Blog

The U.S. Supreme Court Feb. 21 decided that lawful permanent residents who have pled guilty to charges related to the filing of false tax returns that resulted in a loss to the government of more than $10,000 have committed aggravated felonies involving fraud or deceit and are subject to deportation (Kawashima v. Holder, U.S., No. 10-577, 2/21/12).

The 6-3 ruling affirms a decision by the U.S. Court of Appeals for the Ninth Circuit that found that, under the immigration statutes, Akio and Fusako Kawashima could be removed for filing a false corporate tax return.

“The elements of willfully making and subscribing a false corporate tax return, in violation of 26 U.S.C. § 7206(1), and of aiding and assisting in the preparation of a false tax return, in violation of 26 U.S.C. §7206(2), establish that those crimes are deportable offenses because they necessarily entail deceit,” wrote Justice Clarence Thomas for the court's majority.

In her dissent, Justice Ruth Bader Ginsburg argued that aliens should not be subject to deportation under Sections 7206(1) and (2) because the Immigration and Nationality Act singles out tax evasion—and no other tax crimes—as an aggravated felony for deportation purposes.

Traditionally delinquent taxpayers were sent a tax notice with a 60-day deadline, then they would receive a second or third notice but there is a much shorter response window today.

Penalties are also much harsher.Under the new rules, delinquent taxpayers are sent a tax notice with a 60-day deadline. If the Florida Department of Revenue does not receive payment within the 60 days, a warrant is filed and the taxpayer's bank account is frozen.  

The Obama administration called for higher taxes Feb. 13 on corporations that shift jobs and profits overseas, while offering help to companies that keep business in the United States, in the it's fiscal year 2013 budget.

The administration called for U.S. taxes on excessive profits from the offshore use of transferred intangibles.

The plan also called for a credit against income tax equal to 20 percent of the expenses paid or incurred in connection with “insourcing” a U.S. trade or business. Deductions for expenses paid or incurred in connection with “outsourcing” a U.S. trade or business would be disallowed.

Also in the Green Book, the administration proposed disallowing the deduction for domestic production activities for oil and other fossil fuel production.

In a fact sheet, the administration said that in addition to stopping transfer pricing abuses, the budget would delay the deduction for the interest expense attributable to overseas investment.

The Obama budget also calls for the top tax rate for qualified dividends would be taxed at individual income tax rates of up to 43.4 percent for taxpayers earning more than $200,000 per year under President Obama's budget proposal for fiscal year 2013 released Feb. 13.

The Obama administration has previously supported tying the dividends tax rate to capital gains, which the administration still believes should be taxed at a top rate of 20 percent.
A senior Treasury Department official said the budget called for “tough choices” and said dividends have traditionally been taxed at ordinary income tax rates, so the proposal would simply return policy to where it had been for most of the 20th century.

The Obama budget also calls for capping income tax deductions for individuals at the value of the 28 percent tax rate. The official said there would be no exceptions, including deductions to charitable organizations.

Treasury said the budget proposal does not offer a detailed look at either corporate or individual income tax reform ideas, but the president believes any of the proposed changes would be an improvement to current policy. An eagerly awaited framework for corporate tax reform is expected to be released by Treasury “around the end of the month,” the senior official said.