Yearly Archives: 2022

According to Law360, The U.S. measure for global intangible low-taxed income will likely remain out of sync with an international minimum tax agreement now that legislative windows have closed without key GILTI changes. 

Enacted under the 2017 Tax Cuts and Jobs Act, GILTI was meant to target income earned from intangible assets, such as patents or other intellectual property, held in jurisdictions with low tax rates. Foreign income that falls under the provision is immediately pulled into the U.S. for taxation and receives a deduction of 50%, 

Nearly 140 jurisdictions last October agreed in principle on Pillar Two, which would allow countries to apply top-up taxes to make up the difference if members of a corporate group land at effective tax rates below a 15% threshold.

By the time these 140 other countries signed on to the overhaul, the global regime differed from GILTI in two main ways: 

• Pillar Two involved a 15% minimum ETR, and 
• its top-up taxes operated on a country-by-country basis. 

GILTI, in contrast, still had its 10.5% rate and allowed for jurisdictional blending, which allows companies to use excess foreign tax credits from high-tax jurisdictions to cover the GILTI tax in other countries.

Congressional Democrats proposed changes to GILTI on these two key issues under the Build Back Better Act, which passed the House of Representatives in late 2021 but faced roadblocks in the Senate. Under the Inflation Reduction Act, GILTI remained unchanged.

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This October's DoJ Tax Division's highlights includes: 

John Everson, who owned an electrical engineering business in Ohio, was convicted of tax evasion. Everson tried to conceal more than $1.3 million of income he earned from his business by instructing clients to make payments to a trust he controlled. Everson then used the money in the trust to pay personal expenses. Everson's conduct caused a tax loss of more than $500,000.

Scott Chappelle, a real estate developer in Michigan, was sentenced to 38 months for obstructing the IRS' attempts to collect his unpaid withholding and income taxes. Chappelle admitted he kept the taxes he withheld from his employees' wages but when the IRS tried to collect those taxes, Chappelle made false statements about his and his companies' assets to avoid having to pay the IRS.

Eugene R. Britt III, a bar and restaurant owner, pleaded guilty to tax evasion. Brit disguised his ownership in three bars and restaurant, skimmed cash from the gross receipts of the businesses and failed to report that income for approximately two decades.

Zeki Donuk, who operated a New Jersey construction business, was charged with tax evasion, employment tax crimes, filing false tax returns and making false statements in bankruptcy. According to the indictment, Donuk cashed checks payable to his business instead of depositing them into the business's account and didn't report the income on either the business or his personal returns. In addition, for at least a year Donuk failed to withhold employment taxes from his employees or file employment tax returns.

Clarence A. Joles Sr., the owner of an asphalt paving business, pleaded guilty to filing a false tax return. Joles admitted that he deposited his business's gross receipts into nine different bank accounts but failed to give his tax preparer the records from some of those accounts. This caused Joles to underreport his business income by more than $1 million.

Ronald Ray Wilson, a former member of the Texas House of Representatives, pleaded guilty to evading payment of taxes. In 2008 and 2011, Wilson stipulated to two Tax Court decisions finding that he owed taxes to the IRS. Subsequently, Wilson used his law firm's client trust account to conceal his income to avoid paying the stipulated amounts. Wilson also tried to conceal his pension and other assets causing a tax loss of approximately $794,632.

Joseph Garza, an attorney, was indicted by a federal grand jury in Dallas on charges of wire fraud and helping his clients file false tax returns. According to the indictment, from 2012 to 2021 Garza promoted a tax shelter that allowed his high-income clients to claim fraudulent tax deductions. The indictment alleges that Garza directed his clients to transfer funds into shell companies that then returned the money to the clients. To conceal the circular flow of funds, Garza allegedly commissioned fictitious business valuation reports, created invoices for fake business expenses and drafted sham contracts. Garza's scheme allegedly allowed his clients to hide approximately a billion dollars from the IRS and caused a tax loss exceeding $200 million.

 Thinking Not Paying Your Taxes?

You Better Thank Again, if You Like Your Freedom!

  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 upheld a Florida jury's decision that a corporate secretary was responsible for the failure of her father's air conditioning company to pay employment taxes, saying jurors reasonably concluded that she had authority within the company. 

Evidence showed that in her role at Scott Air Inc., Ashley Scott satisfied the Internal Revenue Service's definition of a responsible person in that she held a corporate office, controlled the company's finances and had power to make payments from company accounts, a three-judge panel said in a per curiam opinion.

Three rounds of jury trials had resulted in an overall reduction of Scott's responsibility to pay IRS penalties for the company's tax failures, from a total of 13 quarters for which she was considered responsible to 2. 

The IRS assessed Scott $680,000 in trust-fund penalties in 2010 for the company's failure to pay employment taxes over 13 quarters from 2004 to 2007, according to court filings. Scott appealed the decision twice, saying both times that the jury didn't have enough evidence to find that she was the person who should be considered responsible for paying the company's employment taxes, according to court filings.

The Eleventh Circuit sided with Scott in 2019, ordering a jury to reconsider its finding that Scott should pay nearly $620,000 of the penalties, saying the lower court did not clarify the legal authority of a corporate secretary.

• The panel said that in addition to being a corporate officer of the company, Scott had power to spend its money. She admitted she could shop for supplies of up to $1,000 without her father's permission, according to the opinion. Scott was also in charge of the company's payroll and paid its unemployment taxes and child-support withholdings on the behalf of some employees.
• Scott also signed the company's payroll tax returns during the two quarters she was found responsible, the panel said.

Have an IRS Responsible Party Penalty 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

On November 14, 2022 we posted IRS CI Had a 90.6% Conviction Rate on Prosecuted Cases of Tax Evasion & Tax Fraud, where we discussed that IRS-CI released its 2022 Annual Report on November 3, 2022. 

As it relates to Crypto Currency, the report indicates that there where significant prosecutions in 2022 and identifies cryptocurrency as an area of top priority in 2023. 

Following the publication, CI Chief Jim Lee made clear that the division will continue to closely scrutinize crypto transactions and

Are you making out points out that in 2023, CI will establish the advanced collaboration and data center (ACDC) to provide centralized access the data and resources to effectively support CI's mission of the deterring tax and financial crime. ACDC will enhance CI's abilities to access, investigate, and analyze information regarding Crypto Currency (tracing, monitoring, tax basis calculating).

Bolstered by the prominent placement of reporting language on the front of Form 1040, law enforcement can be expected to bring more criminal tax cases against those who fail to disclose transactions involving digital assets. 

Lee Publicly Announced On A Recent Call With Bloomberg Tax That The Division Already Has Hundreds Of Crypto-related Cases For Which It Expects To Bring Charges.

This is a significant announcement for all companies or individuals operating in the cryptocurrency space or who have engaged in digital asset transactions. 

Lee Has Announced Plans To Hire More Than 500 New
IRS Employees, Including 360 New Special Agents.

In light of the ambitious hiring plan, failure by taxpayers to report digital asset transactions is more likely to be scrutinized by the division. 

The IRS has been open about its aggressive stance on enforcement, willingness to bring cases and the types of cases it is prioritizing. Now more than ever, it is imperative for companies and individuals to take steps to comply with all applicable laws and regulations and ensure they have competent counsel in the event they become the target of an investigation.

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). 

 

Read more at: Tax Times blog