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Monthly Archives: November 2022

No Equitable Tolling, As In Boechler, For Jurisdictional 90-Day Filing Deadline

According to Law360The U.S. Tax Court can't consider a California company's day-late challenge to an IRS bill, the court ruled on November 29, 2022, despite a recent U.S. Supreme Court decision in Boechler concluding that a different tax code deadline was not jurisdictional and didn't necessarily bar late cases.

Hallmark Research Collective's suit challenging the deficiency notice from the Internal Revenue Service is barred by the 90-day deadline for such cases under Internal Revenue Code Section 6213(a), the Tax Court's 17 judges said in a unanimous opinion

In coming to its conclusion, the court said the deadline is not analogous to a different tax code deadline that the Supreme Court determined was not jurisdictional in the case Boechler PC v. Commissioner of Internal RevenueHallmark had asked the court to reconsider its initial dismissal of the case.

The Tax Court Said The Actual Text, Placement And
History Of Section 6213(A) Indicate That Congress
Intended For The Deadline To Be Jurisdictional.

That Congress has made several amendments to the statute to give taxpayers more flexibility to meet the deadline shows it knew the Tax Court didn't have the authority to give deadline relief itself, the court added.

Hallmark filed its 2015 return late and failed to file its return for 2016, after which the IRS prepared a return on its behalf and sent a deficiency notice outlining taxes, penalties and additions to tax owed for both years, according to the Tax Court's opinion. The company filed its Tax Court petition challenging the deficiency notice one day late in September 2021, after which the Tax Court dismissed its case, finding it lacked jurisdiction because of the untimely petition, according to the opinion.

But the Supreme Court issued its opinion in law firm Boechler PC's case just a few weeks after the Tax Court dismissed the Hallmark case. In their opinion from April, the justices said that statutory filing deadlines must be clearly stated as jurisdictional in order for them to be construed as such.

IRC Section 6330(d)(1)'s filing deadline, the one in dispute in Boechler, doesn't clearly connect to the authority given to the Tax Court to consider collection due process cases, the Supreme Court found. That meant that the Tax Court had the authority to consider the day-late case filed by Boechler, according to the high court.

Hallmark then asked the Tax Court to reconsider dismissing its Section 6213 case, arguing that the Supreme Court's reasoning was applicable to the dispute over the deficiency statute. But the Tax Court found on November 29, 2022 that Section 6213 does clearly predicate the court's jurisdiction on timely filings of deficiency cases, using the same "clear statement" rule that the Supreme Court used in the Boechler case, according to the opinion.

The 90-day deadline requirement being placed in the jurisdictional portion of Section 6213 supports the Tax Court's conclusion that the deadline is meant to be a time bar, the court said. The actual language of the statute also supports this conclusion, as does the fact that Congress has repeatedly amended the statute to accommodate some extenuating circumstances that could inhibit compliance with the deadline, according to the opinion.

"Congress recognized that the Tax Court does not have the power to extend the jurisdictional deadline imposed by Section 6213," the court said. "Thus, Congress, in the course of its amendments, has treated the deadline of Section 6213(a) (and its predecessor statutes) as a jurisdictional deadline that the Tax Court cannot alter or toll."

Have an IRS Tax Problem?

     Contact the Tax Lawyers at

Marini & Associates, P.A. 

for a FREE Tax HELP Contact us at:
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Toll Free at 888 8TAXAID (888-882-9243)

Read more at: Tax Times blog

Another Criminal Prosecution For Willfully Failing to Pay Employment Taxes

A Miami business owner pleaded guilty on November 29, 2022 to willfully failing to pay over employment taxes to the IRS. A sentencing date will be set by U.S. District Judge K. Michael Moore.

According to court documents and statements made in court, Ari Weingrad owned and operated two car rental companies, Rent Max Miami, Inc. and Rent Max North, Inc., both of which had locations throughout Florida. 

As the sole owner and CEO of Rent Max Miami, and as the co-owner and president of Rent Max North, Weingrad knew he was responsible for collecting, accounting for and paying over payroll taxes withheld from his employees’ wages to the IRS. 

Between 2011 and 2016, Weingrad withheld from his employees but did not pay over more than $850,000 in employment taxes owed to the IRS. Instead, he caused Rent Max Miami to spend corporate funds to pay discretionary expenses, including a $50,000 cashier’s check to himself, a $45,000 in cashier’s checks payable to his wife, and expenses related to a 55-foot yacht.

Weingrad faces a maximum penalty of five (5) years in prison for willful failure to pay over employment taxes. He also faces, 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 Not Paying Your Taxes?

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US Man Living In Shanghai Owes $2.3M In FBAR After Dropping Out of His OVDP

According to Law360, an American living in Shanghai owes the Internal Revenue Service $2.3 million after failing to report at least a dozen foreign bank accounts on his 2010 tax forms, the U.S. government told a federal court in a complaint in U.S. v. William A. Chen, case number 1:22-cv-03562, in the U.S. District Court for the District of Columbia.

William A. Chen opened the bank accounts in China during 2005 when he planned to relocate from the U.S., the government said in a complaint filed Nov. 22. He failed to disclose their existence and any interest earned on them, according to the government.

Chen opened the accounts at HSBCStandard Chartered BankDeutsche BankIndustrial and Commercial Bank of China, Shanghai Pudong Development Bank, Morgan Stanley and Bank of China, the government said in its complaint. He moved to Shanghai in 2006 and currently lives in the city, according to the government.

Chen hired PwC to prepare his 2006 and 2007 tax forms but had checked "no" on Form 1040's Schedule B question asking if he had any foreign accounts, according to the government.

Chen began filing Report of Foreign Bank and Financial Accounts in 2008, the government said, but did not fully disclose his accounts in 2008 or in 2010, the U.S. said. The 2010 failure involved 12 foreign accounts held with HSBC, Standard Chartered Bank and Deutsche Bank, the government said. The aggregate highest balance of the accounts totaled $5.7 million, according to the government.

Chen entered the 2014 Offshore Voluntary Disclosure Program in 2015 but dropped out in 2018. The penalties and interest against him total $2.3 million, the government said.

Have an FBAR Penalty Problem?  

 Contact the Tax Lawyers at 
Marini& Associates, P.A. 
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Toll Free at 888-8TaxAid (888) 882-9243

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Diamond Dealer Did Not Make the Cut and Agrees To Pay $1.3M In FBAR Penalties

According to Law360A diamond dealer agreed Thursday to pay $1.3 million as part of a consent judgment in New Jersey federal court settling allegations that he failed to report his overseas bank accounts.

Favi Cahan of Toms River, New Jersey, agreed that he willfully failed to file Reports of Foreign Bank and Financial Accounts from 2005 to 2008, according to the decision entered by the U.S. District Court for the District of New Jersey. The U.S. had accused him of owing $1.5 million in penalties and interest.

Cahan became a permanent U.S. resident around 1990, according to court documents. The U.S. claims Cahan traveled to Switzerland in 1997 and opened a bank account at UBS, declaring himself the beneficial owner of assets deposited.

Simultaneously, Cahan granted a brother, Jehuda Cahan, power of attorney over the account, and gave a Swiss asset manager named Felix Kramer full discretion to invest the funds, the U.S. said. By the end of 1997, the U.S. said, the account's balance was about $2.1 million.

From 2005 to 2008, Favi Cahan directed 19 transfers from his UBS account, drawing down the balance from about $1.9 million at the beginning of 2005 to about $1 million in 2008, the U.S. said.

The IRS assessed civil penalties against him in 2020 for $425,000 for each year from 2005 through 2007 and $100,000 for 2008, for a total of $1.375 million. By March 2022, he had accrued interest on his unpaid liabilities and incurred other additions such that his outstanding debt had grown to more than $1.5 million, the government said.

Favi Cahan describes himself as "a scion of the Cahan family — Belgian diamond dealers of renown,'' who distinguished himself "as an aficionado in the influential Antwerp Diamond Bourse'' on FaviCahan.com, which redirects to the website for FCD Corp., a jeweler in Manhattan's Diamond District.

A section on FCD's website said Favi Cahan was a senior executive at Israeli diamond wholesaler LID before he moved to New York City in 1990 and "transferred his passion and talents to 47th Street," joining "the prestigious Diamond Dealers Club."

Have an IRS Tax Problem?

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 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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