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Monthly Archives: March 2024

IRS Enforcement Targets 125K Wealthy Non-Filers – You Think it May Be Time To Get Compliant?

The Internal Revenue Service is ramping up enforcement against 125,000 high-income taxpayers who haven't filed returns since 2017 as a part of its ongoing efforts to increase tax compliance, the agency's chief told reporters Thursday.

The IRS will begin mailing compliance letters this week to more than 125,000 taxpayers who have failed to file a tax return between 2017 and 2021, IRS Commissioner Daniel Werfel said. The notices will be sent to about 25,000 taxpayers with more than $1 million in income, and the remaining will go to taxpayers with incomes between $400,000 and $1 million, the agency said in a statementThe agency expects to send about 20,000 to 40,000 letters each week, beginning with filers in the highest income categories, Werfel said.

The amount of revenue the agency might be able to recover is uncertain, Werfel said, adding that the agency isn't aware of potential credits and deductions the involved taxpayers might be entitled to receive.

"The Third-Party Information on These Taxpayers
Indicates Financial Activity of More Than $100 Billion,"

Werfel told reporters, though he later noted that it's unclear how much of that is taxable income. "But even with a conservative estimate, the IRS believes hundreds of millions of dollars of unpaid taxes are involved in these cases," Werfel said.

The agency will also be taking steps to update nonfilers who are entitled to a refund, Werfel said. Last year, taxpayers, many with lower incomes, were entitled to a potential refund of nearly $900 because they hadn't filed a 2019 tax return, he said, adding that those taxpayers will be updated later in the tax season.

Werfel urged taxpayers who haven't filed to do so voluntarily and as quickly as possible, saying that failure to act can lead to IRS compliance activities, including audits, as well as criminal prosecution. Typically, when taxpayers are issued a letter, there is an eight-week window between the time the letter is received and when taxpayers need to contact the IRS with a filing, he said.

Since 2016, the IRS nonfiler program has only run sporadically because the agency hasn't had the resources to pursue nonfiler cases, Werfel told reporters. The Inflation Reduction Act's major investment has given the agency the capacity to restart the nonfiler program, he added.

The program has been updated, Werfel said, adding that the agency used to identify nonfilers as a global group, send the notices out and get follow-up from taxpayers in the form of phone calls, incoming letters of dispute and incoming tax returns.

The IRS now has the staffing and technology to efficiently follow up on those notices, Werfel said. Another is that the agency is prioritizing high-income taxpayers, he said.

"We are establishing that our resources will be focused first and foremost on those taxpayers that are of higher means," Werfel said. "For taxpayers that are of lower means, our emphasis will be on working with them around making sure that they file because, in many cases, taxpayers at a lower income range are actually owed a refund or owed some type of credit."

It's outrageous that so many high-income individuals have routinely gotten away with failing to file tax returns, Senate Finance Committee Chairman Ron Wyden, D-Ore., said Thursday, adding that it's great that the IRS is going after them.

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

Read more at: Tax Times blog

Estate of Logger Owed Failure To Report $3M In Foreign Banks Penalty

According to Law360,  a logger failed to report more than $3 million he kept in foreign accounts, then fraudulently transferred the bulk of it to his wife when he learned he was being audited by the IRS, a Colorado federal judge said in upholding $1.7 million in penalties. 

George Harrington, who died last year, had argued that he didn't control the accounts and therefore wasn't required to report them, but his argument was undercut by amended tax filings in which he had reported the accounts to the Internal Revenue Service, U.S. District Judge S. Kato Crews said in an order.

"But a signed tax return is an admission," Judge Crews said in an order upholding the government's request for $1.7 million in penalties from Harrington's estate for failing to report foreign bank accounts to the IRS.

Harrington told the court in 2022 that, following an IRS audit in 2012, he had mistakenly allowed his attorney and an IRS examiner to convince him to submit amended returns that included foreign bank account reports for the two accounts in question. One was a type of foundation held in Switzerland and the other contained two life insurance policies held by a company in Lichtenstein, according to court documents.

The attorney advised Harrington that it would be less expensive to disclose the accounts and settle the tax liabilities than to fight the audit, Harrington said in a filing in the case in November 2022. However, Harrington argued, federal rules and regulations pertaining to beneficiaries of foreign annuities applied to his relationships with the foreign accounts and should have excluded him from the reporting requirement.

Harrington's failure to file FBARs for the four-year period was willful because he knew about the filing requirement, Judge Crews determined. During a similar time period, Harrington filed the reports disclosing his interest in accounts at Bank of New Zealand, according to the order. Harrington also used multiple foreign bankers and attorneys to help him manage his investments, the judge said.

Harrington worked as a logger in Washington state before logging as an independent contractor for Eastern Wood Harvesters in Canada, according to the order. Early in his career with EWH, around 1986, Harrington sold his house and gave the $350,000 in proceeds to a company attorney. In 2002, another attorney contacted Harrington and told him to come to the Cayman Islands because the EWH account "was being wound down," according to the order.

In the Caymans, Harrington and his wife became powers of attorney for a UBS AG account in Switzerland, from which Harrington transferred funds to a Liechtenstein entity known as a stiftung. The stiftung, a type of foundation, then opened an account at UBS Switzerland.

When UBS closed the account in 2009, Harrington rolled its contents into $3.1 million in life insurance policies with a Liechtenstein company, ValorLife, according to the order.

Judge Crews agreed with the government's claim that Harrington had cashed out the insurance policies and transferred $2.8 million in proceeds to his wife, saying the timing of the transfer showed evidence of fraud. The proceeds of the policies were transferred into a Swiss account at Vontobel Holding AG in Harrington's wife's name the day after Harrington and his tax attorney had their first interview with the IRS, according to the order.

However, Judge Crews declined to force Harrington's wife to repatriate funds to cover her husband's FBAR penalties on behalf of his estate, instead taking the government's request under advisement and asking for more information about its legality.

The government argued that the $2.8 million deposited into Harrington's wife's account was actually money she shared with her husband by way of the originating life insurance policies, and that the law in Washington state, where the couple lived, determines that co-owned property can satisfy the liability. But the relevant law, U.S. Code Title 28, Section 3010, requires examining the laws of the foreign country where the property is being held, in this case Switzerland or Liechtenstein, to determine whether it can be used to satisfy the liability, Judge Crews said.

Have an FBAR Penalty Problem?  
Never Stop Arguing
Legal Basis for Abatement!

 Contact the Tax Lawyers at 

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

Read more at: Tax Times blog

Still Have Un-Reported Swiss Bank Accounts? Do you Like Your Freedom?

According to DoJA federal criminal complaint was unsealed on March 11, 2024 in the Southern District of Florida charging a Florida man with conspiring to defraud the United States by hiding income and assets offshore and with making a false statement to the IRS.

According to the allegations contained in the complaint, between 1985 and 2020, Dan Rotta hid more than $20 million in assets in at least two dozen secret bank accounts at five different Swiss banks, including UBS and Credit Suisse. Over the years, Rotta allegedly earned substantial income from these assets that he did not report on his tax returns.

Starting in 2008, after it was reported publicly that UBS and its bankers were under criminal investigation for helping U.S. taxpayers evade their taxes, Rotta allegedly took steps to continue concealing his offshore assets, including by closing his UBS account and moving the funds to Credit Suisse and another Swiss bank, and then later transferring the funds into Swiss bank accounts in the name of nominees.

In 2011, the IRS allegedly began auditing Rotta after it obtained evidence that he had unreported foreign financial accounts. (From UBS?) Allegedly, Rotta falsely denied that he had any such accounts. During the audit, the IRS allegedly obtained evidence showing Rotta received transfers of hundreds of thousands of dollars from these foreign accounts that he did not report on his tax returns. Rotta allegedly claimed that these transfers were non-taxable loans from third parties and caused his representative to present the IRS with sham loan documents to corroborate his claims. As part of the scheme, Rotta allegedly enlisted his friend and cousin, Co-Conspirator 1, a native and resident of Brazil, to claim to the IRS that he either made or facilitated the fake loans.

The IRS allegedly did not believe Rotta and assessed additional taxes as well as penalties and interest against him. Rotta allegedly then caused a petition in U.S. Tax Court to be filed that sought a redetermination of the IRS’s assessments. In that petition, Rotta, through his attorney, allegedly falsely denied having any foreign accounts and attached the fictitious loan documents. Furthermore, Rotta allegedly caused Co-Conspirator 1 to travel to the United States and retell the false loan story to IRS attorneys. In 2017, after Rotta allegedly presented evidence showing that the purported loans had been repaid, the IRS reversed the deficiencies and agreed that Rotta owed no additional tax. Unbeknownst to the IRS, however, the funds that Rotta purportedly repaid to the third parties allegedly went into accounts that he controlled.

In 2019, after he allegedly became aware that the IRS would receive copies of his Swiss bank records, Rotta attempted to participate in the IRS’s voluntary disclosure practice. Under that practice, taxpayers who willfully do not comply with their tax and reporting obligations can make timely, accurate and complete disclosures of their conduct, which may be a way to resolve their non-compliance and limit their criminal exposure. 

In His Submission, Which Was Signed Under Penalties Of Perjury, Rotta Allegedly Made Several False Statements.



Rotta was arrested on March 9 and made his initial court appearance on March 11, 2024 before U.S. Magistrate Judge Jared M Strauss of the U.S. District Court for the Southern District of Florida. 

If convicted, Rotta faces a maximum penalty of five (5) years in prison for the conspiracy charge and five (5) years in prison for the false statement charge. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

A complaint is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Do You Have Undeclared Income from
Offshore Bank or Financial Advisors?
Is Your Name Being Handed Over to the IRS?
Contact the Tax Lawyers at 
Marini & Associates, P.A.   
for a FREE Tax Consultation contact us at:
or Toll Free at 888-8TaxAid (888) 882-9243  

Want to Know if Voluntary Disclosure is Right for You? 

Read more at: Tax Times blog

Treasury States That BOI Filing is Still Required for ALL But Plaintiffs in National Small Business United

On March 6, 2024 we posted Federal Court Rules Corporate Transparency Act Unconstitutional - No Need to File BOI Just Yet where we discussed that iNational Small Business United v. Janet Yellen, a Northern District of Alabama Federal Judge ruled on March 1, 2024, that the CTA was unconstitutional. 

At first glance, the summary judgment could be read as banning the Treasury and any other agency of the federal government from enforcing the CTA. However, The court's ruling prohibits CTA enforcement only against the NSBA itself and all of its members.

The Treasury Department's Financial Crimes Enforcement Network made its interpretation of the ruling clear in a statement issued by FinCEN stated that the ruling applies (ONLY) to the plaintiffs.

"Those Individuals And Entities Are Not Required To Report Beneficial Ownership Information To FinCEN
At This Time."

Given the extremely limited reach of the ruling, it's doubtful that the Treasury and its FinCEN arm will issue guidance universally suspending CTA enforcement while the appeals process plays out, beyond the FinCEN statement issued on March 4, 2024.

Therefore all reporting companies facing CTA deadlines should seriously consider filing, even if the Federal District Court's ruling covers them. Businesses that fail to file in time to meet their CTA deadlines are betting on the NSBA prevailing in the courts. 

Meanwhile, If The US Prevails, These Businesses Will
Potentially Face Significant Civil Fines, Interest, And Penalties, As Well As Possible Criminal Penalties, Including Jail Time.

Choosing to file means potentially losing their filing fees and any cost incurred if they decide to use an advisor. However, filing provides peace of mind, staying in CTA compliance means there's no chance of facing more stringent financial and criminal penalties for failure to file.

Need Help Filing Your BOI Report?

     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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