Monthly Archives: July 2019

On June 27, 2019 the Office of Management & Budget (OMB) reported on its website that it has finished its review of the Obama-era regulations that would significant changes to the minimum investment amount, as well as other consequential changes.

1. an enterprise that is engaged in trade between the United States and a foreign country; or 
2. a major investment in the United States.

Treaty Investor (E-2) Visa

Treaty investor applicants must meet specific requirements to qualify for a treaty investor (E-2) visa under immigration law. The consular officer will determine whether a treaty investor applicant qualifies for a visa.

• The investor, either a real or corporate person, must be a national of a treaty country.
• The investment must be substantial. (Usually $100,000 in a corporate bank account) It must be sufficient to ensure the successful operation of the enterprise. The percentage of investment for a low-cost business enterprise must be higher than the percentage of investment in a high-cost enterprise.
• The investment must be a real operating enterprise. Speculative or idle investment does not qualify. Uncommitted funds in a bank account or similar security are not considered an investment.
• The investment may not be marginal. It must generate significantly more income than just to provide a living to the investor and family, or it must have a significant economic impact in the U.S.
• The investor must have control of the funds, and the investment must be at risk in the commercial sense. Loans secured with the assets of the investment enterprise are not allowed.
• The investor must be coming to the U.S. to develop and direct the enterprise. If the applicant is not the principal investor, he or she must be employed in a supervisory, executive, or highly specialized skill capacity. Ordinary skilled and unskilled workers do not qualify. 

According to DoJ, Wagdy A. Guirguis, owner of several engineering businesses, was sentenced June 28, 2019 to 5 (five) years in prison in Honolulu.

On Nov. 20, 2018, a jury convicted Guirguis of:

 

1. Conspiracy to defraud the United States along with co-conspirator Michael Higa,
2. Three counts of filing false corporate income tax returns,
3. One count of failure to file a corporate income tax return,
4. Three counts of tax evasion,
5. One count of corruptly endeavoring to obstruct and impede the Internal Revenue Service (IRS), and
6. One count of witness tampering.

The convictions arose from a scheme to divert funds from Guirguis’ business entities for his own personal benefit and to avoid the payment of federal employment taxes, corporate and individual income taxes, and IRS penalties.

According to the evidence presented at trial, Guirguis operated numerous engineering businesses. Higa, a Certified Public Accountant (CPA), was the controller of these businesses.

Higa also served as a nominee officer of another entity controlled by Guirguis.

When The IRS Determined Guirguis’ Businesses Owed Over $800,000 In Federal Employment Taxes And Assessed An $812,000 Penalty, Guirguis And Higa Took Steps To Place Income And Assets Out Of The Reach Of The IRS.

For instance, Guirguis and Higa used the nominee entity to fraudulently convey a condominium to Guirguis’ wife. After an IRS revenue officer began questioning Mrs. Guirguis’ sole ownership of this condominium, Guirguis and Higa instructed a bookkeeper to alter the books and records in an attempt to conceal this transaction from the IRS.

From 2001 through 2012, Guirguis and Higa also used the nominee entity to divert approximately $1.3 million from Guirguis’ businesses for Guirguis’ personal use. As a result of their diversion and the concealment efforts, Guirguis’ 2010 through 2012 returns omitted $553,000 in income, resulting in a tax deficiency of $165,000.

In addition, Guirguis filed corporate income tax returns that fraudulently omitted millions of dollars of gross receipts. For one of his businesses, Guirguis simply did not file a corporate tax return, thereby not reporting more than $1.7 million in gross receipts.

After the IRS levied the bank accounts of one business, Guirguis diverted incoming funds owed to that business, directing payment of the funds to a different business. Guirguis also instructed a tenant to disregard IRS collection notices and pay rent directly to him rather than to the IRS. Moreover, Guirguis made false and misleading statements to IRS revenue officers, all in an effort to obstruct the IRS’ efforts to collect on the taxes he and his companies owed.

To impede the criminal investigation into his tax violations, Guirguis falsely told an employee, who had testified before the grand jury, that he did not know about the false backdating in the books of the nominee entity, and asked the employee to sign a false statement to that effect.

In addition to the term of imprisonment, U.S. District Judge Helen Gillmor ordered Guirguis to:

• Serve 3 years of supervised release, and
• to pay a $925 special assessment,
• to pay $6,730.24 in prosecution costs, and
• to pay $3,308,868 in restitution to the IRS minus any payments already made to the IRS.

Sentencing for Michael Higa is scheduled for July 1.



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A taxpayer who was born outside the U.S. and its possessions, whose parents were not U.S. citizens at the time of his birth, and who became a U.S. citizen after residing in a U.S. possession was a "nonresident not a citizen of the U.S." for estate, gift, and generation skipping transfer tax (GST) purposes. PLR 201924009

Various estate, gift, and GST rules apply to a nonresident not a citizen of the U.S. IRC Sec. 2101(a) imposes a tax, in general, on the transfer of the taxable estate of every "decedent nonresident not a citizen of the U.S." Code Sec. 2209 provides that a decedent who was a citizen of the U.S. and a resident of a possession thereof at the time of his death is considered, for purposes of the estate tax, a "nonresident not a citizen of the U.S." but only if that person acquired his U.S. citizenship solely by reason of (1) his being a citizen of the U.S. possession, or (2) his birth or residence within that U.S.

The taxpayer was born in Country A, which was not the U.S. or one of its possessions. At the time of his birth, neither of taxpayer's parents were citizens, nationals, or residents of the U.S. nor any of its possessions or territories. And neither of taxpayer's parents were born in the U.S. nor any of its possessions or territories.

Taxpayer relocated to Possession, a possession of the U.S. under Code Sec. 7701(d), with a student visa. After graduating from college, taxpayer began working in Possession with a work visa. Taxpayer has continuously resided in Possession since college. A few years later, taxpayer became a citizen of the U.S. through naturalization proceedings in the U.S. District Court for the district of Possession.

Taxpayer was (1) not born in the U.S. or one of its possessions, and (2) not born of parents at least one of whom was a citizen of the U.S. Therefore, under the 1940 Act, Taxpayer did not acquire citizenship on account of his birth.

Taxpayer became a U.S. citizen under the 1952 Act's naturalization provision based on his continuous residency in Possession. As discussed above, taxpayer did not become a U.S. citizen under the 1940 Act based on his birth. Accordingly, IRS concluded, based on the facts presented and representations made, that taxpayer acquired his U.S. citizenship solely by reason of residence within a possession of the U.S.

Thus, taxpayer met one of the requirements of Code Sec. 2209 and therefore was a nonresident not a citizen of the U.S.

Have a US Estate Tax Problem?

Robert S. Blumenfeld  -