Yearly Archives: 2024

Using Inflation Reduction Act funding and as part of ongoing efforts to improve tax compliance in high-income categories, the Internal Revenue Service announced on February 21, 2024 plans to begin dozens of audits on business aircraft involving personal use. (IR-2024-46) 

The audits will be focused on aircraft usage by large corporations, large partnerships and high-income taxpayers and whether for tax purposes the use of jets is being properly allocated between business and personal reasons.

The IRS will be using advanced analytics and resources from the Inflation Reduction Act to more closely examine this area, which has not been closely scrutinized during the past decade as agency resources fell sharply. The number of audits related to aircraft usage could increase in the future following initial results and as the IRS continues hiring additional examiners.

“Personal use of corporate jets and other aircraft by executives and others have tax implications, and it’s a complex area where IRS work has been stretched thin. With expanded resources, IRS work in this area will take off. These aircraft audits will help ensure high-income groups aren’t flying under the radar with their tax responsibilities” said IRS Commissioner Danny Werfel.

For someone such as an executive using the company jet for personal travel, the amount of personal usage impacts eligibility for certain business deductions. Use of the company jet for personal travel typically results in income inclusion by the individual using the jet for personal travel and could also impact the business’s eligibility to deduct costs related to the personal travel.

The examination of corporate jet usage is part of the IRS Large Business and International division’s “campaign” program. Campaigns apply different compliance streams to help address areas with a high risk of non-compliance. These efforts include issue-focused examinations, taxpayer outreach and education, tax form changes and focusing on particular issues that present a high risk of noncompliance.

The IRS will begin conducting examinations in the near future as part of the agency’s commitment to ensuring fairness in tax administration.

In addition to work on corporate jets, the IRS has a variety of efforts underway to improve tax compliance in complex, overlooked high-dollar areas where the agency did not have adequate resources prior to Inflation Reduction Act funding.

• For example, the IRS is continuing to pursue millionaires that have not paid hundreds of millions of dollars in tax debt. The IRS has already collected $482 million in ongoing efforts to recoup taxes owed by 1,600 millionaires with action continuing in this area. 
• Elsewhere, the IRS is pursuing multi-million-dollar partnership balance sheet discrepancies, ramping up audits of more than 75 of the largest partnerships using artificial intelligence (AI) as well as other areas.

"The IRS continues to increase scrutiny on high-income taxpayers as they work to reverse the historic low audit rates and limited focus that the wealthiest individuals and organizations faced in the years that predated the Inflation Reduction Act,” Werfel said. 

“We are adding staff and technology to ensure that the taxpayers with the highest income, including partnerships, large corporations and millionaires and billionaires, pay what is legally owed under federal law. 

Have an IRS Tax Problem?

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Read more at: Tax Times blog

The Inflation Reduction Act's investment in the Internal Revenue Service could raise $497 billion over a decade, marking a significant increase over the agency's previous estimates of how much revenue the law's funding boost would generate, the agency said Tuesday.

The IRS' previous estimates suggested that the 2022 law's funding boost would bring in $390 billion in revenue between fiscal years 2024 and 2034, but the agency's old process for estimating revenue was "extremely conservative," according to the white paper released by the IRS and the U.S. Department of Treasury.

According to the agency's new estimates, which take into account direct revenue and the effects of "soft notices" in addition to the effects audits have on taxpayer behavior, the funding boost could raise as much as $497 billion.

The new estimates include the effects of "specific deterrence," which finds that taxpayers who are audited are more likely to be compliant during future years, according to the white paper.

The IRS' previous estimates of the Inflation Reduction Act's revenue effects assumed that the agency would maintain its recent operation practices and that those practices would become less effective as they were scaled up, according to the paper.

The New Estimates Consider The Full Range Of Ways That
The Technology, Data And Service Improvements Funded
By The Inflation Reduction Act Will Increase Revenues.

The new estimates assume that the IRS is sufficiently funded from fiscal year 2024 through fiscal year 2034 in addition to the funding provided by the Inflation Reduction Act, the paper said.

Have An IRS Tax Problem?

Marini & Associates, P.A. 

Read more at: Tax Times blog

This is a perfect example of why the things that taxpayer do during an IRS audit, to cover up past IRS noncompliant, can get you criminally convicted. According to the DoJ, a federal jury in Atlanta convicted Saleem Hakim, 54, of tax evasion and failing to file tax returns on January 31, 2024.

According to court documents and evidence introduced at trial, from 2011 through 2013, Hakim brokered the sale of precious metals to his clients. Hakim earned more than $1 million in commissions from the sales, which enabled him to fund a lavish lifestyle that included purchases of high-end watches, jewelry, designer accessories and furs. Despite earning substantial income, he did not file income tax returns for tax years 2011 through 2013.

The evidence introduced at trial also showed that from 2020 through 2022, Hakim and his wife worked for businesses in Atlanta that bought and sold jewelry and luxury handbags. The Hakims earned a combined income of more than $260,000 for those years yet did not file tax returns. 

The evidence established that Hakim attempted to hide his and his wife’s income from the IRS by diverting his income into a trust that he established after being initially charged with tax crimes for tax years 2011 through 2013.

In addition, Hakim attempted to obstruct the investigation into his tax misconduct for 2020 through 2022. A witness testified that after he received a grand jury subpoena for records relating to income that the witness paid to Hakim and his wife, Hakim drafted a letter for the witness falsely stating he did not have any business records in his possession relating to the Hakims and asked the witness to send the letter. The witness sent the letter to federal prosecutors and IRS agents.

Don't Be Cute With The IRS During an IRS Audit!!!

If You Have A Tax Problem, Hire
An Experienced Tax Attorney
To Deal With The Civil Tax Issue

Sentencing is scheduled for April 30, 2024. Hakim faces a maximum penalty of five years (5) in prison for each tax evasion charge and one year (1) in prison on each failure to file charge. He also faces 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.

Have an IRS Tax Problem?

     Contact the Tax Lawyers at

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 rule requiring millions of companies to disclose their beneficial owners to the U.S. Department of the Treasury is now in effect, many may not know they are responsible for these reporting obligations.

The rules for reporting beneficial ownership information to the Treasury's Financial Crimes Enforcement Network are intended to unmask shell corporations that may be used for financial crimes including money laundering, and they're primarily aimed at smaller companies. The requirements became effective with the new year. The new reporting requirements could potentially apply to up to 32 million entities. 

Congress enacted the CTA in 2021 as part of the Anti-Money Laundering Act, within the National Defense Authorization Act. Finalized in 2022, the BOI reporting rule requires businesses to submit beneficial ownership information that FinCEN said it will use to create a national database that will help target tax evasion, money laundering and other crimes carried out through shell companies.

Need Help With BOI Reports?

     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