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Monthly Archives: January 2020

How Will The IRS Know? – IRS Whistleblower Office Collected More than $616 Million in 2019!

On June 5, 2019, we posted IRS Whistleblower Office Collects Over $1.44 Billion & Paid a Record $312M to Tipsters where we discussed that the Internal Revenue Service’s Whistleblower Program made 217 awards to whistleblowers totaling $312,207,590 and collected $1,441,255,859 in fiscal year 2018, according to a new report. the in its 2019 Annual Report to Congress, the Whistleblower Office reported that it made 181 awards to whistleblowers totaling $120,305,278 (before sequestration), which includes 24 awards under IRC § 7623(b).

Proceeds collected were $616,773,127. Included in the proceeds collected, as a result of § 7623(c), are the non-Title 26 amounts collected for criminal fines, civil forfeitures, and violations of reporting requirements amounting to $110,003,100. Title 26 amounts collected were $506,770,027.

Whistleblower claim numbers assigned in FY 2019 decreased by 7.3 percent from those submitted in FY 2018, and closures increased by 29.8 percent.

The Tax Relief and Health Care Act (TRHCA 2006) added IRC § 7623(b), which enacted significant changes in the Internal Revenue Service (IRS) award program for whistleblowers. TRHCA set a new framework for the consideration of whistleblower submissions and established the Whistleblower Office within the IRS to administer that framework. The TRHCA 2006 requires that the Secretary of the Treasury conduct an annual study and report to Congress on the use of IRC § 7623. The annual study and report to Congress includes any legislative or administrative recommendations for IRC § 7623 and its application. This report discusses the IRS Whistleblower Program activities for FY 2019 in satisfaction of the reporting obligations under the TRHCA 2006.

The Whistleblower Office coordinates with other IRS units, analyzes information submitted, and makes award determinations. If a submission does not meet the criteria for IRC § 7623(b) consideration, the Whistleblower Office may consider it for an award pursuant to its discretionary authority under IRC § 7623(a). A whistleblower must meet several conditions to qualify for the IRC § 7623(b) award program. The information must be:

  • Signed and submitted under penalties of perjury, 
  • Related to an action in which the proceeds in dispute exceed $2,000,000, and 
  • Related to a taxpayer, and for individual taxpayers only, one whose gross income exceeds     $200,000 for at least one of the tax years in question.

If the information meets the above conditions and substantially contributes to an administrative or judicial action that results in the collection of proceeds, the IRS will pay an award of at least 15 percent, but not more than 30 percent, of the proceeds

The award percentage decreases for cases based principally on information disclosed in certain public sources or when the whistleblower planned and initiated the actions that led to the tax law violations. Whistleblowers may appeal the Whistleblower Office’s award determinations under IRC § 7623(b) to the United States Tax Court (Tax Court).

The IRS pays awards from proceeds, and as such, award payments cannot be made until the taxpayer has exhausted all appeal rights and the taxpayer no longer can file a claim for refund or otherwise seek to recover the proceeds from the government. Therefore, the IRS generally cannot make award payments for several years after the whistleblower has filed a claim. 

 

_____________________________
 
Want a Reward of Between 15- 30% of
Underpaid IRS Tax Liabilities for
Blowing the Whistle on a Tax Cheat? 
________________________________________
 
____
 
Contact the Tax Lawyers at
Marini & Associates, P.A.
 
for a FREE Tax Consultation at:
or Toll Free at 888-8TaxAid (888 882-9243).

 

Read more at: Tax Times blog

Union Bancaire Privée, UBP SA Forgot To Report Some US Account Holder?

The DoJ announced that it has signed an addendum to a non-prosecution agreement with Union Bancaire Privée, UBP SA (UBP), a private bank headquartered in Geneva, Switzerland. 

The original non-prosecution agreement was signed on Jan. 6, 2016. At that time, UBP reported that it held and managed 2,919 U.S. Related Accounts, with assets under management of approximately $4.9 billion, and paid a penalty of $187,767,000. 

 
In Reaching This Agreement on January 2, 2020,
UBP Acknowledges It Should Have Disclosed
"Additional U.S.-Related Accounts"
To The Department At The Time Of The Signing
Of The Non-Prosecution Agreement.
 

Pursuant to this revised agreement, UBP will pay an additional sum of $14,000,000 and will provide
supplemental information regarding its U.S.-related account population, which now includes 97 dditional accounts. 


“Foreign banks that participated in the Swiss Bank Program were obligated to identify all accounts in which U.S. taxpayers held an interest, directly or indirectly,” said Richard E. Zuckerman, Principal Deputy Assistant Attorney General for the Tax Division. “Today’s agreement reflects our continued commitment to ensuring that when entities cooperate and make disclosures to the Department, that they do so fully.”

 

 
The Swiss Bank Program provided a path for Swiss banks to resolve potential criminal liabilities in the United States relating to offshore banking services provided to United States taxpayers. Banks eligible to enter the program were required to advise the department that they had reason to believe that they had committed tax-related criminal offenses in connection with undeclared U.S.-related accounts.

As participants in the program, they were required to make a complete disclosure of their cross-border activities, provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers had a direct or indirect interest, cooperate in treaty requests for account information, and provide detailed information about the transfer of funds into and out of U.S.-related accounts, including undeclared accounts.

 
Do You Have Undeclared Foreign Income ?
 
 
Is Your Name Being Handed Over to the IRS?
  
Want to Know if the OVDP Program is Right for You? 
 
Contact the Tax Lawyers at 
Marini & Associates, P.A.   
 
for a FREE Tax Consultation contact us at:
Toll Free at 888-8TaxAid (888) 882-9243
 

 

Read more at: Tax Times blog

151 Offshore Banks & Financial Advisors Are Turning Over Your Names To The IRS – What Are Your Waiting For?

On September 3, 2018 we posted 150 Offshore Banks & Now Financial Advisors Are Turning Over Your Names To The IRS - What Are You Waiting For? and since then the Government has add Adrian Baron (effective 9/11/2018) to this list bringing the number to 151 Offshore Banks and Foreign Financial Advisors.

The IRS keeps updating its list of foreign banks which are turning over the names of their US Account Holders.  Under the terms of their agreement with the IRS & Treasury, banks are required to:
  • Make a complete disclosure of their cross-border activities;
  • Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;
  • Cooperate in treaty requests for account information;
  • Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed;
  • Agree to close accounts of account holders who fail to come into compliance with U.S. reporting obligations; and
  • Pay appropriate penalties.

These Banks, Financial Instructions and Foreign Financial Advisors  have made substantial efforts to cooperate with the IRS investigation, including by:

  1. facilitating interviews that their Office with employees, including top level executives;
  2. voluntarily producing documents in response to the Office’s requests;
  3. providing, in response to a treaty request, unredacted client files for the U.S. taxpayer-clients who maintained accounts at their Banks or Financial Instruction; and
  4. committing to assist in responding to a treaty request that is expected to result in the production of un-redacted client files for U.S. taxpayer-clients who maintained accounts at these Banks and Financial Instructions and with these Foreign Financial Advisors. 
This list does not impact the Streamlined programs because you must be non-willful to qualify. All of this is part of the June 2014 improvements to the OVDP, which sparked new interest in cleaning up offshore accounts.
 
  1. With roughly 151 Foreign Banks and Financial Advisors cooperating with the DOJ & IRS and 
  2. FATCA requiring the entire world to report to the IRS
it is INEVITABLE that this increased disclosure, will result in EVERY AMERICAN eventually being discovered. Banks worldwide want to know if there US clients are compliant with the IRS. 

As additional banks are added to the list, American taxpayers will continue to be subject to the 50% intentional failure to file penalty, which now applies to all taxpayers with foreign accounts who  make a voluntary disclosure after September 28 2018.
Although the 50% penalty is high, willful civil violations can result in tax, penalties and interest totaling 325% of the highest balance in the account for the  most recent six years period. Recent guidance suggests that the IRS could be more lenient in the future, but the IRS’s definition of leniency can still make the OVDP a very good deal that provides certainty.   
Do You Have Undeclared Income from one of 
these Offshore Banks or 
Financial Advisors?
Is Your Name Being Handed Over to the IRS?
  
Want to Know if the OVDP Program is Right for You? 
Contact the Tax Lawyers at 
Marini & Associates, P.A.   
for a FREE Tax Consultation contact us at:
Toll Free at 888-8TaxAid (888) 882-9243

Read more at: Tax Times blog

IRS Wins Another 50% Willful FBAR Penalty Case!

 A district court has found in Agrawal, (DC WI 12/9/2019) 124 AFTR 2d ¶2019-5522 that a taxpayer was liable for nonwillful FBAR penalties and that the reasonable cause exception did not apply because the taxpayer did not act with ordinary business care and prudence when he prepared some of his own returns and when he had an accountant prepare others.

The penalty for violating the FBAR requirement depends on whether the violation was non-willful or willful. The maximum penalty amount for a nonwillful violation of the FBAR requirements is $10,000. (31 USC § 5321(a)(5)(B)(i)) The maximum penalty amount for a willful violation "shall be increased to the greater of" $100,000 or 50% of the balance in the account at the time of the violation. (31 USC § 5321(a)(5)(C)31 USC § 5321(a)(5)(D))

The IRS may not impose a penalty if the taxpayer meets several requirements, one of which is that the violation was due to reasonable cause. (31 USC § 5321(a)(5)(B)(ii))

The district court points out that neither 31 USC § 5321 nor its corresponding regs define "reasonable cause" in the FBAR reporting context, but the regs implementing Code Sec. 6651 equate the reasonable cause standard with a standard of "ordinary business care and prudence." (Reg. § 301.6651-1(c)(1)) The regs interpreting Code Sec. 6664(c)(1) state that the determination whether a taxpayer acted with reasonable cause "is made on a case-by-case basis, taking into account all pertinent facts and circumstances," and further that "generally the most important factor is the extent of the taxpayer's effort to assess the taxpayer's proper liability." (Reg. § 1.6664-4(b)(1))

Mr. Agrawal self-prepared his 2006 and 2007 tax returns. He hired an accountant to prepare his 2008 and 2009 tax returns. In all years, he indicated, in the Foreign Accounts and Trusts part of Schedule B to Form 1040, that he did not have a foreign bank account. In all years he failed to file FBARs. But Mr. Agrawal did have a foreign bank account during those years with more than $10,000 in it.


Mr. Agrawal testified that he told his accountant that he did not have a foreign bank account. He said he did this because a tax professional at the foreign bank told him that the income in the account was not subject to US income tax.

Mr. Agrawal was in immigrant from India, completed graduate school education in the US, and taught geophysics and math at a US technical college.
The IRS sought to impose a penalty for nonwillful failure to file FBARs. While he conceded that he should have filed FBARs, Agrawal argued the reasonable cause exception should apply and that his conduct was excused because he relied on the advice of tax professionals, and because he was elderly, unsophisticated about tax law, and spoke English as a second language.
The district court found that the reasonable cause exception did not apply to Agrawal and that he was liable for the penalty.
The court held that no reasonable juror could find that Agrawal acted with ordinary business care and prudence, or that he made a reasonable effort to understand his FBAR reporting responsibilities, when he failed to file his FBARs for the years 2006-2009.

By his own admission, Agrawal self-prepared his 2006 and 2007 tax returns; he did not disclose the existence of a foreign financial account on Schedule B despite a direct question on the issue. And according to his deposition testimony, in 2008 and 2009, he did not tell the CPA preparing his tax return of the existence of the foreign account or question the CPA's decision to leave blank the Schedule B question about foreign bank accounts.
The court said that a taxpayer acting with ordinary business care, or one making a reasonable effort to understand his responsibilities, would have sought informed advice about the reporting requirements alluded to in Schedule B; seeking such advice would necessarily involve the taxpayer notifying the advisor of the existence of the foreign account.
The court said that Agrawal's arguments that he was elderly, spoke English as a second language, and had an inexpert understanding of tax reporting requirements did not alter its reasonable cause analysis. By his own admission, Agrawal had sufficient mental acuity technical facility with the English language to work as a math teacher and as a geophysicist, and, for that matter, to represent himself in this litigation.

Have Unreported Income From a Foreign Account?

 


Want to Know if the OVDP Program is Right for You?


 
Contact the Tax Lawyers at 
Marini& Associates, P.A.  
 
for a FREE Tax Consultation
or Toll Free at 888-8TaxAid (888) 882-9243
 

 

Read more at: Tax Times blog