Monthly Archives: November 2020

According to AccountingTODAY, during a House Ways and Means Oversight Subcommittee hearing, Rep. Judy Chu, D-California, submitted the AICPA letter for the congressional record and asked Rettig to respond to how its backlog of millions of pieces of mail from the pandemic is still affecting taxpayers who are being sent penalty notices and the tax professionals who are trying to help them without an easy way to get through to the IRS.

“The IRS closed its facilities to protect its workforce for several weeks this spring and I recognize that it created a huge backlog of mail that the IRS is still working through,” she said. “But I’m disturbed that the IRS is continuing levy and lien notices while processing that backlog of mail. Taxpayers and businesses who have in fact filed on time are being penalized because the IRS still has not processed their filings.”

She noted that the AICPA letter from Nov. 5 included some “commonsense options that the IRS can implement to alleviate the financial difficulties for these tens of thousands of taxpayers.”

She asked him why the IRS wasn’t setting up a dedicated way to address these concerns. “Commissioner Rettig, my understanding is that the IRS has not established an expedited phone service for tax professionals to dispute the lien and levy notices that are being sent to taxpayers despite the backlog,” she said. “Do you have a current estimate of how large the mail backlog is could you also provide a rationale for not setting up such a process to date and whether we can have such a process?”

Rettig Responded That The IRS Has “An Aggregate Of About 3 Million Pieces Backlogged, Of Which About A Million Are Tax Returns, Which Is Not Unusual For Us.”

As for the AICPA letter, he pointed out that he worked for 36 years on the outside as a tax attorney before joining the IRS. “I’m in touch with thousands of practitioners on the outside, AICPA as well as others, and what they were asking for was for us to go beyond the first-time abate and beyond reasonable cause for individuals with a comment saying first-time abate for a failure to file, failure to pay, failure to estimate penalty, you get an automatic abatement and one of their comments was, well if somebody already has one of those they don’t get a second one but then they default to reasonable cause,” he said. 

“We have procedures in place. The individuals in the Internal Revenue Service were not merely career employees who looked at this, but more than 10 people who came onboard from private practice with similar experience to mine looked at this as well and were not willing to provide an open forum for people, professionals particularly, who might not be addressing their responsibilities during this. So we took a hard look at that and AICPA is aware, as are other practitioners.”

Have IRS Tax Problems?

 Contact the Tax Lawyers at
Marini & Associates, P.A. 

Read more at: Tax Times blog

On September 11, 2019, we posted IRS Not Agree with Chiropractic Adjustments  - Chiropractor Sentenced to Prison for Tax Evasion, where we discussed that the owner of a chiropractic business was sentenced to Six (6) months in prison for tax evasion after pleading guilty to the charge in June 2019. 

Previous to that we posted on September 26, 2017, Utah Chiropractor Sentenced to Prison for Tax Evasion and Obstructing the IRS, where we discussed that yet another chiropractor, who also owned a health care products business, was sentenced to 33 months in prison for tax evasion and corruptly endeavoring to obstruct the internal revenue laws

And now according to DoJ, a Montana chiropractor and his wife pleaded guilty on November 20, 2020 to tax evasion.

According to court documents and statements made in court, Jonathan Wilhelm, owned and operated Pro Chiropractic PC (Pro Chiro) and Big Sky Spinal Care Center Inc. (Big Sky). From 2013 through 2018, the Wilhelms directed payments to cash and then did not report the cash transactions on Pro Chiro’s and Big Sky’s books and records, which they provided to a return preparer to prepare the businesses’ tax returns. 

The Wilhelms knew that omitting the cashed checks and cash payments resulted in an understatement of taxable income totaling $284,691 for tax years 2013, 2014, 2015, 2017, and 2018. In total, the defendants caused a tax loss to the IRS of $74,486.

U.S. Magistrate Judge Kathleen L. DeSoto (Same Judge as 2019 chiropractor tax evasion case) has scheduled a sentencing for March 12, 2021. 

At sentencing the defendants each face a maximum sentence of five (5) years. The defendants also each face a period of supervised release, restitution, and monetary penalties.

  
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

On July 20, 2020, the U.S. Department of Treasury (Treasury) and the Internal Revenue Service (IRS) issued final regulations on the high-tax exclusion to the global intangible low-taxed income (GILTI) regime (the Final Regulations). The final high-tax exclusion rules allow taxpayers to opt out of the GILTI regime if certain foreign affiliates are already paying at least 18.9% in offshore taxes and allows retroactive relief for all applicable tax years.

GILTI High-Tax Exclusion

The Final Regulations give U.S. persons who own at least 10%, directly or indirectly, of the vote or value of a controlled foreign corporation (CFC) (U.S. Shareholders) the option to opt out of the GILTI regime if such CFC is subject to tax in a foreign country at an effective rate greater than 90% of the maximum U.S. corporate rate (i.e., currently a foreign effective tax rate of 18.9%, based on a U.S. corporate tax rate of 21%). 

The election is effective for the year in which it is made and all subsequent tax years, unless the election is revoked, and can be retroactively applied for tax years beginning after December 31, 2017 and before July 23, 2020. 

The Final Regulations Also Allow For Elections To Be Made On Amended Returns, Though U.S. Shareholders Must Then Also File Amended Tax Returns Within Specific Time Frames.

U.S. Shareholders must apply the GILTI high-tax exclusion consistently, such that an election made by a U.S. Shareholder will generally apply to all 10%-owned CFCs.

A U.S. Shareholder must determine a CFC's effective foreign tax rate for purposes of the exclusion at the CFC level. The effective foreign tax rate is calculated based on the effective foreign tax rate imposed on the aggregate of all items of net tested income of a CFC attributable to a single "tested unit." 

For purposes of the high-tax exclusion, a tested unit includes (i) a CFC; (ii) an interest in certain pass-through entity held, directly or indirectly, by a CFC; or (iii) certain branches whose activities are carried on directly or indirectly by a CFC. Additionally, if a tested unit makes a disregarded payment to another tested unit, the Final Regulations require gross income to be reallocated among the tested units to appropriately associate the income with the tested unit in which it is subject to tax.

Coordination with the Subpart F High-Tax Exception

Under the complementary Subpart F high-tax exception, a controlling U.S. Shareholder of a CFC may elect to exclude an item of the CFC's foreign base company income or insurance income from Subpart F income when the relevant income item is subject to tax in a foreign country at an effective rate of more than 90% of the maximum U.S. corporate rate (i.e., currently a foreign effective tax rate of 18.9%, based on a U.S. corporate tax rate of 21%).

In a separate set of proposed regulations also issued on July 20, 2020 (the Proposed Regulations), the Treasury and the IRS announced their intent to conform the rules implementing the Subpart F high-tax exception to the GILTI high-tax exclusion, and to provide for a single election under Code Section 954(b)(4) for purposes of both regimes. If the Proposed Regulations are finalized, the conformed Subpart F high-tax exclusion rules will be more restrictive than those that currently govern the election.

 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

Read more at: Tax Times blog

The Internal Revenue Service today released the Criminal Investigation Division's annual report, highlighting the agency’s successes and criminal enforcement actions taken in fiscal year 2020, the majority of which occurred during COVID-19. 

A Key Achievement Was The Identification of
Over $10 Billion In Tax Fraud and Other Financial Crimes. 

"The special agents and professional staff who make up Criminal Investigation continue to perform at an incredibly high-level year after year," said IRS Commissioner Chuck Rettig. "Even in the face of a global pandemic, the CI workforce initiated nearly 1,600 investigations and identified $2.3 billion in tax fraud schemes. This is no small feat during a challenging year, and their work is critical to protecting taxpayers and the integrity of our tax system."

Key focuses of CI in fiscal year 2020 included COVID-19 related fraud, cybercrimes, with an emphasis on virtual and cryptocurrencies, traditional tax investigations, international tax enforcement, employment tax, refund fraud and tax-related identity theft.

In response to COVID-19 related crimes, CI special agents quickly adapted their investigative techniques to initiate cases into fraudulent claims for Economic Impact Payments, Paycheck Protection Program loans, and refundable payroll tax credits from the Coronavirus Aid, Relief, and Economic Security Act.

In fiscal year 2020, CI initiated 1,598 cases, applying 73% of its time to tax related investigations. 

• The number of CI special agents increased by one percent, following special agent hiring to offset planned retirements. 
• CI continued increasing its usage of data analytics and strengthening its international partnerships to assist in finding the most impactful cases. 
• One important partnership remained the Joint Chiefs of Global Tax Enforcement (J5); a transnational committee comprised of tax organizations from five countries. In FY 2020 alone, more information was shared regarding cryptocurrency, tax crimes, and related enforcement, than in the previous ten years combined. 
• CI also saw the first guilty pleas for a case under the J5 umbrella. 

The high conviction rate reflects the thoroughness of CI investigations and the high caliber of CI agents. CI is routinely called upon by prosecutors and partner agencies across the country to lead financial investigations on a wide variety of financial crimes.

The 2020 report is interactive, summarizes a wide variety of CI activity during the year and features examples of cases from each field office on a wide range of financial crimes. The federal fiscal year begins Oct. 1 and ends on Sept. 30.

Have a 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 

or Toll Free at 888-8TaxAid

Read more at: Tax Times blog