Yearly Archives: 2018

The star of the "Blade" trilogy and "White Men Can't Jump," who served three years in prison for unpaid taxes until his release into a months long house arrest in 2013, had told the Internal Revenue Service that his financial adviser had taken out loans and disposed of his assets and income without his knowledge.

 

However, Tax Court Judge Kathleen Kerrigan said Snipes did not produce “bona fide documentation” beyond affidavits of misconduct from his financial adviser, showing that his income or assets had been dissipated.

“The [IRS] settlement officer did not abuse her discretion in determining that acceptance of [Snipe’s offer-in-compromise] was not in the best interest of the United States,” Judge Kerrigan said, effectively holding up the IRS’ filing of a tax lien.

Snipes had argued that an IRS settlement officer, who was unnamed in the court’s decision, had abused her discretion by excluding his allegedly dissipated assets and by not investigating his adviser, W. Johnson.

However, Judge Kerrigan disagreed, finding the settlement officer had followed the revenue agency’s published guidance, “spent considerable time and effort” to determine Snipes’ income, equity, assets and transfers of real property, and ultimately lowered the IRS’ estimate of what it thought it could reasonably collect from Snipes from nearly $17.5 million to about $9.6 million.

According to court records, Snipes had multiple assets and real estate holdings, and his debt arises from not filing tax returns from 2001 to 2006. Snipes had asked the IRS to accept his offer on the condition of proving his financial adviser’s own liability as a transferee, but Judge Kerrigan said the IRS was not in the position of accepting an offer with conditions imposed upon it.

In addition, taxpayers in “collection due process” hearings do not have the authority to compel the IRS to conducted expedited investigations into third parties, and Snipes had failed to prove that he would suffer economic hardship as a result of having to fork over what the IRS thought he could reasonably pay, the judge said.

 

Snipes made more than $37 million from 1999 to 2004, according to court documents. During that time, he became involved with American Rights Litigators, which believes that income taxes are largely unconstitutional, and he expressed that opinion in a letter he wrote to the IRS

In February 2008, Snipes was convicted on three counts of tax fraud. He was acquitted on three other counts of willful failure to file returns for the years 2002 to 2004, and on counts of conspiracy to defraud the IRS and submitting a false claim.

 

 

 

 

 

The IRS’ Large Business and International Division said it has identified five additional compliance campaigns since announcing an overhaul to its audit procedures in 2015. Now with a total of 50 campaigns, the agency’s audit revamp involves moving toward issue-based examinations instead of the old approach of placing large multinational businesses under continuous audit by a rolling team of examiners.

“The campaigns are the culmination of an extensive effort to redefine large business compliance work and build a supportive infrastructure inside LB&I,” the IRS said in a statement. “Campaign development requires strategic planning and deployment of resources, training and tools, metrics and feedback.”

Under FATCA, which took full effect in 2014 after Congress passed it in 2010, Americans must report if they hold more than $50,000 in foreign assets. In addition, foreign financial institutions must disclose information on U.S. taxpayer accounts to the IRS through intergovernmental agreements.

The FATCA campaign comes after the Treasury Inspector General for Tax Administration, the agency watchdog, published a report in July that found although the IRS had spent nearly $380 million to carry out FATCA, the agency “is still not prepared to enforce compliance” with it.

Another campaign announced Tuesday involves focusing on individuals who have claimed foreign tax credits without meeting the requirements to do so.

 Another campaign targets the use of offshore service providers, which facilitate the creation of foreign entities and tiered structures “to conceal the beneficial ownership of foreign financial accounts and assets, generally, for the purpose of tax avoidance or evasion,” according to the IRS.

The other two campaigns announced Tuesday involve “delinquent-filed” 1120-F forms — the U.S. income tax return of a foreign corporation — and an effort to address the consequences of certification delays and “the burden of amended return filings” regarding the work opportunity tax credit.

When the agency first announced a reorganization to the LB&I division, it said the process involved winding down the coordinated industry case program of continuous audits and targeting areas for examination on the basis of compliance risks instead. Since then, there were scant details on how exactly large business audits, where businesses are suspected of evading taxes on significant sums of money, will change under the new regime.

Then, in January 2017, the IRS released the long-awaited list of campaigns, which included focuses on enterprise activities, cross-border activities and pass-through entities. There were 13 campaigns included in the first batch.