Yearly Archives: 2021

According to the DoJ, the founder of a Russian bank pleaded guilty on October 1, 2021 to filing a materially false tax return.

“In 2013, when the value of Oleg Tinkov’s investment in his bank’s stock rose to over a billion dollars, Tinkov quickly renounced his U.S. citizenship and then lied to the IRS in a ploy to evade ‘exit taxes’ he knew were due,” said Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division. 

“Today, Tinkov Has Entered A Plea To A Felony And Agreed To Pay More Than $500 Million In Taxes, Interest And Penalties, More Than Double The Amount Of Money He Sought To Escape Paying To The U.S. Treasury Through His Fraudulent Scheme.”

“Oleg Tinkov brazenly violated United States tax law,” said Acting U.S. Attorney Stephanie M. Hinds for the Northern District of California. “No one who enjoys the immense benefits of United States citizenship, as Tinkov did, may avoid the corresponding obligation to support the country he chose. Tax evaders should take notice of the long reach of U.S. law enforcement.”

“Tinkov renounced his U.S. Citizenship shortly after receiving millions of dollars,” said Acting Special Agent in Charge Darrell J. Waldon of the IRS-CI Washington D.C. Field Office. “Despite his knowledge of U.S. tax reporting requirements, he substantially understated his wealth on filings with the IRS. 

According to the plea agreement, Oleg Tinkov, also known as Oleg Tinkoff, was born in Russia and became a naturalized United States citizen in 1996. From that time through 2013, he filed U.S. tax returns. In late 2005 or 2006, Tinkov founded Tinkoff Credit Services (TCS), a Russia-based branchless bank that provides its customers with online financial and banking services. Through a foreign entity, Tinkov indirectly held the majority of TCS shares. 

In October 2013, TCS held an initial public offering (IPO) on the London Stock Exchange and became a multi-billion dollar, publicly traded company. As part of going public, Tinkov sold a small portion of his majority shareholder stake for more than $192 million, and his assets following the IPO had a fair market value of more than $1.1 billion. Three days after the successful IPO, Tinkov went to the U.S. Embassy in Moscow, Russia, to relinquish his U.S. citizenship.

As part of his expatriation, Tinkov was required to file a U.S. Initial and Annual Expatriation Statement. This form requires expatriates with a net worth of $2 million or more to report the constructive sale of their assets worldwide to the IRS as if those assets were sold on the day before expatriation. The taxpayer is then required to report and pay tax on the gain from any such constructive sale.

Tinkov was told of his filing and tax obligations by both the U.S. Embassy in Moscow and his U.S.-based accountant. When asked by his accountant if his net worth was more than $2 million for purposes of filling out the expatriation form, Tinkov lied and told him he did not have assets above $2 million. When his accountant later inquired whether his net worth was under $2 million, rather than answer the question, Tinkov filled out the expatriation form himself falsely, reporting that his net worth was only $300,000. On Feb. 26, 2014, Tinkov filed a false 2013 individual tax return that falsely reported his income as only $205,317. In addition, Tinkov did not report any of the gain from the constructive sale of his property worth more than $1.1 billion, nor did he pay the applicable taxes as required by law. In total, Tinkov caused a tax loss of $248,525,339.

Tinkov was arrested on Feb. 26, 2020, in London, United Kingdom (UK), on these charge. Since that time, he has been contesting extradition on medical grounds. Tinkov has provided to the government and a court in the UK expert medical reports supporting his claim that he is undergoing a UK-based intensive treatment plan for acute myeloid leukemia and graft versus host disease, which has rendered him immunocompromised and unable to safely travel. As part of the plea, Tinkov has agreed to make the expert reports available to the court.

Tinkov’s sentencing hearing is scheduled for Oct. 29 before U.S. District Judge Jon S. Tigar. Under the terms of the plea agreement, Tinkov agrees to pay no less than $506,828,377, which includes the 2013 taxes, the civil fraud penalty, and statutory interest on that tax, totaling $448,957,108 as well as tax liabilities for other years that Tinkov acknowledged he owes. 

Per the terms of the plea agreement, the parties have agreed to recommend a custodial sentence of time served, followed by one year of supervised release, and an additional fine of $250,000. This recommendation binds the court once it accepts the plea agreement.

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Read more at: Tax Times blog

According to Law360, in  Daphne Jeanette Rost, executor of the Estate of John H. Rebold, v. U.S., case number 1:19-cv-00607, in the U.S. District Court for the Western District of Texas the court held that an estate will not recover almost $600,000 in penalties and interest it had paid for failing to report foreign financial accounts after a federal court determined there was no dispute that it had established an entity qualifying as a foreign trust. 

John H. Rebold's estate set up a foundation that clearly was a trust because it did not conduct business and existed for beneficiaries that did not control it, the court ruled in a decision released Monday. The estate offered no facts to rebut the government's argument that it was not a domestic entity, the court added, dismissing the case. 

Rebold traveled to Switzerland in 2005 to establish the foundation, which was formed under Liechtenstein law as an entity known as a Stiftung. He deposited $2 million in 2005 and $1 million in 2007. Rebold failed to report the creation, the transfers or his ownership on his 2005-2007 tax returns. 

The Internal Revenue Service deemed the entity a foreign trust and assessed interest and penalties of $596,830 against Rebold. He paid and filed a refund suit before dying. Both the estate and the government filed for summary judgment. 

The core of the dispute is whether the foundation qualifies as a foreign trust for tax purposes, the court said. Treasury Regulations Sections 301.7701–1 and 301.7701–4(a) state that an entity is a trust if it preserves property for beneficiaries who do not participate in these duties and are not associates in a business.

The foundation meets these criteria, the court said. Its formation documents state its purpose is defraying the costs of Rebold's family. The documents also specifically state the foundation does not conduct business, the court said.

The next question is whether the foundation is a foreign trust, the court said. Federal law defines a foreign trust as any trust that is not domestic, it said. A domestic trust, it said, must meet two tests: It is administered by a U.S. court and controlled by a person in the U.S. The estate failed to present any evidence on these questions, so the court awarded summary judgment for the government.

Received a CP15 Notice and 25% Penalty
For Late Filing Form 3520A?

Received a CP15 Notice and $10,000 Penalty
For Failure To File 3520?

 

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

TIGTA reviewed levies issued for over 2 million taxpayers by IRS Collection functions during the period October 1, 2019, through September 30, 2020, and found that the IRS generally complied with legal and administrative requirements. 

However, There Were Some Instances of Noncompliance In Which An Estimated 1,306 Taxpayers’ Rights Were Potentially Violated And
1,186 Taxpayers Were Potentially Burdened.

TIGTA’s review of levies issuedby the Automated Levy Programsfound:

·         Federal Payment Levy Program – from a population of 1,018,356 taxpayers: 9 taxpayers were not notified of their CDP rights and an estimated 33 taxpayers were levied while a CDP hearing was pending. From a population of 1,944 taxpayers with disqualified employment tax levies and 1,034 taxpayers with Federal contractor levies issuedthrough the FederalPayment Levy Program,36 taxpayers were not notified of their CDP rights and 18 taxpayers were not timely notified of their CDP rights.

·         State Income Tax Levy Program– from a population of 367,293 taxpayers, 28 taxpayers were not notified of their CDP rights and an estimated 1,186 taxpayers were potentially burdened whenthey did not timely receive their post-levy CDP rights. An estimated 34 taxpayers did not receivea new CDP notice after an additional tax assessment was made.

·         Municipal Tax Levy Program – from a population of 423,075 taxpayers, an estimated 528 taxpayers did not receive a new CDP notice after an additional tax assessment was made. An estimated 171 taxpayers were levied while a CDP hearing was pending.

From a population of 180,620 taxpayers levied through the Automated Collection System, TIGTA found that 81 taxpayers were not notified of their CDP rights and 7 taxpayers were not timely notified of their CDP rights. Also, 190 taxpayers did not receive a new CDP notice after an additional tax assessment was made, and 46 taxpayers were levied while a CDP hearing was  pending.

From a population of 35,978 taxpayers levied by revenue officers through the Integrated Collection System, TIGTA found that 50 taxpayers were not notified of their CDP rights and 23 taxpayers were not timely notified of their CDP rights. Also, 18 taxpayers did not receive a new CDP notice after an additional tax assessment was made, and 32 taxpayers were levied while a CDP hearing was pending.

TIGTA made eight recommendations to help improve the proper issuance of levies by the IRS. The IRS agreed with seven recommendations. The IRS disagreed with one recommendation to ensure that post-levy CDP notices are    issued to taxpayers within 30 days of receipt of levy proceeds, but plans to review reports every 60 days to identify accounts for which a post-levy CDP notice was not sent within a reasonable period and promptly address those situations.

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

Read more at: Tax Times blog

According to Procedurally Taxing, he U.S. Supreme Court agreed to hear Boechler v. Commissioner of Internal Revenue, appealed from the Eighth Circuit. 

The Question Presented Is Whether the Time Limit in Section 6330 (D)(1) Is a Jurisdictional Requirement or a
Claim Processing Rule
Subject to the Equitable Tolling?

In Boechler, P.C. v. Commissioner, 2020 U.S. App. LEXIS 23306, on July 24, [2020], the Eighth Circuit aligned itself with the Ninth Circuit in Duggan v. Commissioner, 879 F.3d 1029 (9th Cir. 2018), and held that, even considering recent Supreme Court case law that generally treats filing deadlines as not jurisdictional, the Collection Due Process (CDP) Tax Court filing deadline at section 6330(d)(1) is jurisdictional.  

The majority predicated its holding on an exception that Congress may override the general rule by making a clear statement in the statute that Congress wants the filing deadline to be jurisdictional.  

In ruling that Congress had made a clear enough statement in the CDP provision, the Boechler majority rejected the D.C. Circuit’s opinion in Myers v. Commissioner, 928 F.3d 1025 (D.C. Cir. 2019), holding that the similarly-worded Tax Court filing deadline at section 7623(b)(4) for whistleblower award actions is not jurisdictional.  

A concurring judge in Boechler said she felt bound to agree with the majority because of prior Eighth Circuit precedent, but if she were presented with the issue without that precedent, she would hold the filing deadline not jurisdictional.

The petition for writ of certiorari emphasizes this clear circuit court split and urges the Court to resolve the matter. Boechler further argues:

        Review is also warranted because the Eighth Circuit aligned itself with the wrong side of the split.         This Court has made clear that statutory time limits are quintessential claim-processing rules                    presumptively subject to equitable tolling unless Congress has clearly indicated to the contrary. And         Section 6330(d)(1) is not the “rare statute of limitations that can deprive a court of jurisdiction.”            United States v. Kwai Fun Wong, 575 U.S. 402, 410 (2015).

The petition cites a line of important non-tax cases including Henderson v. Shinseki and Irwin v. Dept. of Veterans Affairs. As Kristin Hickman observed, the case presents yet another issue at the intersection of tax procedure with important administrative law doctrine. Carl Smith deserves credit as the architect of many of the arguments against strict jurisdictional limits in the Code, going back to the 2016 Tax Court loss in Guralnik.

The issue of jurisdictional time periods is undoubtedly important doctrinally, but it is also of great practical importance. Two amicus briefs, both with PT connections, supported the petition for certiorari. The Center for Taxpayer Rights, represented by the Tax Clinic at the Legal Services Center of Harvard, filed an amicus brief emphasizing the judicial resources consumed by the strict policing of jurisdictional time periods. Keith blogged about one recent example here. The Center’s brief also urges the Court to specifically rule on whether the CDP petition filing deadline is subject to equitable tolling, describing common circumstances and compelling cases in which taxpayers lost their right to judicial review. These include case of taxpayers being actively misled by IRS errors, taxpayers suffering misfortunes such as late-delivered and undelivered mail, and taxpayers who file timely in the wrong forum.

The second amicus brief was filed by the Villanova (My Alma Mater) Federal Tax Clinic and the Seton Hall Center for Social Justice Impact Litigation Clinic, represented by pro bono counsel from Skadden Arps. This amicus brief makes two points. First, the clinics argue that treating section 6330(d)(1) as jurisdictional would undermine Congress’s intent in creating Collection Due Process as a check on IRS collection activity. Second, the brief emphasizes the disproportionate harm to low-income taxpayers effected by treating the filing deadline as jurisdictional.

Have an IRS Tax Problem?

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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