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Monthly Archives: April 2019

IRS Reports Tax refunds down $4.4B for 2018 Tax Filings

April 29, 2019

The Internal Revenue Service reported a $4.4 billion decline in total tax refunds as of April 19, the first tax season under the Tax Cuts and Jobs Act, with the average size of tax refunds down about 2 percent.

The total number of tax refunds increased slightly, from 95,434,000 to 95,737,000, a 0.3 percent increase. The total amount of tax refunds declined 1.7 percent, though, from $265.326 billion to $260.919 billion.

The average amount of the refund also dipped 2.0 percent, from $2,780 to $2,725.


At the same time, the Tax Cuts and Jobs Act also eliminated the personal and dependent exemptions. The IRS recommended last year that taxpayers adjust their withholdings with a "paycheck checkup" using its online withholding calculator to avoid withholding too little this year. Nevertheless, relatively few taxpayers actually

The 2017 tax overhaul eliminated or sharply limited a host of tax deductions, including widely used ones like the state and local tax deduction. Taxpayers can write off only $10,000 in state and local taxes from their federal taxes now. That provision has been attacked by lawmakers in so-called "blue states" that traditionally vote for Democrats. In exchange, the tax law doubled the size of the standard deduction and lowered tax rates overall, prompting more taxpayers to skip itemizing this year.  

2019 FILING SEASON STATISTICS

Cumulative statistics comparing 4/20/2018 and 4/19/2019
 

Individual Income Tax Returns:   

2018

2019

% Change
Total Returns Received  136,919,000 137,233,000 0.2
Total Returns Processed   130,477,000 130,775,000 0.2
       

E-filing Receipts:

      
TOTAL              124,515,000 126,264,000 1.4
Tax Professionals  70,983,000 70,476,000 -0.7
Self-prepared   53,532,000 55,788,000 4.2
       

Web Usage:

      
Visits to IRS.gov  386,895,000 421,514,000 8.9
       

Total Refunds:

      
Number  95,434,000 95,737,000 0.3
Amount  $265.326 Billion  $260.919 Billion -1.7
Average refund  $2,780 $2,725 -2.0
       

Direct Deposit Refunds: 

      
Number  80,491,000 83,249,000 3.4
Amount  $236.851 Billion  $238.381 Billion  0.6
Average refund  $2,943 $2,863 -2.7


The vast majority of taxpayers saw their taxes reduced over the course of last year, but many of them didn't notice the difference in their paychecks. The IRS faced complaints from many taxpayers who ended up owing far more money than they expected or getting a lower tax refund than anticipated. In response, the IRS lowered the threshold for imposing tax penalties on taxpayers who underwithheld or paid too little in estimated taxes last year. The IRS is again urging taxpayers to check their withholdings now that tax season is over.

However, the IRS is also planning to roll out a newly revised Form W-4 next month that will again require many taxpayers to adjust their withholdings. They will likely need to get help from tax professionals because it is expected to be even more complicated to use than last year's form. An early draft of the form provoked complaints last year from accounting and tax professional groups because it asked for much more information than usual about outside sources of income from spouses and others.

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





Sources:
IRS
accountingTODAY
 

Read more at: Tax Times blog

Zurich Life Insurance Rolls Over on Their US Clients

April 26, 2019

According to DoJ, Zurich Life Insurance Company Ltd (Zurich Life), headquartered in Zurich, Switzerland, and Zurich International Life Limited (Zurich International Life), headquartered in the Isle of Man (collectively Zurich) reached a resolution with the United States Department of Justice on April 24, 2019. As part of the agreement, Zurich will pay a penalty of $5,115,000 to the United States.

According To The Terms Of The Non-Prosecution Agreement, Zurich AFREES To COOPERATE In Any Related Criminal Or Civil Proceedings,
to implement controls to stop misconduct involving undeclared u.s. accounts, and to pay a penalty in return for the department’s agreement not to prosecute the insurance providers for tax-related criminal offenses.
“The Tax Division remains steadfast in its goal of ending the use of offshore banking and insurance products when used to commit tax evasion,” said Principal Deputy Assistant Attorney General Zuckerman.
“This Resolution With Zurich Should Serve As A Strong Message To Those Who Use Offshore Bank Accounts And Insurance Products To Evade Taxation That The Department Of Justice Is Committed To Stopping Such Fraud.”  
Zurich Life was founded in 1922 and operates in Switzerland as an insurance carrier offering life insurance and investment products. As of 2016, Zurich Life had approximately $21.3 billion in assets under management and over 300,000 policies in force. Zurich International Life is based in the Isle of Man and operates as an insurance carrier offering life insurance and investment products. Zurich International Life focuses its business on the international expatriate market.
As Of 2016, Zurich International Life Had Approximately $10.6 Billion In Assets Under Management And Approximately 300,000 Policies In Force.
Zurich Life and Zurich International Life are indirectly owned subsidiaries of Zurich Insurance Group Ltd, a Swiss holding company headquartered in Zurich, Switzerland.
From Jan. 1, 2008, through June 30, 2014, Zurich issued or had certain insurance policies and accounts of U.S. taxpayer customers, who used their policies to evade U.S. taxes and reporting requirements. In particular, Zurich had approximately 420 U.S. related policies, 127 with Zurich Life and 293 with Zurich International Life, with an aggregate maximum value of approximately $102 million, for which the U.S. taxpayer customers did not provide evidence that they had declared their policies to U.S. tax authorities.
To Qualify For Favorable Tax Treatment Under The U.S. Tax Code, Insurance Must Meet Certain Minimal Requirements. The Policies Offered By Zurich Life And Zurich International Life Did Not Meet These Requirements.
The increase of the principal in these policies was therefore subject to taxation, and the policies were required to be disclosed to the Internal Revenue Service (IRS) on FinCEN Form 114 Foreign Bank Account Report, commonly referred to as an FBAR. In issuing or having undeclared U.S. related policies, Zurich knew or should have known that they were helping U.S. taxpayers conceal from the IRS ownership of undeclared assets, maintained as insurance policies or accounts.
Zurich International Life, in particular, sold insurance products to U.S. taxpayers that were “unit linked,” meaning the cash surrender value and death benefit amount were linked to the value of specified investments. With such policies, the U.S. taxpayer had a suite of specialized investment options, allowing them to access potentially higher returns by taking on the market risk associated with the policies.
Some of these unit-linked policies offered a base death benefit that was nearly equivalent to the cost of the policy itself, and in some instances was fully funded by transfers from offshore bank accounts. Upon redemption, the U.S. taxpayer would receive the premium amount plus any investment earnings on the policy less a very small percentage for putative risk and fees.
Despite knowing that some of these policies, which had minimal-to-no risk mitigation function and specialized investment options, were held by U.S. taxpayers, Zurich International Life failed to act appropriately to ensure timely compliance by the policyholders with U.S. tax laws. In at least one instance, uncovered during the course of Zurich Life’s internal review, a former U.S. citizen, who pled guilty to a federal fraud offense after purchasing a Zurich International Life policy, used that insurance policy to hide substantial assets, despite owing approximately $900,000 in restitution to his victims.
Following the commencement of the Department’s Swiss Bank Program, the Zurich Group initiated a global review of the life insurance, savings and pension business sold by all of its non-U.S. operating companies to identify policies or accounts with U.S. indicia. This review prompted an extensive customer outreach to current and former customers with a possible nexus to the United States to confirm the customers’ status as U.S. taxpayers, assess their compliance with applicable U.S. tax and reporting rules, and encourage participation in an IRS voluntary disclosure program.
In July 2015, Zurich contacted the Department to inform it of the initial findings of the self-review. Prior to the self-reporting, Zurich was neither a subject nor a target of any investigation being conducted by the Tax Division.
Since This Self-Disclosure, Zurich Has Conducted A Thorough Investigation And Reported Substantial Findings To The Tax Division, Including Dozens Of Detailed Summaries Of Account Information And Comprehensive Reports For U.S. Policies.
In addition to these efforts, the Companies have worked closely with non-U.S. regulators to ensure full disclosure to the Department. For instance, in 2016, Zurich Life applied to the Swiss Federal Department of Finance and received approval to waive Article 271 of the Swiss Criminal Code, which restricted the disclosures that Zurich Life could make to the Department, thereby facilitating Zurich Life’s production of certain information that would have otherwise been prohibited.
Do You Have Undeclared Income From
An Offshore Bank or Insurance Company?
 
Is Your Name Being Handed Over to the IRS?
  
Want to Know Which Remaining IRS Program
 is Right for 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

Read more at: Tax Times blog

Fisherman Gaffed for Tax Evasion

April 23, 2019

Rhode Island Man Pleads Guilty to Evading Taxes from 2005 through 2016 & Obstructing IRS From Assessing and Collecting Tax.
 
According to DoJ.  a Hope, Rhode Island, man who failed to pay hundreds of thousands of dollars in federal income taxes pleaded guilty yesterday to tax evasion.
 
According to court documents, from 2005 through 2016, Billie Schofield worked for local fishing companies and earned hundreds of thousands of dollars in income.
 
 
Schofield evaded the assessment of taxes on income earned through multiple commercial activities by causing payments to be made through a nominee business and depositing money in a nominee account.
 
He obstructed the Internal Revenue Service’s (IRS) efforts by filing false income tax returns, preventing the delivery of IRS levy notices to his employer, and by sending bogus checks to the IRS in a fraudulent attempt to pay off an IRS lien placed on his property. 
 
Schofield’s Conduct Resulted in a Tax Loss
of More Than $250,000.
 
Sentencing is scheduled for Sept. 13 before U.S. District Court Judge William E. Smith. 
 
The Defendant Faces a Statutory Maximum Sentence of 5 Years in Prison for the Tax Evasion Charge.  
 
He also faces a period of supervised release, restitution and monetary penalties.  
 
 
Have a IRS Criminal 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 orToll Free at 888-8TaxAid (888) 882-9243
 
 
 
 
 
 
 
 
 
 
 

     

    Read more at: Tax Times blog

    9th Circ. Finds Inadequate Proof Of Mailing in Dening $167,000 Tax Refund

    April 19, 2019

    The Court of Appeals for the Ninth Circuit has reversed a district court decision that held that the taxpayers timely filed their refund claim because they met the requirements of the common-law mailbox rule.

    The Circuit Court Held That Code Sec. 7502's Timely Mailing Rule Supplanted the Common-Law Rule
     
     and That IRS's reg under Code Sec. 7502 is a valid interpretation of that Code section.
     

    So according to the Ninth Circuit, the 2011 Treasury rule is definitive on whether a tax filing is mailed on time, and taxpayers cannot rely on the common-law “mailbox rule.”

    Howard and Karen Baldwin claimed to have filed an amended tax return on time via U.S. mail, but they could not show they complied with the regulation, which says the only way to establish that a document was mailed to the IRS is proof of proper use of certified mail or a private delivery service, the appeals court said in a published opinion. Therefore, their amended return was filed late and their case should be dismissed, the court said, voiding a $167,000 refund and $25,000 award of legal fees.

    The Baldwins contended they followed the mailbox rule, which says testimonial or circumstantial evidence can provide sufficient proof of proper mailing, but the 2011 Treasury regulation displaced that rule, the court said.

    It was reasonable for the Treasury regulation to set “the sole means by which taxpayers may prove timely delivery in the absence of direct proof of actual delivery,” the court said.

    At trial, two employees of the couple testified the 2005 amended return was timely mailed just before a statutory deadline expired, according to the opinion. The IRS said it never received that amended return by the Oct. 15, 2011, deadline, but it did eventually receive the return in July 2013. (Something is Fishy Here).

    The U.S. District Court for the Central District of California ruled that the Baldwins had complied with the common-law mailbox rule and awarded them the $167,000 refund that they claimed on the amended return along with $25,000 in legal fees.

    In reversing the decision with instructions to dismiss the case, the Ninth Circuit said the IRS replaced the mailbox rule by promulgating Treasury Regulation Section 301.7502-1(e) in August 2011, the court said. That regulation says Section 7502 of the Internal Revenue Code provides the exclusive means to prove delivery and renders the common-law mailbox rule unavailable, the court said.

    To comply under Section 7502, a document must be sent by registered mail, which provides a receipt to the person sending it, the court said. Registered mail also provides heightened security for the mailed item, such as keeping it in a locked space, and electronically tracks the chain of possession from the taxpayer to the recipient, the opinion said.

    The regulation resolved a circuit split over the correct interpretation of Section 7502, which “left the law in an undesirable state, as it allowed similarly situated taxpayers to be treated differently depending on where they lived,” the court said.

    Have a IRS Tax Problem?  
     

     
    Contact the Tax Lawyers at 

    Marini& Associates, P.A. 
     

    In
    

     

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