Monthly Archives: April 2025

Florida law generally provides robust liability protection for LLC members through the Florida Revised Limited Liability Company Act, which states that debts or liabilities of an LLC are solely those of the company. However, this protection is not absolute, as Florida recognizes exceptions under Federal Tax and Florida Sales and Use Tax laws. Specifically, section 213.29, Florida Statutes, imposes personal liability on individuals responsible for collecting and remitting sales tax if they willfully fail to do so. This provision applies to officers or directors with administrative control over tax compliance and creates significant exposure for LLC members.

The Florida Department of Revenue (FDOR) treats sales tax as state funds at the time of collection, viewing businesses as custodians of these funds rather than owners. Failure to remit collected sales tax can pierce the liability shield typically protecting LLC members from business debts. FDOR has pursued collection actions against individual LLC members, including liens on personal bank accounts, and in more egregious cases where taxes were collected but not remitted, has made criminal referrals to the State Attorney.

To establish personal liability, FDOR must prove "willful" failure to collect or remit taxes. This determination often involves questioning former officers or managers about their roles in tax compliance and financial decision-making. Individuals deemed "responsible persons" with authority over financial priorities face the greatest risk. Personal liability is asserted through a Notice of Assessment Personal Liability (NOAPL), which gives individuals 20 days to file an informal protest. Failure to respond promptly can result in severe financial consequences, including penalties equal to twice the unpaid tax amount.

The concept underlying this liability mirrors the "trust fund" tax approach seen in other jurisdictions, where businesses collecting sales tax are considered trustees of government funds. A notable 2022 New York Administrative Law Judge decision illustrates how strict liability could apply even without direct involvement in daily operations. In that case, an LLC member's signature on documents and status as a member sufficed for personal liability. While not binding in Florida, this reasoning could influence similar cases under Florida's statutory framework.

Given these risks, LLC members with signature authority or control over financial decisions should prioritize sales tax compliance to avoid personal liability. The FDOR may assess penalties and initiate collection actions against individuals who fail to remit taxes properly. Prompt response to any notices is critical because defaulting on a NOAPL makes reopening protest rights nearly impossible.

Marini & Associates’ tax attorneys offer assistance in mitigating these risks through voluntary disclosure agreements, audit defense, administrative appeals, and negotiated settlements. Their expertise can help LLC members abate or waive penalties and address assessments before liens or criminal referrals occur.

Have a  Florida Sales Tax Problem?

Mr. Sweeney is a Tax Attorney with 40 years of experience in the areas of Tax Law, both Federal & State, including Representation before the IRS and various State Taxing Agencies.

Read more at: Tax Times blog

According to Law360, the estate of a deceased corporate attorney told the Eleventh Circuit  that the U.S. government wrongly taxed $3 million claimed by his stepchildren, arguing that the amount was properly deducted as a contracted business transaction under the Internal Revenue Code.

Representing the estate of Richard Spizzirri during oral arguments in Miami, Joanne M. O'Connor of Jones Foster told a three-judge panel that the individual payouts of $1 million to Spizzirri's three stepchildren were listed in a prenuptial agreement with his fourth wife — Holly Lueders, the childrens' mother — and are therefore deductible as claims "contracted bona fide and for an adequate and full consideration in money or money's worth" under IRC Section 2053.

O'Connor further argued that the payments to the children in the third modification of the agreement were "clearly transactional and an ordinary course of business in terms of the situation they were in at the time where she's agreeing to ratify and confirm her waiver of support rights."

After Spizzirri died in 2015, the stepchildren sued the estate in probate court to get their money. The estate then deducted the payments under Section 2053, which allows the estate to deduct such claims "contracted bona fide" and without them being considered gifts. 

The Stepchildren Weren't Included In Spizzirri's Will, But Were Included In The Prenup's Agreement's Modification In 2005.

The Internal Revenue Service rejected the deductions, finding that the estate was liable for more than a $2.2 million deficiency and assessed a more than $450,000 penalty, court records show. The Tax Court upheld the rejection in February 2023 after finding that the three $1 million payouts had donative intent.

U.S. Circuit Judge Britt Grant questioned O'Connor on whether the course of business was normal given Spizzirri's "incredibly odd family circumstances." 

"Do we look at what he usually would have done or what an ordinary person would have usually done?" Judge Grant said. In this case, O'Connor said the ordinary course of business "refers to the particular circumstances."

U.S. Circuit Judge Robert Luck noted the prenup or antenuptial agreement allowed for the one-time payments to the stepchildren.

"The agreement said ... we want you to put this in the will. In other words, we wouldn't even be here if the decedent had actually complied with his obligations under the antenuptial agreement."

But Judge Luck also added that contract provisions are read as a whole, saying the agreement "seems to suggest that the entire package was done as a way to resolve all marital and estate issues."

Arguing for the government, Pooja Boisture of the U.S. Department of Justice said the agreement's provisions should be read independently, saying the 2005 modification was a "testamentary freedom," or the right to distribute his wealth has he sees fit after death, and "has no value in money or money's worth."

Boisture added that Spizzirri's stepchildren had an expectation of inheritance taken from the agreement's modification. In the modification, Boisture said Spizzirri intended to put the stepchildren in his will.

"If that is not an example of an expectation of inheritance, I do not know what is," Boisture said.

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

Read more at: Tax Times blog

 We previously posted All That You Wanted to Know About Form 706NA - Part I, where we discussed that in the area of estate tax compliance, many of us have prepared Form 706’s, the estate tax return for US citizens and domiciliaries.  To be sure, this form is quite voluminous and can take a while to fill out but there are very few mysteries beyond schedule E; what percentage of an asset might be includable in an estate, the value of an annuity, what debts and expenses are deductible, the calculation of the marital deduction, and the generation-skipping tax computation. The Form 706NA, however, preparation of the tax return for the estate of the nonresident alien owning property in the United States, can present a more daunting task.  

Based on our estate counsel Robert Blumenfeld's 32 years of experience as a senior attorney at the International office of the IRS, some of the strange and exotic problems that he discovered upon while auditing roughly 1,500 estate tax returns and preparing about 300 of the same in the last few years.
 

After we get through the information about the decedent himself, we reach an area of the return, Part III, General Information. Most of it is pretty obvious but… The first area of major concern may be whether the decedent died intestate. Many people who have assets in several countries have country specific wills, for instance one for the United States and one for say Canada, England etc. If the decedent did die testate, one should always include the US will. If there are other wills, go through them carefully before you submit them to the IRS because they make contain data which would create questions or problems with the IRS. In the alternative, many folks have a Universal Will which covers the disposition of assets in all countries. Because of the difference of rules from country to country, such a universal will may create problems with assets passing to a surviving spouse or a charity. 

Question five relates to whether the decedent owned jointly held property in the United States. If the taxpayer plans to include 100% of the value of the asset, then this question should pose no problems. Two potential problems come to light: if the decedent came from a community property jurisdiction, is one half of the value of the asset excluded by operation of law in the foreign country? If one wishes to exclude a portion of an asset from a decedent in a non-community property jurisdiction, Section 2040 of the IRC places the onus again, of proving contribution on the surviving co-tenant. This can sometimes be a very difficult task, especially if the property is been held for a substantial number of years and many records/canceled checks etc. have been destroyed over the years. 

Question six asks whether the decedent had ever been a US citizen. If the answer to the initial question is yes but at the time of death, the decedent is no longer a US citizen, it is necessary to include in the paperwork sent to the IRS some evidence that the decedent properly expatriated from the United States. Based on the timing, if this happened shortly before death, it could raise the issue of expatriation to avoid tax. Again, getting this information before preparing the return is a good way to avoiding embarrassment at  the examination.

Have a US Estate Tax Problem?

 

Estate Tax Problems Require

an Experienced Estate Tax Attorney

 

 

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).

 

Robert S. Blumenfeld  - 

 Estate Tax Counsel

Mr. Blumenfeld concentrates his practice in the areas of International Tax and Estate Planning, Probate Law, and Representation of Resident and Non-Resident Aliens before the IRS.

Prior to joining Marini & Associates, P.A., he spent 32 years as the Senior Attorney with the Internal Revenue Service (IRS), Office of Deputy Commissioner, International.

While with the IRS, he examined approximately 2,000 Estate Tax Returns and litigated various international and tax issues associated with these returns.As a result of his experience, he has extensive knowledge of the issues associated with and the preparation of U.S. Estate Tax Returns for Resident and Non-Resident Aliens, Gift Tax Returns, Form 706QDT and Qualified Domestic Trusts.

Read more at: Tax Times blog

According to DoJ, a former Florida woman was sentenced yesterday to three years in prison for willfully failing to file tax returns and naturalization fraud.

According to court documents and statements made in court, Lucia Andrea Gatta was an Italian citizen, born in Chile. In 2001, Gatta moved to and began residing in the United States, and in 2012 she became a naturalized U.S. citizen.

Starting with tax year 2005, Gatta stopped filing tax returns or paying taxes on her income to the IRS. 

From 2011 To 2013, Gatta Possessed Millions Of Dollars
In Assets Held In A Foreign Bank Account In Switzerland
That Earned Her Hundreds Of Thousands In Interest
And Dividend Income Every Year.

U.S. citizens and permanent residents are required to file with the U.S. Treasury Department a FinCEN Form 114 - Report of Foreign Bank and Financial Accounts (FBAR) if the combined balance of all foreign accounts they own, have a financial interest in or signature authority over is more than $10,000 at any point during a calendar year. For those years, Gatta did not file an annual FBAR reporting her interest in her Swiss bank account.

During her citizenship application process, Gatta falsely reported that she had not committed crimes, including her willful failure to file tax returns. Instead, Gatta lied to immigration officials about her income and claimed that her family financially supported her. She also submitted to a U.S. immigration officer false documents that purported to show she had minimal income.

Once Gatta knew she was under criminal investigation, she left the United States for Italy and contested her extradition for over 18 months. But in August 2023, the Italian government ordered Gatta’s extradition to the United States to face charges for her willful failure to file tax returns for tax years 2011 through 2013 and naturalization fraud.

In addition to the term of imprisonment, U.S. District Judge Aileen M. Cannon ordered Gatta to serve one year of supervised release and to pay a $50,000 fine.

 Do You Have Undeclared Offshore Income?

Read more at: Tax Times blog