters to the IRS and Federal Election Commission identifying what it calls possible violations of federal law and asking for further investigation.

The suit says three of the president's kids, Donald Trump Jr., Ivanka Trump, and Eric Trump, the foundation's other board members besides the president, should receive one-year directorship bans. They provided "no oversight" amid the lawbreaking, the suit alleges.

 

President Trump took to Twitter, his favorite medium, soon after the lawsuit was announced to blame "sleazy" Empire State Democrats for inventing what he called a "phony crime."

"I won’t settle this case!" Trump said via Twitter, asserting that his foundation, which was set up in 1987 and is located at Trump Tower on 5th Avenue in Manhattan, has given more to charity, $19.2 million, than it has taken in, $18.8 million.

One of the suit's central allegation involves what the attorney general's office calls false statements made to New York officials by the foundation about a January 2016 campaign event in Iowa.

Trump campaign staffers co-opted the foundation, calling the event a fundraiser for veterans, when in fact it was a campaign event ahead of the Iowa caucus, the suit alleges.

More than $2.8 million raised at that event flowed from the foundation at the direction of senior Trump campaign staff, who dictated how the money would be spent, according to the lawsuit.

Former Trump campaign manager Corey Lewandowski pushed Allen Weisselberg, the foundation's treasurer and a top Trump business captain, for money to be doled out in Iowa in the days ahead of the Feb. 1 caucuses, the suit says. Trump won the Iowa Republican caucus on his way to winning the presidency in November 2016.

Those payments, according to the suit, amounted to "related-party transactions," or illegal self-dealing. It seeks restitution of that amount, plus potential penalties.

“This Is Not How Private Foundations Should Function and My Office Intends to Hold the Foundation and Its Directors Accountable for Its Misuse of Charitable Assets,” Underwood Said.



The foundation also made an unlawful $25,000 political donation to the campaign of Florida attorney general Pam Bondi in 2013, the suit says. That money was reimbursed to the foundation by Trump in 2016 after news reports detailed the payment, the suit notes, alleging several other allegedly unlawful foundation transactions as well.

The case is State of New York v. Trump et al., case number 451130/2018, in Manhattan Supreme Court.

Have a Private Foundation Tax Problem?

Contact the Tax Lawyers at 
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Toll Free at 888-8TaxAid (888) 882-9243

 


 

Read more at: Tax Times blog

IRS Offers Penalty Relief to Many Subject to New Transition Tax

June 4, 2018

The Internal Revenue Service today June 4, 2018 announced in IR-2018-131 that it will waive certain late-payment penalties relating to the section 965 transition tax, and provided additional information for individuals subject to the section 965 transition tax regarding the due date for relevant elections.

The IRS explained the relief in three new FAQs, posted today on the agency’s tax reform page. These supplement 14 existing questions and answers that provide detailed guidance to taxpayers on reporting and paying the tax.

Section 965 of the Internal Revenue Code, enacted in December 2017, imposes a transition tax on untaxed foreign earnings of foreign corporations owned by U.S. shareholders by deeming those earnings to be repatriated. Foreign earnings held in the form of cash and cash equivalents are taxed at a 15.5 percent rate, and the remaining earnings are taxed at an 8 percent rate. The transition tax generally may be paid in installments over an eight-year period when a taxpayer files a timely election under section 965(h).

In general, the questions and answers indicate that:

  • In some instances, the IRS will waive the estimated tax penalty for taxpayers subject to the transition tax who improperly attempted to apply a 2017 calculated overpayment to their 2018 estimated tax, as long as they make all required estimated tax payments by June 15, 2018.  
  • For individual taxpayers who missed the April 18, 2018, deadline for making the first of the eight annual installment payments, the IRS will waive the late-payment penalty if the installment is paid in full by April 15, 2019. Absent this relief, a taxpayer’s remaining installments over the eight-year period would have become due immediately. This relief is only available if the individual’s total transition tax liability is less than $1 million. Interest will still be due. Later deadlines apply to certain individuals who live and work outside the U.S. 
  • Individuals who have already filed a 2017 return without electing to pay the transition tax in eight annual installments can still make the election by filing a 2017 Form 1040X with the IRS. The amended Form 1040 generally must be filed by Oct. 15, 2018. 
  • See the FAQs for details.
Have an International Tax Problem?

  

 
Contact the Tax Lawyers at
Marini & Associates, P.A.  

for a FREE Tax Consultation Contact Us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888-8TaxAid (888 882-9243).

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 


  


Read more at: Tax Times blog

US Expats Having Their Accounts Frozen by US Banks

June 4, 2018

US banks are freezing accounts and investments for American expats to avoid the cost of money laundering and tax avoidance laws.
 
Hundreds of expats have had letters from Fidelity, Wells Fargo, Merrill Lynch, Morgan Stanley and other Us financial institutions to notify them that Their Accounts are Closed.
 
The banks say strict US know-your-customer rules and the Foreign Account Tax Compliance Act (FATCA) are too expensive to meet – even for customers with millions of dollars in their accounts.
The know-your-customer rules demand the financial institutions separate transactions that are not ‘normal’ and may indicate money laundering.
FATCA requires banks to tell the US Internal Revenue Service about account balances and investments held by American customers.

What the Letters Say

US financial institutions generally have a reciprocal duty to report the account details of foreign nationals (Individuals) to the IRS, which then transmits the data on to foreign tax authorities.
 
They also must monitor their customers who live overseas to ensure they are keeping to the local regulator’s rules as well and they may be different from those in the US, creating a dual compliance burden.
 
The time and cost involved in compliance has led many financial institutions to ditch non-profitable customers by letter and email.
 
The Merrill Lynch letters say:
 
“We have conducted an extensive review of our non-US resident client business to determine whether we had the ability to continue to effectively serve your wealth and investment needs under increasing business requirements and regulatory restrictions."
 
“Having completed this analysis, we believe you would be better served by a firm or firms that can meet your comprehensive wealth and investment management needs. Therefore, we will no longer be servicing your Merrill Lynch Wealth Management account(s) and/or credit facilities effective _DATE_”
 

Dilemma for American Expats

Customers are then asked to choose to transfer their accounts elsewhere or to have the money sent to them.
Taking the first option means investments are transferred without tax consequences or early drawdown penalties, but few financial institutions are willing to take on American customers because of the compliance consequences.
 
Why Now?

The rules were finalized two years ago, under the Obama administration, after almost two years of consultation. But implementation was deferred until now, to give the banks time to implement the new system.

A beneficial owner is defined as anyone who owns 25 per cent or more of a legal entity, and any individual who controls the legal entity, but several questions remain. In particular, the rules are not easy to understand when applied to complicated ownership structures, according to US law firm Sullivan and Worcester.

The banking agencies have not published any advice, so clients and practitioners have to rely on guidance from the Treasury's Financial Crimes Enforcement Network (FinCEN), which released a frequently asked questions document last month.


This at least clarified that the customer due diligence (CDD) requirement applies whether the 25 per cent equity interests is held either directly or indirectly, no matter how complex its corporate structure or how many layers of ownership there are.

FinCEN also suggests that levels of ownership lower than 25 per cent might justify CDD in some cases, though legally the 25 per cent level is all that is required. But it says customer identification programmes should be risk-based, and a customer that presents many risks could justify going below the 25 per cent level.
Besides American expats, thousands of so-called ‘Accidental Americans’ have been caught in the compliance net because their parents were US citizens, even if they have never set foot in the country. 

Have an International Tax Problem?
 
Contact the Tax Lawyers at
Marini & Associates, P.A.
 
for a FREE Tax Consultation Contact Us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888-8TaxAid (888 882-9243).

 

Sources:

IExpats

   

STEP International

Read more at: Tax Times blog

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