Fluent in English, Spanish & Italian | 888-882-9243

call us toll free: 888-8TAXAID

Yearly Archives: 2022

IRS Sues Widow as PR in Federal Court for Husbands $2.3M FBAR Penalty

September 6, 2022

According to Law360, An Idaho widow faces $2.3 million in penalties and interest stemming from her husband's failure to report his foreign bank accounts to the Internal Revenue Service, the U.S. alleged in a complaint filed in federal court.

Patricia Leeds is the surviving spouse of Richard Leeds, who willfully neglected to report his two Swiss bank accounts from 2006 to 2012, the U.S. said in its its complaint, filed on August 30, 2022. She is named as a defendant in her capacity as a potential successor or personal representative to her deceased husband's estate, the U.S. said.

Richard Leeds opened one account with EFG Bank in 1980, the U.S. said in its complaint, and withdrew just over $157,000 from the account between 2006 and 2009. He initially denied to the IRS that he made the withdrawals, which is evidence that he knew he had an obligation to report them, the government said.

Richard Leeds closed the account and transferred the funds in 2009 to a second EFG account, which he had opened in 1997 and put under the name Asian Group for International Studies and Training, a foreign corporation he created in Turks and Caicos in 1997, the government said. Richard Leeds was the beneficial owner, the "director" and the "president/secretary" of the corporation, the U.S. said. He asked EFG to hold correspondence about the account at the bank, the U.S. said.

Cash withdrawals from the second account totaled almost $485,000 from 2006 to 2012, the U.S. alleged. As with the first account, Richard Leeds denied withdrawing the money, it said. He closed the account in 2012 and transferred the funds, $2.5 million, to a domestic account, the government said.

Richard Leeds did not disclose his accounts to an accountant hired for preparing his tax returns, the U.S. said. He admitted to a foreign source of income but did not take the accountant's advice to consult a tax attorney, it said.

The IRS Accepted Richard Leeds Into Its Offshore Voluntary Disclosure Program In 2014, The U.S. Said. He Filed Reports For The Accounts But Opted Out Of The Program In 2018, It Said.

The IRS started an examination and assessed penalties of $1.5 million against him in 2018. The amount has grown to $2.3 million as of Aug. 15, it said. Richard Leeds died in 2021, according to the complaint.



Have Un-Reported Foreign 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 at: 
www.TaxAid.com or www.OVDPLaw.com 
or Toll Free at 888-8TaxAid (888) 882-9243



Read more at: Tax Times blog

Why Filing an Amended Return, After You Are Known to the IRS, Is of No Avail

September 6, 2022


According to Law360, a Swiss couple owe accuracy penalties totaling $500,000 for 2006 and 2007 because their amended returns were submitted after a summons, the U.S. Tax Court said on August 31, 2022 in the case of Johannes et ux. v. Commissioner, docket number 14410-15, in the U.S. Tax Court.

Johannes and Linda Lamprecht Filed Their Amended Returns For 2006 And 2007 After The Internal Revenue Service Submitted A John Doe Summons To UBS That Applied To Them, The Tax Court Said.


Thus, their amended returns weren't "qualified amended returns" under Treasury Regulation Section 1.6664-2(c)(3)(i)(D) and the couple were liable for the penalties for understating income.

(3) Qualified amended return defined -

(i) General rule. A qualified amended return is an amended return, or a timely request for an administrative adjustment under section 6227, filed after the due date of the return for the taxable year (determined with regard to extensions of time to file) and before the earliest of - ...

(D)(1) The date on which the IRS serves a summons described in section 7609(f) relating to the tax liability of a person, group, or class that includes the taxpayer (or pass-through entity of which the taxpayer is a partner, shareholder, beneficiary, or holder of a residual interest in a REMIC) with respect to an activity for which the taxpayer claimed any tax benefit on the return directly or indirectly.

(D)(2) The rule in paragraph (c)(3)(i)(D)(1) of this section applies to any return on which the taxpayer claimed a direct or indirect tax benefit from the type of activity that is the subject of the summons, regardless of whether the summons seeks the production of information for the taxable period covered by such return; ...

The Tax Court also found that the IRS had complied with a supervisory approval requirement and that assessing the penalties wasn't barred by a statute of limitations.



Have Un-Reported Foreign Income?


Have an FBAR Penalty Problem?  
 
 

 Contact the Tax Lawyers at 

Marini& Associates, P.A. 
 
 
for a FREE Tax Consultation at: 
www.TaxAid.com or www.OVDPLaw.com 
or Toll Free at 888-8TaxAid (888) 882-9243


Read more at: Tax Times blog

OMB To Review FinCEN's Proposed Regs On Beneficial Ownership Reporting

September 2, 2022

On December 17, 2021, we posted FinCEN Issues Proposed Regs On Beneficial Ownership Reporting, where we discussed that the Financial Crimes Enforcement Network (FinCEN) has issued proposed regs implementing the beneficial ownership information reporting provisions of the Corporate Transparency Act. The proposed rules address, among other things, who must report beneficial ownership information (BOI), when BOI must be reported and what BOI must be reported.

Now according to Law360, Final rules establishing a database of beneficial ownership information are pending before a division of the Office of Management and Budget in a bid to keep money from moving through shell companies.

The Office of Information and Regulatory Affairs at the OMB received the rules on August 30, 2022, according to information on its website. 


The Division Generally Has Up To 90 Days
To Complete Reviews Of Regulations.

The proposed regs by the U.S. Department of the Treasury's financial crimes unit in December would require corporations and similar legal entities to report identifying information such as the full legal names, dates of birth and addresses of all of their beneficial owners. An individual is considered to be a beneficial owner under the rules if they have "substantial control" over the company or own or control at least 25% of it.

Treasury's Financial Crimes Enforcement Network says a registry of beneficial ownership information would help to check the ability of those seeking to obscure their interests in shell or front companies.


Have a FinCen Reporting 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

How To Survive A Cryptocurrency Tax Audit

August 30, 2022

Cryptocurrency tax audits are on the rise. Reports suggest that a federal crackdown on cryptocurrency tax avoidance in the United States is in process.

At an April 13, 2021, hearing of the Senate Finance Committee, Sen. Rob Portman (R-OH) and IRS Commissioner Charles Rettig discussed issues relating to the reporting of cryptocurrency transactions.

Commissioner Rettig specifically highlighted new cryptocurrency disclosure obligations on the Form 1040 tax return and has it listed on the IRS' "Dirty Dozen" list.

Preparing and undergoing a tax examination for Crypto can be exhausting, but hopefully, this post will help you prepare to survive an IRS Crypto Currency Audit.

What Information Will I Need For A Cryptocurrency Audit?
During an audit, it’s likely that the IRS will ask you for the following information: 

  • All blockchain addresses and wallet IDs that you own/control 
  • All crypto exchanges and wallets you are using, as well as your user IDs, email addresses, and IP addresses related to those accounts. ‍ 

You’ll also need the following information on each one of your cryptocurrency transactions. 

  • The date and time each unit of your cryptocurrency was acquired 
  • The fair market value of each cryptocurrency at the time of acquisition 
  • The date and time of each time you disposed of your cryptocurrency 
  • The fair market value of each cryptocurrency at the time of disposal, and what you’ve received in exchange for each cryptocurrency 
  • The accounting method that you used to calculate your capital gains at each disposal event 

What Exchanges Hold Your Cryptocurrency?
Do you have all of your cryptocurrency in a cold storage wallet, or do you maintain various hot wallets on different exchanges? This is very important, and it may impact the ability of the Internal Revenue Service to track your information or not. It is important to note that the IRS has been working to develop various processes and procedures to effectively unravel the anonymity you may have believed you had, as a result of prior transactions. This includes arrests and John Doe Summonses.

Review the Crypto Audit IDR
When you receive a notice of examination from the IRS, they will also receive an IDR which is an Information Document Request. Some IDRs are relatively short and may only be a page or two, while others can be upwards of 30 pages for more complex tax matters. Therefore, when you are under a crypto audit, the first step always is to evaluate the IDR to determine what the IRS is asking for, so that you can make notes as to what you’ll need to respond and prepare a strategy of how to respond.

How Far Back Does A Cryptocurrency Audit Go?
Audits include all tax returns that are filed in the last three years for overstatement of deductions or six years for substantial understatement of income. (Though they typically don’t go back further than six years). 

If no return was filed, or a fraudulent return is filed, there is no limit to how far back the IRS can audit.

Frequently Asked Questions
To summarize what we’ve discussed we have provided a few frequently asked questions about cryptocurrency tax audits. 

  • Can you get audited for cryptocurrency? 
    Yes.     If the IRS has reason to believe that you are underreporting your crypto taxes, it is likely that they will initiate an audit. 
  • How long does a crypto tax audit typically take? 
    The maximum length of an audit is generally 3 years. However, the length of a crypto tax audit can vary heavily depending on the specifics of your situation. 
  • How do you avoid a cryptocurrency tax audit?  
    To minimize your chances of being audited, be sure to accurately report your cryptocurrency capital gains and income across all your wallets and exchanges.
  • Which Crypto Exchanges Do Not Report To The IRS?
    To legally operate in the United States, all major cryptocurrency exchanges are required to abide by relevant IRS reporting requirements.  

  • More FAQ's regarding cryptocurrency?
    Go to the IRS' webpage.

Unreported Cryptocurrency? 
About 1-2 years ago, the IRS stated it would not be developing a “stand-alone” cryptocurrency voluntary disclosure program, but no such program currently exists. If you are out of cryptocurrency tax and reporting compliance, we can also advise you of the benefits of a domestic or offshore Voluntary Disclosure, which we handle on a regular basis.

Hybrid Offshore Accounts (Did You Report on Forms 114 & 8938)
The offshore and international cryptocurrency holding rules and regulations are currently in flux. If all of your cryptocurrency is in an account overseas that contains nothing but cryptocurrency, then you have a position to take that a cryptocurrency account does not have to be reported. 

Conversely, if you have your cryptocurrency is in a foreign hybrid account that contains both cryptocurrency and currency, then the IRS takes the position that that type of account is reportable and so you will want to review your records to determine the status and whether you are in compliance or not.

Should I Seek The Help of A Tax Attorney Like TaxAid?
Yes, many investors choose to seek the help of a tax attorney that can advocate their tax positions before the IRS. 

  • If you choose to hire a tax professional, be sure that the tax attorney who you work with has a strong background in cryptocurrency, like Marini & Associates, PA - TaxAid.com.

  • We have experience in representing taxpayers with cryptocurrency tax issues.  
  • We know how to use various cryptocurrency tax software.
  • The tax attorneys at Marini & Associates, PA (TaxAid.com), will meet with the IRS on your behalf, so you don't have to. and
  • If you are out of cryptocurrency tax and reporting compliance, we can also advise you of the benefits of a domestic or offshore Voluntary Disclosure, which we handle on a regular basis.
Have a Virtual Currency Tax Problem?

Value Your Freedom?
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). 

 

 

 

Sources

CoinLedger

Lexology

 

 

Read more at: Tax Times blog

Live Help