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The “See” Duction Did Not Work for Texas Restaurant Owners

According to DoJ, a Texas couple was convicted on May 23, 2019 of conspiracy and tax charges.
Michael Herman and his wife, Cynthia Herman were convicted of conspiracy to defraud the United States by impeding the Internal Revenue Service (IRS) and of filing false individual income tax returns for tax years 2010 and 2011. The jury also convicted Michael Herman of filing false 2010 through 2012 corporate income tax returns. 
According to the evidence introduced at trial, the Hermans owned and operated three establishments: Cindy’s Gone Hog Wild, a restaurant and bar in Travis County, Texas, and two restaurants in Bastrop County, Texas, Cindy’s Downtown and Hasler Brothers Steakhouse.
The Hermans skimmed cash from the restaurants by depositing only a portion of the restaurants’ cash receipts into their business bank accounts and reported only those deposits on the corporate and individual income tax returns.
The Evidence at Trial Showed that the Hermans Failed to Deposit Approximately $570,000 in Cash Receipts into their Business Bank Accounts.
The Hermans also paid for personal expenses out of the business accounts, including repair of their personal swimming pool, utilities for their home, and the salary of a household employee. Michael Herman signed and filed the false 2010 through 2012 income tax returns filed on behalf of Cindy’s Gone Hog Wild Inc.
U.S. District Court Judge Xavier Rodriguez has not set a sentencing date. The Hermans each face a statutory maximum sentence of 5 (five) years in prison on the conspiracy charge and 3 (three ) years in prison on each of the false tax return charges. They also face a period of supervised release, restitution and monetary penalties.
Have an IRS Criminal Tax Problem? 

Contact the Tax Lawyers at 
Marini& Associates, P.A. 
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Read more at: Tax Times blog

Court Denies Dolphins Owner $33M Deduction For Land Gift To University of Michigan

According to Law360, a D.C. Circuit Court said real estate developer Stephen M. Ross and his partners could not deduct $33 million for land donated to the University of Michigan in 2003 and sustained a 40% penalty.

In a unanimous decision, the three-judge panel said the U.S. Tax Court was right in finding that Ross' partnership RERI Holdings I did not properly substantiate its basis in the donated property, and overstated the value of the donation by more than 400%.

“We agree with the Tax Court that RERI fell short of the substantiation requirements by omitting its basis in the donated property,” Senior Circuit Judge Douglas H. Ginsburg wrote on behalf of the panel.

The Panel Also Upheld The Imposition Of

A 40% Penalty Against RERI,
Saying That It Found No Clear Error In The Court’s Analysis Of The Dispute.


Have a IRS Tax Audit 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 orToll Free at 888-8TaxAid (888) 882-9243




Read more at: Tax Times blog

Available IRS Payment Plans – Part II

On May 14, 2019 we posted Available IRS Payment Plans - Part I, where we discussed that for the 2019 filing season, the IRS projects that more taxpayers than ever will file and owe and that many will be able to pay, but a lot of them will need to make other arrangements because they can’t pay their full tax bills to the IRS. We also discussed that the IRS has three simplified payment plans:

  • Guaranteed Installment Agreements (GIA): 36-month payment terms for balances of $10,000 or less.
  • Streamlined Installment Agreements (SLIA): 72-month payment terms for balances of $50,000 or less.
  • Streamlined Processing for Balances Between $50,000-$100,000: 84-month payment terms for balances between $50,000 and $100,000.

Here we would like to discuss a few other tips related to these simple agreements:

1. Avoid a tax lien – pay down the balance to get into a SLIA. Here’s the best plan for taxpayers who owe more than $50,000: Get an extension to pay of up to 120 days, get funds to pay the balance down to under $50,000, and obtain a SLIA. Doing so will avoid the filing of a tax lien.

2. For SLIA, it’s the “assessed” balance – not the total amount owed. The $50,000 SLIA threshold is based on the taxpayer’s assessed balance – not the total amount they owe. The assessed balance includes tax, assessed penalties and interest, and all other assessments for each tax year. It doesn’t include accrued penalties and interest after the original assessment. For example, if a taxpayer’s original assessment is under $50,000 for an older tax year, he may accrue additional penalties and interest that puts the total balance over $50,000. In this situation, they would still qualify for a SLIA based on the original assessed balance. Taxpayers can also designate payments to reduce their “assessed balance only” to help them qualify for a SLIA.

3. Apply and pay automatically to reduce fees. The IRS increases installment agreement setup fees if taxpayers pay by check. Reduce the setup fee by agreeing to automatic direct debit payments. Automatic payments also avoid a monthly reminder letter from the IRS about the payment due.

4. Pay by direct debit or payroll deduction to avoid default. IRS installment agreements have a high default rate. To avoid a default, taxpayers must make their monthly payments. The best way to avoid missing a payment is to have the payment automatically deducted from the taxpayer’s financial accounts.

5. Don’t owe again. The second most common cause of defaulted installment agreements is filing future tax returns with unpaid balances. Taxpayers need to change their withholding and/or make estimated tax payments to avoid owing taxes that they can’t pay in the future.

6. Taxpayers can miss one payment a year. Most IRS payment plans allow taxpayers to miss one payment per year and not default. It’s best for the taxpayer to notify the IRS in advance if they can’t make a payment.

7. If the taxpayer’s financial situation worsens, get an ability-to-pay plan. Taxpayers can always renegotiate their payment plans if their financial circumstances change. For example, if a taxpayer loses their job, they may not be able to pay the IRS. In these cases, the taxpayer can contact the IRS and provide documentation on their ability to pay. This may mean a lower payment or even payment deferral (called currently not collectible status). Be careful here: If the taxpayer owes more than $10,000 and can’t pay within 72 months, the IRS is likely to file a tax lien.

8. Remember to ask for penalty abatement at the end of the plan. One important action to take at the end of a payment plan is to request abatement of the failure to pay penalty. Taxpayers should consider using first-time abatement or reasonable cause abatement if they qualify.

Each year, more than 3 million taxpayers get into a payment plan with the IRS. With tax reform, we can expect that more taxpayers will need a payment plan in 2019. Taxpayers who owe less than $100,000 should first look at 36-, 72-, or 84-month payment plans with the IRS. Many will also benefit from the help of a qualified tax professional to find the best option.

Need Help with an Installment Payment Plan?

Contact the Tax Lawyers at 
Marini& Associates, P.A.  

for a FREE Tax HELP Contact Us at:
or Toll Free at 888-8TaxAid (888) 882-9243 




Read more at: Tax Times blog

Another IRS Summons on Behalf of a Foreign Government

On March 13, 2018 we posted District Court upholds Another IRS Summons Issued Pursuant to a Tax Treaty Request where we discussed that a district court has upheld a summons that IRS issued to an American law firm, pursuant to a request from the French tax authorities, with respect to transfers of funds made by an alleged French citizen to a client trust account maintained by the law firm. (Franck Hanse v. US, Case No. 1:2017cv04573).

Previously we posted on August 1, 2013 Federal Courts Authorize John Doe Summonses Seeking Identities of Credit Card Use For Norweign Tax Authority!  where we discussed that federal courts in Minnesota, Texas, Pennsylvania, Oklahoma, Virginia and California had entered orders authorizing the Internal Revenue Service (IRS) to serve John Doe summonses on certain U.S. banks and financial institutions, seeking information about persons who have used specific credit or debit cards in Norway.  

Now the DOJ, petitioned the U.S. District Court for the Western District of North Carolina to authorize IRS summonses to uncover the identities of Finnish residents using U.S.-issued payment cards in Finland. The DOJ and IRS are pursuing this matter under the U.S.-Finland tax treaty and at the request of the Finnish government.

“Our continued success in combatting Offshore Tax Noncompliance has been helped by the Assistance We Receive through the Network of Tax Treaties Around the Globe,”
said IRS Commissioner Charles Rettig. 

“Yesterday’s effort reflects that the U.S. will return this help by working under the law with tax administrators in other nations to help them in their fight against tax evasion and avoidance. A global economy should not be allowed to serve as a possible vehicle for tax evasion in any country.”

The petition states: "Finnish taxpayers may use fo's reign payment cards in an attempt to avoid reporting income and paying Finnish income tax. Such Finnish residents divert income to a U.S. bank, maintain an account there, and use the account to make purchases in their home country through payment cards issued by the U.S. bank."

The Court granted the request, authorizing the IRS to serve "John Doe" summonses to identify the individuals who hold three payment cards issued by Bank of America, Charles Schwab and TD Bank. Each of the cards was used to make withdrawals and purchases in Finland worth between $85,000 and $135,000 in the period from 2013 to 2014.

The DOJ stated that it does not allege that Bank of America, Charles Schwab or TD Bank violated any U.S. or Finnish laws with respect to the card accounts. 

Becoming A Believer That Fiscal Transparency Really Exists?

Have Undeclared Income from an Offshore Account?

Want to Know if the OVDP Program is Right for You?

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


Read more at: Tax Times blog