Monthly Archives: August 2018

According to Law360, Swiss bank Zürcher Kantonalbank has agreed to pay $98.5 million after admitting to helping U.S. clients dodge taxes by letting them stash money in undeclared accounts that used code names and shell companies, Manhattan federal prosecutors announced on August 13, 2018.

ZKB will hand over the amount as part of a deferred prosecution agreement, which the bank reached after admitting to helping U.S. clients collectively avoid paying more than $39 million in U.S. taxes between 2002 and 2013, according to prosecutors. The bank would have been given more credit for cooperating with the government if it hadn’t dissuaded two indicted employees from reaching out to the U.S. Attorney’s Office, prosecutors said.

Those two bankers, Stephan Fellmann and Christof Reist, were originally indicted on felony charges and pled guilty to misdemeanor charges on August 13, 2018.

“The Substantial Financial Penalties Imposed on the Bank, and the Two Bankers’ Pleas, Should Make Clear That Helping US Taxpayers to Be Tax Evaders Will Not Be Tolerated,” Manhattan U.S. Attorney Geoffrey S. Berman said in a statement. 

If ZKB abides by the agreement, which includes a requirement to turn over information about the U.S. client accounts, the government said it will defer prosecution on the information for three years and then seek to dismiss the charges.

According to the prosecutors’ statement, ZKB helped U.S. clients dodge taxes by opening and maintaining undeclared accounts, including by allowing the clients to be identified by a code word instead of by name. The bank also allowed U.S. clients to maintain accounts held in the names of non-U.S. entities, some of which were sham structures existing solely to hide offshore assets, prosecutors said.

At ZKB’s “high-water mark” in 2008, the bank held approximately $794 million in assets relating to undeclared accounts held by U.S. clients, according to the statement.

ZKB’s external asset manager desk “treated UBS’ decision to stop accepting U.S. taxpayer-clients as a business opportunity, and actively sought to increase its U.S. taxpayer-client base,” according to the prosecutors’ statement.

In December 2012, three ZKB bankers: Fellmann, Reist and Otto Hüppi, were charged in a New York federal court with conspiracy to defraud the U.S. and the IRS for their role in ZKB’s conduct, according to prosecutors.

Fellmann, whose name is spelled “Fellman” in the case name and Reist are scheduled to be sentenced Nov. 30 and face up to one year in prison. Hüppi remains at large.

The case is USA v. Fellman et al., case number 1:12-cr-00962, in the U.S. District Court for the Southern District of New York.

Have Undeclared Income from an Offshore Account?
 

Want to Know if the OVDP Program is Right for You? 

 

 

 

Contact the Tax Lawyers at 

Marini& Associates, P.A. 

 

 

for a FREE Tax Consultation

at: www.TaxAid.com or www.OVDPLaw.com or

Toll Free at 888-8TaxAid (888) 882-9243

 



 

The new deduction, referred to as the Section 199A deduction or the deduction for qualified business income, was created by the Tax Cuts and Jobs Act. The deduction is available for tax years beginning after Dec. 31, 2017. Eligible taxpayers can claim it for the first time on the 2018 federal income tax return they file next year.

The deduction is generally available to eligible taxpayers whose 2018 taxable incomes fall below $315,000 for joint returns and $157,500 for other taxpayers. It’s generally equal to the lesser of 20 percent of their qualified business income plus 20 percent of their qualified real estate investment trust dividends and qualified publicly traded partnership income or 20 percent of taxable income minus net capital gains.

Deductions for taxpayers above the $157,500/$315,000 taxable income thresholds may be limited. Those limitations are fully described in the proposed regulations.

Qualified business income includes domestic income from a trade or business. Employee wages, capital gain, interest and dividend income are excluded.

In addition, Notice 2018-64, also issued on August 8, 2018, provides methods for calculating Form W-2 wages for purposes of the limitations on this deduction.

Taxpayers may rely on the rules in these proposed regulations until final regulations are published in the Federal Register.

 

 

We Can Advise on How These Tax Cuts Can Benefit You!

 

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

On July 24, 2018 we posted IRS Cost-Sharing Regulations Revived By Appeals Court where we discussed that the Ninth Circuit reversed a decision by the U.S. Tax Court that invalidated an Internal Revenue Service cost-sharing regulation in a dispute with an Intel Corp. subsidiary, saying the revenue agency did not exceed its authority in promulgating the rule.  In a 2-1 decision, the appeals court said the IRS is entitled to deference and was justified in issuing the rule under the Administrative Procedure Act, despite comments from the public that opposed the regulation.

The Tax Court had sided with Altera Corp., an Intel subsidiary, in the case in July 2015 after finding that the IRS had ignored significant evidence and public comments while issuing its rule requiring cost-sharing agreements between related parties to include the costs of stock-based compensation.

Now according to Law360 on August 7, 2018 the Ninth Circuit withdrew its July 24 decision against Intel Corp. subsidiary Altera, letting stand a U.S. Tax Court decision invalidating IRS regulations that require employee stock option expenses to be shared with foreign subsidiaries in cost-sharing arrangements.

The now-withdrawn Ninth Circuit opinion that went against Altera Corp., an Intel Corp. subsidiary, represented a rare win for the Internal Revenue Service in a transfer pricing case.

The ruling was also unusual in that one of the judges voting with the majority, Stephen Reinhardt, had died in March, months before the opinion was issued.

The now-withdrawn ruling said Judge Reinhardt had “fully participated” in the case and “formally concurred in the majority opinion” before his death.

The one-sentence order withdrawing the ruling stated that the majority and dissenting opinions “are hereby withdrawn to allow time for the reconstituted panel to confer on this appeal.”

The case is Altera Corp. and Subsidiaries v. Commissioner of Internal Revenue, case numbers 16-70496 and 16-70497, in the U.S. Court of Appeals for the Ninth Circuit.

Have a IRS Tax Problem? 

 

  
Contact the Tax Lawyers at 

Marini& Associates, P.A. 

 

 

for a FREE Tax HELP Contact Us at:

www.TaxAid.com or www.OVDPLaw.com or

Toll Free at 888-8TaxAid (888) 882-9243

 

On July 27, 2018 we posted 2nd Taxpayer Victory on a FBAR Penalty Case - FBAR Limited to $100M!  where we discussed US v. Dominique G. Colliot, case number 1:16-cv-01281, in the U.S. where a District Court for the Western District of Texas how that the maximum FBAR penalty was limited to $100,000 a year.

We also discussed that a second district court has determined that, despite a statutory change authorizing higher penalties, IRS couldn't impose penalties, for willfully failing to file a Report of Foreign Bank and Foreign Accounts (FBAR), in excess of the amounts provided in regs that were promulgated before the law change and that haven't been changed to reflect the increase in United States v. Wadhan, D. Colo. Dkt 17-CV-1287 Dkt Entry 5

Now on July 31, 2018 in Norman v. United States, Ct. Fed. Cl. Dkt 15-872, the Court held that the taxpayer Norman was liable for the FBAR willful penalty and this Court rejected the Colliot holding that the FBAR willful penalty was limited to a maximum of $100,000, because the regulations had not been changed to reflect the statutory amendment increasing the maximum FBAR willful penalty. 

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Congress’ Intent in Amending § 5321 The court stated that:

 
Finally, the court ruled that:

Have Undeclared Income from an Offshore Account?

 

 

Want to Know Make Sure You Are Not Over Penalized 
If You Do Not Enter The OVDP Program?
 
 

 

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