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Yearly Archives: 2019

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
    

     

    Read more at: Tax Times blog

    US S.C. Heard Oral Arguments on Whether States Can Tax Out-of-State & Foreign Trusts

    April 17, 2019

    On February 27, 2019 we posted US S.C. To Decide Whether States Can Tax Out-of-State & Foreign Trusts,  where we discussed that more than $120 billion of our nation's income flows through trusts and the Supreme Court will hear a case that may clarify how much states are able to tax and that in April, the Supreme Court of the United States will hear an appeal against North Carolina's practice of taxing the undistributed income of an out-of-state trust that has a beneficiary living in the state. North Carolina is one of 11 states that consider trusts taxable when they hold income for a person who is using the state's services, but US courts have reached different results about whether due process prohibits these taxes. 

    According to Law360, the U.S. Supreme Court justices questioned on April 16, 2019 whether a North Carolina beneficiary’s expectation of distribution from a trust gave the state taxing rights, even though its settlor and initial trustee were out of state and distributions weren't guaranteed.



    The justices heard oral arguments in a case pitting North Carolina’s Department of Revenue against the Kimberley Rice Kaestner 1992 Family Trust, whose beneficiary lived in North Carolina. The state Supreme Court ruled last June that North Carolina’s taxation of the trust based on the beneficiary’s residence was unconstitutional, prompting the Department of Revenue to appeal to the U.S. Supreme Court.

    The justices were advised that the beneficiary had no guarantee of receiving money from the trust during the four years that the state taxed the trust. The mere presence of a beneficiary did not give the state the right to tax the trust, whose settlor and initial trustee were in New York, he told the justices. During the tax years, when the beneficiary received no distributions, the trustee was a Connecticut resident, and the money belonged to him, not the North Carolina beneficiary.

    Justice Elena Kagan seemed skeptical. She advised that eventually the beneficiary would likely get the money from the trust and questioned why it shouldn’t be her state that taxes it. Why should New York or Connecticut have the taxing authority when a North Carolina resident would receive money from the trust, including accrued interest.

    David A. O’Neil of Debevoise & Plimpton LLC, representing the Kaestner Family Trust, told the court had for decades protected a trust from taxation by the state where the beneficiary resides, if the trust has no other contacts with that state, and it should look to those precedents, including Brooke v. City of Norfolk from 1928, Safe Deposit & Trust Co. v. Virginia from 1929 and Guaranty Trust Co. v. Virginia from 1938.

    “They are every bit as valid today as they were then,” O’Neil said. “The court said, using the same principles of trust law that apply today,  the beneficiary really isn’t the owner of the property there, so we’re not going to allow taxation of that.”

    Earlier, Justice Stephen Breyer seemed sympathetic to O’Neil’s position when he questioned Matthew W. Sawchak, solicitor general of North Carolina. He didn’t seem disposed to accept an argument from Sawchak that “the trust has no situs” and that North Carolina should impose taxation because “benefits and protections” were extended by that state to the beneficiary.

    Key To The North Carolina Supreme Court’s Finding That Taxation Of The Trust Was Unconstitutional Was That Kaestner, The Beneficiary, Did Not Receive Distributions From The Trust During The Years At Issue. The Revenue Department Collected $1.3 Million In Taxes From The Trust Over Four Years.

    Sawchak told the justices that the state Supreme Court got it wrong, and that discarding beneficiary contacts and focusing only on trustee and administrative contacts, is “a recipe for tax avoidance.”

    “Let’s say I don’t find that distinction particularly significant,” Justice Gorsuch said. “It’s slicing the baloney a little too thinly.”


    The outcome of NC Department of Revenue vThe Kimberley Rice Kaestner1992 Family Trust will determine whether individuals are able to avoid state taxes by placing assets with trustees in states with no income tax liability. 

    This may also impact Foreign – Non-US trusts, who have US beneficiaries, living in states which tax the income from Out-of-State Trusts.

    More than $120 billion of our nation's income flows through trusts, and this case that may clarify how much states are able to tax.

     

    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

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    According to Ostrow Reisin Berk & Abrams (via Mondaq) in April, the Supreme Court of the United States will hear an appeal against North Carolina's practice of taxing the undistributed income of an out-of-state trust that has a beneficiary living in the state. North Carolina is one of 11 states that consider trusts taxable when they hold income for a person who is using the state's services, but US courts have reached different results about whether due process prohibits these taxes.

    The outcome of NC Department of Revenue vThe Kimberley Rice Kaestner1992 Family Trust will determine whether individuals are able to avoid state taxes by placing assets with trustees in states with no income tax liability.

     

     

    This may also impact Foreign – Non-US trusts, who have US beneficiaries, living in states which tax the income from Out-of-State Trusts.

     

    Read more at: Tax Times blog

    Tax Time Guide wrap-up: Tips on Payment Options, Penalty Waivers, Refunds and More – IR-2019 -60:

    April 15, 2019

    The Internal Revenue Service on April 2, 2019 urged taxpayers to file an accurate tax return on time, even if they owe but can’t pay in full.

    Most taxpayers are being affected by major tax law changes. While most will get a tax refund, others may find that they owe taxes. Those who owe may qualify for a waiver of the estimated tax penalty that normally applies. See Form 2210, Underpayment of Estimated Tax by Individuals, Estates and Trusts, and its instructions for details.

    The filing deadline to submit 2018 tax returns is Monday, April 15, 2019, for most taxpayers. Because of the Patriots’ Day holiday on April 15 in Maine and Massachusetts and the Emancipation Day holiday on April 16 in the District of Columbia, taxpayers who live in Maine or Massachusetts have until April 17 to file their returns.

    Checking on refunds

    The IRS issues nine out of 10 refunds in less than 21 days. Using the “Where’s My Refund?” online tool, taxpayers can start checking on the status of their return within 24 hours after the IRS receives an e-filed return or four weeks after the taxpayer mailed a paper return. The tool has a tracker that displays progress through three phases: (1) Return Received; (2) Refund Approved; and (3) Refund Sent.

    All that is needed to use “Where’s My Refund?” is the taxpayer’s Social Security number, tax filing status (such as single, married, head of household) and exact amount of the tax refund claimed on the return.

    “Where’s My Refund?” is updated no more than once every 24 hours, usually overnight, so there’s no need to check the status more often.

    How to make a tax payment

    Taxpayers should visit the “Pay” tab on IRS.gov to see their payment options. Most tax software products give taxpayers various payment options, including the option to withdraw the funds from a bank account. These include:

    • IRS Direct Pay offers taxpayers a free, fast, secure and easy way to make an electronic payment from their bank account to the U.S. Treasury.
    • Use an approved payment processor to pay by credit or debit card for a fee.
    • Mail checks or money orders made out to the U.S. Treasury.
    • Make monthly or quarterly tax payments using IRS Direct Pay or through the Electronic Federal Tax Payment System.

    Can’t pay a tax bill?

    Everyone should file their 2018 tax return by the tax filing deadline regardless of whether they can pay in full. Taxpayers who can’t pay all their taxes have options including: 

    • Online Payment Agreement — Individuals who owe $50,000 or less in combined income tax, penalties and interest and businesses that owe $25,000 or less in payroll tax and have filed all tax returns may qualify for an Online Payment Agreement. Most taxpayers qualify for this option and an agreement can usually be set up on IRS.gov in a matter of minutes.
    • Installment Agreement — Installment agreements are paid by direct deposit from a bank account or a payroll deduction.
    • Delaying Collection — If the IRS determines a taxpayer is unable to pay, it may delay collection until the taxpayer's financial condition improves.
    • Offer in Compromise (OIC) — Taxpayers who qualify enter into an agreement with the IRS that settles their tax liability for less than the full amount owed.
    Owed Taxes - Can't Pay?  

    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

     

    
     
     

    Read more at: Tax Times blog

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