Fluent in English, Spanish & Italian | 888-882-9243

call us toll free: 888-8TAXAID

Blog

You Do Have to Report Bribe Income on Your Form 1040

August 4, 2020


According to DoJ, Ronald Olson, a vice president and deputy operation manager for Turner Construction Company (“Turner”), pled guilty on July 29, 2020, to charges of evading taxes on more than $1.5 million in bribes he received from building sub-contractors and is scheduled to be sentenced on December 9, 2020.


In related proceedings, co-conspirator Michael Campana, a subordinate construction manager at Bloomberg, LLC (“Bloomberg”), was sentenced last Friday, July 24, 2020 to 24 months in prison, for evading taxes on more than $420,000 in the same scheme. 


In addition, two managers of a construction contractor – Anthony Guzzone and Vito NiGro – were respectively charged on July 14 and July 22, 2020, for evading taxes on more than $1.4 million and $1.8 million in bribes that they respectively received in the same scheme.

 

“When Bribery Is Coupled With Tax Evasion,
Both The Bribery Victims And The Taxpaying Public 
Are Forced To Bear The Hidden,
Unfair Costs Of Corruption."

Between 2011 and 2017, Guzzone was a construction project manager for Bloomberg, a global financial firm that was engaged in various building projects in New York City and elsewhere, while Olson and Nigro were executives at Turner, which performed construction projects for Bloomberg.  For most of that time, beginning in 2013, Campana was also a construction manager at Bloomberg.  Each of the defendants participated in a scheme to obtain bribes from construction sub-contractors, who paid kickbacks to the defendants in exchange for being awarded various construction contracts and sub-contracts performed for Bloomberg.

 

In all, the defendants are charged with failing to pay taxes, between 2010 and 2017, on bribes exceeding $5.1 million.  The defendants received such bribes in various forms, including millions of dollars in cash, as well as construction labor and materials for work on their individual homes and properties, and the direct payment of personal expenses.  Such personal expenses included charges related to Campana’s 2017 wedding, such as approximately $40,000 paid by sub-contractors to a catering hall in New Jersey, over $13,000 to a photography studio, and over $23,000 to a travel agent for airline tickets purchased in connection with Campana’s honeymoon, as well as Super Bowl tickets worth almost $8,000 provided to Guzzone.  Each of the defendants evaded federal income tax on this bribery income, by failing to declare it on income tax returns for various years between 2010 and 2017.

 


The taxpayers should have reported this income on their Form 1040, Schedule C. As ridiculous as it sounds, the federal government requires that money acquired through illegal means be reported and taxed just like legitimate income. It's right there on the official IRS tax instructions: 

"Income From Illegal Activities, Such As Money From Dealing Illegal Drugs, Must Be Included In Your Income on Form 1040,  Line 21, or on Schedule C or Schedule C-EZ (Form 1040) if From Your Self-Employment Activity."

Not surprisingly, very few criminals ever declare this type of income. However some do, when they have either been caught during that tax year or think they are about to be caught. Their goal is to avoid getting charged twice: once for their initial crime and again for evading the taxes on their ill-gotten gains. Don't forget that it was tax charges that ultimately put away Al Capone.

 

Where a taxpayer informs the IRS that they made millions from embezzling, stealing money or dealing drugs; legally the IRS can't inform law enforcement, unless a law-enforcement agency gets a court order granting it access to a specific taxpayer's return. 


The IRS is prohibited from proactively alerting other agencies about criminal activity, unless terrorism is involved. And even in that case, it still needs a court order to disclose anything, but the IRS can initiate the legal process on its own. The rules are all spelled out in an IRS guide to "section 6103," the law that covers tax-return confidentiality. Like many legal statutes, it's complex and filled with loopholes. 


Have a Criminal Tax Problem? 

 
 
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

Last Call For Voluntary Disclosure For 2017 Unpaid Transition Tax!

July 30, 2020

June 17, 2020 we posted LB&I Add New TCJA Compliance Campaign Including  §965 Transition Tax & IRC §962 Election!  where we discussed that IRS LB&I has added a new compliance campaign that will examine TCJA issues. 

This new campaign will examine TCJA issues on a select pool of returns and then share what is learned by these examinations throughout the IRS. 


Issues could include computation of:
  • IRC §965 Transition Tax,
  • IRC §250 50% Deduction for Corporate Taxpayer's, 
  • IRC §960 80% Deamed Paid Foreign Tax Credit and

  • IRC §962  Election to be taxed as a Corporation.

Now Douglas O' Donald, Commissioner IRS Large Business and International division said on  during a webcast hosted by the American Bar Section of Taxation, that: 
The IRS Will Begin Distributing Letters and Placing People Into Its Audit Pipeline in "October" To Enforce The Transition Tax On Overseas Profits Included In The 2017 Tax Law!
The IRS expects to sent thousands of letters to people who the agency expects may need to comply more fully with repatriation tax. Hundreds of others, who have flouted their related compliance responsibilities, will likely be placed into the agency's purview.
For Offshore Voluntary Disclosures, including Streamlined Offshore Voluntary Disclosures, if the IRS has initiated a civil examination of taxpayer's returns for any taxable year, regardless of whether the examination relates to undisclosed foreign financial assets, the taxpayer will not be eligible to use the Voluntary Disclosure Procedures. 
Have a 2017 TCJA International Tax Problem?

 Contact the Tax Lawyers 

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

Panama Papers Accountant Scheduled for Jail Time!

July 29, 2020

On December 5, 2018, we posted Panama Papers Lead To Indictment Of 4 (3 Professionals & 1 Client), where we discussed that New York federal prosecutors announced the indictment of a lawyer and three other men on December 4, 2018 on charges of wire fraud, tax evasion and money laundering, tying the case to the 2016 leak of documents from the law firm Mossack Fonseca called the Panama Papers.
Law enforcement officials described the charges against attorney Ramses Owens, who remains at large, and investment manager Dirk Brauer, accountant Richard Gaffey and businessman Harald Joachim von der Goltz, all of whom have been arrested, as a warning to would-be tax criminals and those who would help them. The defendants could face decades in prison.
“The Charges Announced Today Demonstrate Our Commitment to Prosecute Professionals Who Facilitate Financial Crimes across International Borders and the Tax Cheats
Who Utilize Their Services.”

“The unsealing of this indictment sends a clear message that IRS-CI is actively engaged in international tax enforcement, and more investigations are on the way,” said Don Fort, who leads the tax agency’s criminal investigations unit. “

Now according to Law360, prosecutors are seeking more than two (2) years in prison for a private equity magnate and his former accountant whose $3.4 million tax dodge was exposed in the Panama Papers, saying the two elderly men need to serve significant time to promote respect for U.S. tax law.

Private equity manager Harald Joachim von der Goltz, 83, and his former accountant Richard "Dick" Gaffey, 75, have both admitted to concealing von der Goltz's assets from the IRS with the help of Panamanian law firm Mossack Fonseca. Millions of the firm's documents were leaked to the press in 2016, providing a glimpse into how the world's powerful hide their wealth offshore.

The pair are scheduled to be sentenced in September, and have both argued that their age and health conditions warrant lower sentences. In recent filings, federal prosecutors said that while neither man should serve the eight years called for by the U.S. sentencing guidelines, both should spend multiple years behind bars.

  • Von der Goltz, a dual citizen of Germany and Guatemala who prosecutors say abandoned his U.S. resident status in a bid to remain uncharged, has asked for time served, citing his character, age and illnesses. 
  • Gaffey, a Massachusetts resident, has lobbied for a two-year sentence to be served in home confinement because of the risk to his health posed by COVID-19.


Prosecutors told U.S. District Judge Richard M. Berman that they would not oppose delaying the start of prison sentences for the two men, depending on the severity of the pandemic at the time. However, they asked the judge to impose unspecified sentences longer than two years on both men. 


Have a Criminal Tax Problem?
 
 
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

Advice For Those Who Didn’t File An Extension on July 15, 2020

July 28, 2020

The IRS cautions taxpayers who missed the July 15 tax deadline and didn't request an extension, to file as soon as possible to reduce potential penalties. e-Filing returns can help expedite the process.

An extension to file is not an extension to pay; penalties and interest will apply to taxes owed after July 15.  

A taxpayer will usually qualify for relief if they qualify for First -Time Penalty Abatement or where they have reasonable cause for filing late.

1.     First-Time Penalty Abatement (FTA) - Generally, an FTA can provide penalty relief if the taxpayer has not previously been required to file a return or has no prior penalties (except the estimated tax penalty) for the preceding three years with respect to the same IRS File (IRM §20.1.1.3.6.1). or

2.     Reasonable Cause Defense - Under Section 6038 of the tax code, which lays out the information reporting requirements for individuals and businesses with an interest in foreign corporations and the penalties for delinquent filing, penalties may be abated if a reasonable cause exists for the failure to file. However, neither the statute nor the applicable regulations define a reasonable cause standard for the abatement. Treasury Regulations Section 301.6651-1(c) provide a definition of what constitutes reasonable cause for failure to file corporate income tax returns and says that "if the taxpayer exercised ordinary business care and prudence and was nevertheless unable to file the return within the prescribed time, then the delay is due to reasonable cause." 

Have IRS Penalty Problems?


 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

Live Help