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Monthly Archives: September 2020

IRS Clamping Down on Financial Crimes According to 2019 Annual Report To Address Nearly $10 Billion In Tax Fraud in 2018!

In its IRS Criminal Investigation Annual Report for 2019 the IRS Criminal Investigation division found nearly $10 billion in tax fraud in fiscal year 2018, four times more than last year thanks to its focus on using data analytics. 

The unit identified $9.7 billion in tax fraud in 2018, up from $2.5 billion in 2017. The team also found $10.4 billion in other financial crimes, a steep hike from the $1.1 billion identified in fiscal year 2017. 

Bloomberg BNA  reports that Don Fort, chief of the Criminal Investigation division, said in a statement “We prioritized the use of data in our investigations in fiscal 2018.” “The future for CI must involve leveraging the vast amount of data we have to help drive case selection and make us more efficient in the critical work that we do. Data analytics is a powerful tool for identifying areas of tax non-compliance.” 

The number of special agents working on the CI team fell below 2,100 by the end of the unit’s 2018 fiscal year because of retirements and hiring freezes, leading CI to look at everything from bank records to the dark web to help investigate cases, according to the statement. 

The figures are also a testament to the Department of Justice’s crackdown on U.S. taxpayers hiding money in Swiss banks, because a “huge amount of money” is now entering the system, said Neiman, who worked at the DOJ’s tax and criminal divisions and in investigations into Switzerland’s largest bank, UBS Group AG. 

But the combined $20 million discovered in fiscal 2018 is “just the tip of the iceberg,” according to Betty J. Williams, managing shareholder of Law Office of Williams & Associates, P.C. in Sacramento, Calif. 

“Just As Quickly as Criminals Become More Crafty in the Way They Commit Crimes, The Criminal Investigation Division is Trying To Keep Up With How To Detect Those Crimes.
And While They’re Catching More Criminals,
There Are More Criminals To Catch,” said Williams

The evolution of financial crime mirrors the evolution of money movement in general, said CI Chief, Don Fort. Criminals stay current with the trends and adopt their methods to match the public’s tendencies. 

The Speed At Which Money Moves Today Is Almost Instantaneous And The Convenience That Comes With That Opens The Door For Criminals To Exploit The Latest Technological Advancements. 

Years ago, we had time on our side and we could allow things to play out without losing a trace of a criminal or their proceeds. Now, money disappears in the blink of an eye. 

All that is needed is a smartphone to move money from one location to another, anywhere in the world. The internet and the dark web have facilitated this change and law enforcement has had to make adjustments to keep up. 

CI has made significant investments in training our new employees and experienced employees and this investment is unmatched within the IRS. We instituted Master Your Craft training for special agents while introducing new specialized training for our professional staff as well. You can expect these investments to continue.

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

Read more at: Tax Times blog

The Deceptive Simplicity of Form 706 NA

For those of you whose practice involves international tax, I would like to take this opportunity to explain the deceptive simplicity of the form 706 NA.

You must have a client who is a nonresident alien who dies. He/she owns US situs assets so you look at section 2014 of the Internal Revenue Code; you correctly determine that since these assets exceed $60,000 in value, the estate is required to file a form 706NA which is the form analogous to a 706 in the hands of a nonresident alien. The form itself is deceptively simple-two pages-what kind of problems can this create? Once you start reading the form, you realize that to complete it properly, you may have to incorporate almost every schedule which appears in a 706. 

The deceptive part of the form occurs when you are trying to determine which of decedent’s US assets (based on section 2014) are taxable by the United States.
The United States has more than 20 tax treaties or conventions with foreign countries designed, for the most part, to eliminate double taxation. It is critically important for you, the preparer, to determine which, if any, treaties may exist to reduce the tax liability of your client.
The IRS, on its website, has a list of the countries which currently  share estate tax treaties/conventions with the United States. Even this provides only a partial clue.
Example- You have a client who was a German who lived in Brazil. Since the decedent was a German citizen,  you make the assumption that treaty benefits will be available to his/her estate. Not always so. Some of the treaties base their benefits on decedents who are domiciliaries of but not necessarily citizens of a particular country. Ergo, you learn that the estate of the German client domiciled in Brazil cannot utilize the benefit of the German treaty.
Additionally, since some treaties are predicated on domicile while others are predicated on both domicile and citizenship, you may find yourself in an anomalous situation where you have more than one treaty you can elect to apply. In this particular case, use the treaty which best suits your client.
As a rule, the 20 or so treaties are generally address estates of decedents who were citizens of Europe, England or Canada. There are no treaties with South or Central America or Africa. Remember, however, that some treaties are based on citizenship, not domicile. Therefore the estate of an English citizen domiciled in Sudan could benefit by the UK tax convention.


The benefits as well as the applications of the treaties very widely. This is a result of the fact that these treaties were negotiated over various periods of years from the 1950s to the year 2000. The treaties themselves must be read carefully. They are, for the most part, extremely poorly drafted and difficult to fathom. In the case of confusion, look up the meaning of what the treaty means in a publication called the technical explanations of treaties which are a little bit better written but still no works  of Shakespeare. Remember, if you fail to utilize an existing treaty and it costs your client a significant amount of money, you may become involved with your insurance carrier. For those of us who are attorneys, remember the hornbook, Prosser On Torts.  As I recall, and it's been a while, the first topic addressed is “negligence, the basis of liability”. If you fail to find and utilize an existing treaty, you are negligent and potentially headed for big trouble.


Some of you feel that the IRS will find incorrect your failure to utilize an estate tax treaty. Not so. First of all, not all estate tax returns are selected for examination, so if the return you filed failing to utilize a treaty is not examined, there is no way that treaty benefits will inure your to your client's estate.  Second, even if the estate is examined, it is not the job of the auditing attorney to tell you that you failed to utilize a treaty. Utilization of a treaty is not mandatory. Therefore, if you file the 706NA utilizing the situs rules of section 2014, the IRS agent will merely agree with your situs depiction and not discuss the availability of the treaty.  

If you feel that you are able to utilize one of the existing treaties, you are required to use a form 8833. In this form you explain which treaty you are using, why you feel it is applicable to your particular situation, and determine the treaty benefits of utilizing the treaty. 

Over my 32 years as a senior attorney with the IRS in the international estate tax forum, I audited perhaps 1,800 to 2,000 706 NA's. Utilization of the treaty benefit was not frequent, and I recall situations where some estates could have benefited to the tune of roughly $1 million in tax savings.  

Need Help Preparing Form 706 NA?



Estate Tax Problems Require 

an Experienced Estate Tax Attorneys

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

Read more at: Tax Times blog

LB&I Adds Four Compliance Campaigns To 57 Active Campaign List

The IRS Large Business and International (LB&I) division has added four new compliance campaigns to its active campaigns list of 57 campaigns in total.

In 2017, LB&I announced the identification and selection of 13 initial compliance campaigns. With the new compliance campaigns, LB&I essentially shifted to examinations based on compliance issues that LB&I determined presented greater levels of compliance risk, thereby improving return selection. Since the initial 13 campaign announcement, LB&I has added additional campaigns.

The IRS has announced the following new campaigns:

  1. Allocation of success-based fees. Success-based fees paid in transactions under Treas. Reg. § 1.263(a)-5(a) are presumed facilitative and must be capitalized. These fees may instead be allocated to non-facilitative activities, and currently deducted, if the taxpayer meets the documentation requirements under Treas. Reg. § 1.263(a)-5(f). Rev. Proc. 2011-29 allows a safe harbor election for allocating success-based fees paid in covered transactions under Treas. Reg. § 1.263(a)-5(e)(3) without meeting the above documentation requirements so long as 70% of these fees are allocated as non-facilitative and 30% are allocated as facilitative. The goal of this campaign is to ensure taxpayer compliance with current law.
  2. FIRPTA reporting compliance for NRAs. FIRPTA taxes foreign persons on the disposition of their U.S. real property interests.  Generally the buyer/transferee is the withholding agent and is required to withhold 15% of the amount realized on the sale, file the required forms, and remit the tax to IRS. This campaign is intended to increase FIRPTA voluntary compliance through issue based examinations and external education and outreach.
  3. Computation of life insurance reserves under Sec. 807(d)Section 13517 of the Tax Cuts and Jobs Act (TCJA) amended Internal Revenue Code (IRC) section 807(d) to provide a new method for computing life insurance reserves, effective for tax years beginning after December 31, 2017. IRC section 807(d)(1) provides generally that, for purposes of determining life insurance company taxable income, the amount of the life insurance reserves for any contract (other than a contract to which IRC section 807(d)(1)(B) applies (relating to variable contracts)), is the greater of the net surrender value of such contract or 92.81 percent of the reserve determined under IRC section 807(d)(2), subject to the statutory cap as provided in IRC section 807(d)(1)(C).
  4. Re-computation of life insurance reserves. Internal Revenue Code (IRC) section 807(d) sets forth rules for computing the amount of life insurance reserves. Under prior law, the interest rate used in this computation is the greater of: (i) the applicable federal interest rate (AFIR) (as prescribed under IRC section 846(c)(2)); or (ii) the prevailing State assumed interest rate (PSAIR) (as defined in IRC section 807(d)(4)(B)). See former IRC section 807(d)(2)(B). However, a taxpayer could elect to recompute, every five years, the AFIR used in this computation of life insurance reserves. See former IRC section 807(d)(4)(A)(ii).

As an IRS Tax Defense Law Firm, outside of:

  1. Form3520/3520-A Compliance and Penalties,
  2. Micro-Captive Insurance Campaign,
  3. Post OVDP Compliance
  4. Swiss Bank Program Campaign
  5. Syndicated Conservation Easement Transactions
we have not seen nor heard of any action in the remaining 52 listed campaign areas?
Have an 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
Toll Free at 888 8TAXAID (888-882-9243) 

Read more at: Tax Times blog

TIGTA Notifies IRS That They Must Improve in the Issuance of Levies and Due Process Notices

Treasury Inspector General for Tax Administration (TIGTA) reviewed the levies issued to taxpayers by the different functions within the IRS Collection organization during the period October 1, 2018, through September 30, 2019, found a number of problems associated with IRS levies issued by the Automated Collection System (ACS). 

The TIGTA review found that of the 194,498 taxpayers that received these levies, 145 taxpayers were not timely informed of their Collection Due Process (CDP) rights. The review said, "When an additional amount is assessed to a delinquent account of a taxpayer, an additional CDP notice must be issued to the taxpayer," the audit said. However, out of the 84,513 taxpayers that received additional assessments prior to the ACS levy, four (4) taxpayers did not receive a new CDP notice. IRS also must suspend collection action during the CDP hearing process, TIGTA said.

"However, Of The 194,498 Taxpayers That Received
ACS Levies, TIGTA Identified Three (3) Taxpayers With Levies Issued While A CDP Hearing Was Pending," The Audit Said.

According to the audit, revenue officers issued 58,546 levies utilizing the Integrated Collection System (ICS).

From this population, TIGTA identified: 

  1. 25 taxpayers that were not notified of the CDP rights; 
  2. 24 taxpayers that were not timely notified of their CDP rights; and 
  3. 25 taxpayers that were not notified of their CDP rights when the CDP notice transaction code was incorrectly reversed. 
  4. In addition, out of almost 17,000 taxpayers that received additional tax assessments prior to the levy, audits identified 51 taxpayers that did not receive a new CDP notice subsequent to the time the additional assessment was made.

Finally, "TIGTA also identified 40 taxpayers out of 58,546 that received ICS levies while a CDP hearing was pending in violation of the law," the audit said. Of the seven recommendations made by TIGTA, IRS agreed with six and said it will take alternative corrective action related to the remaining recommendation. 

Have 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
Toll Free at 888 8TAXAID (888-882-9243) 

Read more at: Tax Times blog

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