Yearly Archives: 2021

According to Law360, a GOP push to counter President Joe Biden's plans to beef up oversight by the IRS has gained traction on Capitol Hill as House Democrats try to rally support for plans to give the agency more funding and enforcement authority.

Several senior Republicans said the party would try to build on a successful campaign by the GOP and stakeholder groups to push back against Biden's stalled plan to require banks to file tax information returns with customer account data. They predicted a strong effort in both congressional chambers in the coming days to oppose proposals in the House reconciliation bill, H.R. 5376, to upgrade Internal Revenue Service funding and expedite the enforcement of tax penalties.

A House floor vote on the measure, known as the Build Back Better Act, is expected to come after the Congressional Budget Office releases an analysis of its impact on the deficit. Some uncommitted centrists have said they plan to examine the pending CBO study and a recent analysis by the congressional Joint Committee on Taxation before deciding whether to seek changes and support the bill.

It has projected that a $78.9 billion package of IRS funding in the bill would generate at least $400 billion in additional revenue to help finance Biden's priorities. The bill also includes a corporate minimum tax and other levies aimed at wealthy individuals, and it would help to finance green energy incentives and extensions of several temporarily expanded family incentives in the American Rescue Plan Act. 

But the additional revenue produced by the proposed expansion of IRS enforcement remains in dispute. Earlier this year, a CBO study found the IRS funding upgrade would produce $200 billion in revenue over 10 years, half the administration's current estimate. In a blog post in September, Phillip Swagel, director of the CBO, said the office's projection was based on an IRS estimate that every dollar invested in enforcement would produce a maximum return on investment ranging from $5 to $9.

However, a U.S. Department of the Treasury official said the package of IRS funding actually could raise more than $400 billion.

As Democrats lay the groundwork for a possible House floor vote, Republicans have questioned the need for more IRS funding and argued the return on investment for the upgrade would be less than expected.

Rep. Kevin Brady, R-Texas, ranking member on the Ways and Means Committee, said he planned to focus on the potential for ordinary taxpayers to experience the negative effects of an expansion of IRS enforcement, with or without a new mandate for bank tax information reporting. The House bill provides that none of the IRS funding would be used to raise taxes on those earning less than $400,000, but it sets few other restrictions on the deployment of resources.

Rep. Drew Ferguson, R-Ga., the GOP's chief deputy whip and a member of the Ways and Means Committee, said Republicans hoped to work in tandem with centrist Democrats to push back against proposals to expand IRS funding and enforcement authority. He has promoted a plan, H.R. 5586, to bar Treasury from requiring banks to report on cash transfers in and out of customer accounts.

Whether that proposal advances or not, Neal said he was confident a major upgrade in IRS funding would make it into a final bicameral deal on the reconciliation bill. 

Have an IRS Tax Problem?

     Contact the Tax Lawyers at

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

According to Law360,  Florida man must repatriate roughly $18.2 million held in his overseas bank accounts to pay a court judgment finding he failed to disclose his Swiss accounts to the Internal Revenue Service, a federal judge said.

A federal magistrate judge correctly decided that Isac Schwarzbaum must repatriate funds in his overseas accounts to satisfy the judgment for his failure to timely file his reports of foreign bank and financial accounts with the IRS, U.S. District Judge Beth Bloom said in an order Monday.

Judge Bloom rejected Schwarzbaum's arguments that the government's request for a repatriation order represented an improper workaround of the Federal Debt Collection Procedures Act. A repatriation order instead complies with the FDCPA, which provides rules the government must follow when collecting pre- and post-judgment debts, according to the order.

"The Government's Request That The Court Issue An Order Directing Schwarzbaum To Bring Sufficient Funds To The United States To Satisfy The Judgment Is Not Misplaced,"
Judge Bloom Said.

Schwarzbaum's assertions that the FDCPA doesn't apply to his funds because they were never in the U.S. are also unconvincing, Judge Bloom said.

The order Monday adopted recommendations from Magistrate Judge Bruce Reinhart, who said on June 30 that the court has personal jurisdiction over Schwarzbaum, a dual U.S.-German citizen, and can force him to repatriate the funds.

In August, the federal court found that Schwarzbaum willingly failed to report his foreign bank accounts from 2007 through 2009 and was consequently liable for penalties and interest. That amount has since increased to more than $18 million, including civil penalties, late payment penalties and prejudgment interest, according to court filings. Schwarzbaum has appealed that ruling to the Eleventh Circuit.

The government has contended that he has more than $49 million in assets in his overseas accounts that can be used to satisfy some of his debts to the U.S. Schwarzbaum, meanwhile, argued in a filing in July that the government's request for a repatriation order constituted an unauthorized get-around of the FDCPA.

He also said that the government should be relying on the FDCPA's garnishment provision and not the All Writs Act, which the government cited as justification for its repatriation request.

But Judge Bloom said Monday that the FDCPA incorporates the All Writs Act, giving the "courts the authority to take the necessary steps to aid their jurisdiction or to protect their judgments." The court is consequently not using the All Writs Act to improperly supersede the FDCPA as Schwarzbaum has contended, according to the order. 

Moreover, the applicable precedent supports the court's authority to order Schwarzbaum to repatriate the funds, the judge said.

Judge Bloom also noted that Schwarzbaum is allowed to request a pause on the execution of the judgment, pending his Eleventh Circuit appeal. 

Do You Have Undeclared Offshore Income?

 

Want to Know Which
Voluntary Disclosure Program
is Right for You? 

Contact the Tax Lawyers at 

Marini & Associates, P.A.   

for a FREE Tax Consultation 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

On September 1, 2021 we posted IRS CONTINUES to Criminally Prosecutes Employers For Failure To Pay Withheld Payroll Taxes - As Promised! where we discussed that we posted The IRS is Now Criminally Prosecuting Employers For Failure To Pay Withheld Payroll Taxes! where we discussed that the IRS is stepping up criminally prosecuting business owners for failing to turn over withheld payroll taxes and unlisted several other criminal prosecutions for failing to pay to the IRS withheld payroll taxes. 

Now according to the DoJ, a West Virginia woman pleaded guilty on November 4, 2021 to willfully failing to pay over to the IRS employment taxes withheld from employees’ wages.

According to court documents and statements made in court, Diann Clark was an office manager and bookkeeper at Alpha Associates, an architectural firm in Morgantown where she managed payroll between 2014 and 2018. 

Clark was responsible for collecting and paying over to the IRS Social Security, Medicare and income taxes withheld from the wages of Alpha Associates employees. 

Clark is scheduled to be sentenced at a later date. She faces a statutory maximum sentence of five years in prison, as well as a period of supervised release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors. 

  Thinking of Borrowing From Your Company's
Payroll Tax Withholdings?

You Better Thank Again, if You Like Your Freedom!

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

The Internal Revenue Service today posted detailed reporting directions for certain passthrough entities and taxpayers reporting of partnership interests held in connection with the performance of services, often referred to as “carried interests”, in the form of frequently asked questions (FAQs).

Section 1061 was added to the Internal Revenue Code as part of the Tax Cuts and Jobs Act (TCJA). For taxable years beginning after December 31, 2017, section 1061 recharacterizes certain net long-term capital gains of a partner that holds one or more applicable partnership interests as short-term capital gains. The provision generally requires that a capital asset be held for more than three years for capital gain allocated with respect to any applicable partnership interest (API) to be treated as long-term capital gain. Proposed regulations (REG-107213-18) were published in the Federal Register on August 14, 2020. Final regulations (TD 9945) were published in the Federal Register on January 19, 2021. Owner Taxpayers and Passthrough Entities may rely on the proposed regulations for taxable years beginning before January 19, 2021 (the date final regulations were published in the Federal Register), provided they follow the proposed regulations in their entirety and in a consistent manner. An Owner Taxpayer or a Passthrough Entity may choose to apply the final regulations to a taxable year beginning after December 31, 2017, provided that it consistently applies the final section 1061 regulations in their entirety to that year and all subsequent years. 

Owner Taxpayers and Passthrough Entities must apply the final regulations to taxable years beginning on or after January 19, 2021 (the date final regulations were published in the Federal Register).

The FAQs contain sample worksheets that certain passthrough entities and taxpayers may be required to use in reporting “carried interests,” partnership interests held in connection with the performance of services for tax returns, filed after Dec. 31, 2021 in which a passthrough entity applies the final regulations.

In addition, the FAQs contain additional instructions for certain passthrough entities and taxpayers who though not required to file the sample worksheets must provide similar information and must disclose whether the information was determined under the proposed regulations or another method for tax returns filed after Dec. 31, 2021 for a taxable year beginning before Jan. 19, 2021.

A 2017 tax law change recharacterized certain net long-term capital gains of a partnership that holds one or more applicable partnership interest (APIs) as short-term capital gains. The provision generally requires that a capital asset be held for more than three years for capital gains allocated with respect to any API to be treated as a long-term capital gain.

The purpose of the FAQs is to provide guidance relating to both Passthrough Entity filing and reporting requirements and Owner Taxpayer filing requirements in accordance with Department of the Treasury regulations revised in TD 9945 (.pdf).

This updated reporting guidance will also be added to the next revision of Publication 541-Partnerships, which will be released in 2022.

Have an IRS Tax Problem?

     Contact the Tax Lawyers at

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