Yearly Archives: 2018

The world's highest paid athlete, Cristiano Ronaldo, has been accused of tax evasion. The Real Madrid super star reeled in $93 million last year, putting him ahead of basketball giant LeBron James and La Liga rival, Lionel Messi. Ronaldo has been accused of failing to pay 14.7 million euros ($16.5 million) in taxes.

The prosecutor’s office in Madrid filed a lawsuit that alleges that the 31-year-old knowingly used offshore accounts to hide income from his image-rights payments. The charges come months after Spanish newspaper El Mundo published leaked documents revealing details of the offshore holdings of several soccer players, including Ronaldo. The tax evasion relates to a three-year period starting in 2011.

Ronaldo, who led Real Madrid to win both the Spanish league and European Cup, is just the latest high profile soccer player to face prosecution over tax affairs. Earlier a court rejected Lionel Messi’s appeal over a tax fraud conviction. Messi’s Barcelona teammate Neymar is also being prosecuted in Spain over his transfer from Brazilian team Santos in 2013.

The management team for the four-time world soccer player of the year responded earlier this year to the tax allegations against him by releasing his 2015 tax declaration. It revealed he held assets outside of Spain worth more than 203 million euros.

“This communication, which was not required by law, constitutes irrefutable proof that Cristiano Ronaldo and his representatives are in good faith, and cooperate with the authorities in a spirit of transparency and compliance with legality,” the agency Gestifute said.

The Madrid prosecutor said in his 2014 tax return Ronaldo claimed to have recorded revenue from Spanish sources between 2011 and 2013 of 11.5 million euros, though in reality that number was almost 43 million euros.

Ronaldo had appeared immune to the tax allegations which have affected a number of famous soccer players, including Lionel Messi, who was found guilty of tax evasion last year (his sentence was upheld this year).

However, last year, suspicions against Ronaldo were raised after the so-called "Football Leaks" - think Panama Papers with a hyper-focus on soccer players - suggested that Ronaldo had underreported his income.

Real Madrid’s all-time highest scorer, who is due to play in Portugal’s opening World Cup match against Spain on Friday, has according various news agencies has settled his tax evasion charges brought by the Spanish authorities, paying a EUR18.8 million fine and agreeing to accept a two-year jail sentence, although Spanish criminal law allows a sentence of less than two years for a first offence to be served on probation.  

Ronaldo was accused of evading EUR14.7 million in taxes on EUR75 million of his image rights income, which has, for years, been handled by two Irish companies.

Sources:

 Reuters

Bloomberg

Forbes

On January 18, 2018 we posted IRS to Begin Revoking US Passports of Delinquent Taxpayers in 2018! where we discussed that the IRS will start implementing new procedures required under a 2015 law to crack down on individuals with “seriously delinquent tax debts.”

The IRS issued Notice 2018-1 on January 16, 2018, which provides guidance for implementation of the new IRC 7345, added by Section 32101 of the FAST Act. Upon receipt of section 7345 certification, the State Department is generally required to deny a passport application for individuals with seriously delinquent tax debts and may also revoke or limit passports previously issued to those individuals. The notice also describes some exceptions to certification and taxpayer remedies.  “Seriously delinquent tax debt” is an individual's unpaid, legally enforceable federal tax debt totaling more than $51,000 (including interest and penalties) for which a notice of federal tax lien has been filed and all administrative remedies under IRC § 6320 have lapsed or been exhausted or a levy has been issued.

Now the IRS webpage on Revocation or Denial of Passport in Case of Certain Unpaid Taxes contains the following alert:

If you have seriously delinquent tax debt, IRC § 7345 authorizes the IRS to certify that debt to the State Department for action. The State Department generally will not issue a passport to you after receiving certification from the IRS.
 

Upon receiving certification, the State Department shall deny your passport application and/or may revoke your current passport. If your passport application is denied or your passport revoked and you are overseas, the State Department may issue you a limited validity passport good only for direct return to the United States.

Certification Of Individuals With Seriously Delinquent Tax Debt

Seriously delinquent tax debt is an individual's unpaid, legally enforceable federal tax debt totaling more than $51,000 (including interest and penalties) for which a:

• Notice of federal tax lien has been filed and all administrative remedies under IRC § 6320 have lapsed or been exhausted or
• Levy has been issued

Seriously delinquent tax debt is limited to liabilities incurred under Title 26 of the United States Code and does not include debts collected by the IRS such as the FBAR Penalty and Child Support.
Some tax debt is not included in determining seriously delinquent tax debt even if it meets the above criteria. It includes tax debt:

• Being paid timely with an IRS-approved installment agreement
• Being paid timely with an offer in compromise accepted by the IRS, or a settlement agreement entered with the Justice Department
• For which a collection due process hearing is timely requested regarding a levy to collect the debt
• For which collection has been suspended because a request for innocent spouse relief under IRC § 6015 has been made

Additionally, a passport won’t be at risk under this program for any taxpayer:

• Who is in bankruptcy
• Who is identified by the IRS as a victim of tax-related identity theft
• Whose account the IRS has determined is currently not collectible due to hardship
• Who is located within a federally declared disaster area
• Who has a request pending with the IRS for an installment agreement
• Who has a pending offer in compromise with the IRS
• Who has an IRS accepted adjustment that will satisfy the debt in full

Certification will be postponed while an individual is serving in a designated combat zone or participating in a contingency operation.
Before denying a passport, the State Department will hold your application for 90 days to allow you to:

• Resolve any erroneous certification issues
• Make full payment of the tax debt
• Enter a satisfactory payment arrangement with the IRS

Annual Adjustment For Inflation

The $51,000 threshold is indexed yearly for inflation
Under new Code Section 7345(f), in the case of a calendar year beginning after 2016, the dollar amount in new Code Section 7345 shall be increased by an amount equal to (1) such dollar amount, multiplied by (2) the cost-of-living adjustment determined under Code Section 1(f)(3) for the calendar year, determined by substituting “calendar year 2015” for “calendar year 1992” in Code Section 1(f)(3)(B). If any amount as adjusted under the preceding sentence is not a multiple of $1,000, such amount shall be rounded to the nearest multiple of $1,000.

Taxpayer Notification - Notice CP 508C

The IRS is required to notify you in writing at the time the IRS certifies seriously delinquent tax debt to the State Department. The IRS is also required to notify you in writing at the time it reverses certification. The IRS will send written notice by regular mail to your last known address.

Reversal Of Certification - Notice CP 508R

The IRS will reverse a certification when:

• The tax debt is fully satisfied or becomes legally unenforceable.
• The tax debt is no longer seriously delinquent.
• The certification is erroneous.

The IRS will make this reversal within 30 days and provide notification to the State Department as soon as practicable.
A previously certified debt is no longer seriously delinquent when:

• You and the IRS enter into an installment agreement allowing you to pay the debt over time.
• The IRS accepts an offer in compromise to satisfy the debt.
• The Justice Department enters into a settlement agreement to satisfy the debt.
• Collection is suspended because you request innocent spouse relief under IRC § 6015.
• You make a timely request for a collection due process hearing regarding a levy to collect the debt.

The IRS will not reverse certification where a taxpayer requests a collection due process hearing or innocent spouse relief on a debt that is not the basis of the certification. Also, the IRS will not reverse the certification because the taxpayer pays the debt below $50,000.

Judicial Review Of Certification

The State Department is held harmless in these matters and cannot be sued for any erroneous notification or failed decertification under IRC § 7345.

If the IRS certified your debt to the State Department, you can file suit in the U.S. Tax Court or a U.S. District Court to have the court determine whether the certification is erroneous or the IRS failed to reverse the certification when it was required to do so. If the court determines the certification is erroneous or should be reversed, it can order the IRS to notify the State Department that the certification was in error.

IRC § 7345 does not provide the court authority to release a lien or levy or award money damages in a suit to determine whether a certification is erroneous. You are not required to file an administrative claim or otherwise contact the IRS to resolve the erroneous certification issue before filing suit in the U.S. Tax Court or a U.S. District Court.

Payment Of Taxes

If you can’t pay the full amount you owe, you can make alternative payment arrangements such as an installment agreement or an offer in compromise to have your certification reversed.

If you recently filed your tax return for the current year and expect a refund, the IRS will apply the refund to the debt and if the refund is sufficient to satisfy your seriously delinquent tax debt, the account is considered fully paid.

Passport Status

If your U.S. passport application is denied or your U.S. passport is revoked, the State Department will notify you in writing.

If you need your U.S. passport to keep your job, once your seriously delinquent tax debt is certified, you must fully pay the balance, or make an alternative payment arrangement to have your certification reversed.

Once you’ve resolved your tax problem with the IRS, the IRS will reverse the certification within 30 days of resolution of the issue and provide notification to the State Department as soon as practicable.

Travel

If you’re leaving in a few days for international travel, need to resolve passport issues and have a pending application for a U.S. passport, you should call the phone number listed on Notice CP 508C - If you already have a U.S. passport, you can use your passport until you’re notified by the State Department that it has been revoked.

If your passport is cancelled or revoked, after you’re certified, you must resolve the tax debt by paying the debt in full, making alternative payment arrangements or showing that the certification is erroneous.

The IRS will reverse your certification within 30 days of the date the tax debt is resolved and provide notification to the State Department as soon as practicable.

 

 Want To Keep Your US Passport?
 

 

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.

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.

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.

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.