Monthly Archives: September 2022

According to Law360, a Florida man's estate is liable for fraud penalties after the U.S. Tax Court found on September 14, 2022 that he failed to disclose over $1 million to the IRS, used foreign bank accounts to conceal funds and filed false tax forms.

The estate of Brett L. Clemons Sr. owes fraud penalties under Internal Revenue Code Section 6663, the Tax Court said in a memorandum opinion, finding he tried to swindle the Internal Revenue Service from 2003 through 2009 by failing to report income and filed misleading documents with the agency. The court largely affirmed the assessments the IRS made against Clemons, which included nearly $455,000 in taxes, according to the opinion.

That he failed to work with the IRS while it examined his taxes and relied on foreign bank accounts also indicates that he intended to commit fraud, the court said.

"Mr. Clemons' choice to open Swiss bank accounts with secretive features provides ample evidence of concealment," the opinion said.

Clemons died in 2021 after the Tax Court held a trial in his case. The IRS had assessed taxes against him for 2003 through 2009 based mostly on undisclosed income the agency had determined based on deposits in his bank account, according to the opinion.

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

 

Read more at: Tax Times blog

According to  Law360, the Eleventh Circuit reversed a U.S. Tax Court decision determining the Internal Revenue Service couldn't impose penalties on a man's $25 million in transfers, saying Tuesday that a supervisor wasn't required to approve the penalties until they were assessed.

The requirement that penalties are approved in writing by IRS supervisors under Internal Revenue Code Section 6751(b) doesn't apply to those early communications, the appeals court found. It instead applies to the actual assessment, meaning the penalty was properly approved by an agency supervisor in a second letter that followed the initial communication of the penalties to Burt Kroner, according to the opinion. 

"The statute prohibits assessing a penalty unless a condition has been met, supervisory approval of the initial determination of assessment," the opinion said. "But the statute regulates assessments; it does not regulate communications to the taxpayer."

"Because The IRS Did Not Assess Kroner's
Penalties Without A Supervisor Approving
An 'Initial Determination of Such Assessment,'
We Hold That The IRS Has Not Violated
Section 6751(B)," It Added.

The Tax Court found in June 2020 that Kroner couldn't treat $24.8 million in transfers from a British business partner as gifts for tax purposes. It determined that Kroner's story advocating for treating the funds as gifts wasn't credible, and they're better considered income, according to the opinion.

But the Tax Court found that a Letter 915 — a 30-day letter the IRS sends out that proposes tax adjustments and penalties — constituted an initial determination under Section 6751(b). Since that letter was sent in August 2012, before an IRS supervisor signed off on the penalties in October 2012, the penalties can't stand, the court said.

In its opinion Tuesday, the Eleventh Circuit said the Tax Court's interpretation didn't pass muster based on the text of the statute. Communications to taxpayers and actual tax assessments are distinct from each other, and Section 6751(b) doesn't address communications, according to the opinion.

The Ninth Circuit has also determined that Section 6751(b) doesn't require initial IRS determinations of penalties to be approved by IRS supervisors, but instead requires actual assessments to be authorized with a manager's signature.

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

Read more at: Tax Times blog

According to Law360, a New York City couple asked the Second Circuit to scrap a U.S. Tax Court decision holding them liable for more than $800,000 in taxes and penalties, saying their signatures were forged on documents used to hold them accountable.

Om and Anjali Soni told the appeals court that $158,000 in penalties and fines for their 2004 tax return would have been barred by the Internal Revenue Service's statute of limitations if not for documents forged by their accountant giving the IRS extensions to assess taxes, according to a brief filed on August 29, 2022.

Further, they argued, the Tax Court wrongly approved a $643,000 tax deficiency on their 2004 joint tax return when it ruled that even though Anjali Soni didn't sign the return, she was bound by the doctrine of "tacit consent," which confirms the validity of a joint tax return signed by only one spouse in certain situations.

The Tax Court ruled against the Sonis in January, deciding they were liable for an income deficiency of $643,000 for 2004, plus a $29,000 late fee and a $129,000 penalty for underreporting income.

The couple claimed the deficiency stemmed from using tax preparers who wrongly advised them to claim a $1.7 million loss on an investment, eradicating any 2004 tax liability, according to the brief. However, they claim the deficiency is moot because while the return shows the couple's signatures, neither Om nor Anjali Soni signed for Anjali, and they don't know who did, according to the brief.

The couple said the new accountant they used after the IRS began investigating their return did prison time after pleading guilty in 2016 to other forgery and fraud charges, according to the brief. 

During the couple's Tax Court trial in 2019, the accountant admitted to signing the couple's names to a document giving him power of attorney in 2008, and signing ensuing documents over the next decade giving the IRS more time to assess taxes on the Sonis, without telling the couple, "for expediency's sake," according to the brief.

The accountant said he was acting as a friend of the Sonis because he had been the accountant on the $1.7 million investment deal that drew the attention of the IRS, according to the brief.

In addition to the power of attorney document, the accountant signed nine 872 forms consenting to give the IRS more time to assess tax, according to the brief. 

They said the Tax Court was wrong to find that they had given their accountant "implied" authority and that their subsequent actions treating the accountant as their representative throughout the IRS appeals and litigation process essentially "ratified" the documents.

J. Mark Lane of Lane Crowell LLP, who represents the Sonis, told Law360 he found it unbelievable that the IRS won the case at trial.

"If you read the transcript of the trial in this case, I think you'll see that there was insufficient evidence to support the Tax Court's decision," Lane said. "All of the evidence essentially went the other way."

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

Read more at: Tax Times blog

A domestic corporation cannot pay its transition tax liabilities in installments because it had a tax deficiency due to negligence or intentional disregard of federal regulations, the Internal Revenue Service Office of Chief Counsel said on Friday, September 2, 2022.

The IRS said in Chief Counsel Memorandum 202235009 that the corporation, which was not named, was not entitled to elect to pay the transition tax in installments because the company's return did not reflect the final transition tax regulations, resulting in a deficiency assessed by the IRS. 

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

Read more at: Tax Times blog