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Category Archives: criminal tax law

Another Criminal Prosecution For Willfully Failing to Pay Employment Taxes

A Miami business owner pleaded guilty on November 29, 2022 to willfully failing to pay over employment taxes to the IRS. A sentencing date will be set by U.S. District Judge K. Michael Moore.

According to court documents and statements made in court, Ari Weingrad owned and operated two car rental companies, Rent Max Miami, Inc. and Rent Max North, Inc., both of which had locations throughout Florida. 

As the sole owner and CEO of Rent Max Miami, and as the co-owner and president of Rent Max North, Weingrad knew he was responsible for collecting, accounting for and paying over payroll taxes withheld from his employees’ wages to the IRS. 

Between 2011 and 2016, Weingrad withheld from his employees but did not pay over more than $850,000 in employment taxes owed to the IRS. Instead, he caused Rent Max Miami to spend corporate funds to pay discretionary expenses, including a $50,000 cashier’s check to himself, a $45,000 in cashier’s checks payable to his wife, and expenses related to a 55-foot yacht.

Weingrad faces a maximum penalty of five (5) years in prison for willful failure to pay over employment taxes. He also faces, as well as 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.

 Thinking Not Paying Your Taxes?

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US Man Living In Shanghai Owes $2.3M In FBAR After Dropping Out of His OVDP

According to Law360, an American living in Shanghai owes the Internal Revenue Service $2.3 million after failing to report at least a dozen foreign bank accounts on his 2010 tax forms, the U.S. government told a federal court in a complaint in U.S. v. William A. Chen, case number 1:22-cv-03562, in the U.S. District Court for the District of Columbia.

William A. Chen opened the bank accounts in China during 2005 when he planned to relocate from the U.S., the government said in a complaint filed Nov. 22. He failed to disclose their existence and any interest earned on them, according to the government.

Chen opened the accounts at HSBCStandard Chartered BankDeutsche BankIndustrial and Commercial Bank of China, Shanghai Pudong Development Bank, Morgan Stanley and Bank of China, the government said in its complaint. He moved to Shanghai in 2006 and currently lives in the city, according to the government.

Chen hired PwC to prepare his 2006 and 2007 tax forms but had checked "no" on Form 1040's Schedule B question asking if he had any foreign accounts, according to the government.

Chen began filing Report of Foreign Bank and Financial Accounts in 2008, the government said, but did not fully disclose his accounts in 2008 or in 2010, the U.S. said. The 2010 failure involved 12 foreign accounts held with HSBC, Standard Chartered Bank and Deutsche Bank, the government said. The aggregate highest balance of the accounts totaled $5.7 million, according to the government.

Chen entered the 2014 Offshore Voluntary Disclosure Program in 2015 but dropped out in 2018. The penalties and interest against him total $2.3 million, the government said.



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Diamond Dealer Did Not Make the Cut and Agrees To Pay $1.3M In FBAR Penalties

According to Law360A diamond dealer agreed Thursday to pay $1.3 million as part of a consent judgment in New Jersey federal court settling allegations that he failed to report his overseas bank accounts.

Favi Cahan of Toms River, New Jersey, agreed that he willfully failed to file Reports of Foreign Bank and Financial Accounts from 2005 to 2008, according to the decision entered by the U.S. District Court for the District of New Jersey. The U.S. had accused him of owing $1.5 million in penalties and interest.

Cahan became a permanent U.S. resident around 1990, according to court documents. The U.S. claims Cahan traveled to Switzerland in 1997 and opened a bank account at UBS, declaring himself the beneficial owner of assets deposited.

Simultaneously, Cahan granted a brother, Jehuda Cahan, power of attorney over the account, and gave a Swiss asset manager named Felix Kramer full discretion to invest the funds, the U.S. said. By the end of 1997, the U.S. said, the account's balance was about $2.1 million.

From 2005 to 2008, Favi Cahan directed 19 transfers from his UBS account, drawing down the balance from about $1.9 million at the beginning of 2005 to about $1 million in 2008, the U.S. said.

The IRS assessed civil penalties against him in 2020 for $425,000 for each year from 2005 through 2007 and $100,000 for 2008, for a total of $1.375 million. By March 2022, he had accrued interest on his unpaid liabilities and incurred other additions such that his outstanding debt had grown to more than $1.5 million, the government said.

Favi Cahan describes himself as "a scion of the Cahan family — Belgian diamond dealers of renown,'' who distinguished himself "as an aficionado in the influential Antwerp Diamond Bourse'' on FaviCahan.com, which redirects to the website for FCD Corp., a jeweler in Manhattan's Diamond District.

A section on FCD's website said Favi Cahan was a senior executive at Israeli diamond wholesaler LID before he moved to New York City in 1990 and "transferred his passion and talents to 47th Street," joining "the prestigious Diamond Dealers Club."


Have an IRS Tax Problem?

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 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

Cryto Investors Not Subject To Wash Sale Disallowance

Crypto investors who desire to hanging on to their coins through the ups and downs of the market’s dramatic gyrations. The wash sale may help crypto investors with tax loss benefits.

The wash sale rule prohibits selling securities at a loss and reacquiring them within 30 days. A wash sale occurs when you sell or trade securities at a loss and then buy them or substantially identical securities within 30 days before or after the sale. Some investors attempt to use wash sales to realize a loss and maximize their tax deductions. The wash sale rule does not currently apply to crypto.

The wash sale rule is a regulation set by the Internal Revenue Service that prevents a taxpayer from deducting losses relating to a wash sale. By having this regulation in place, taxpayers are not able to claim artificial losses by trading in and out of a stock to offset capital gains or income. If a taxpayer chooses to repurchase the same or similar security within 30 days, they can add the loss to the cost basis of the security they repurchased. When the new stock is later sold, any capital gains taxes would still be lower.

The wash sale rule currently only applies to assets classified as stocks or securities and other financial instruments that are traded on organized exchanges. 

Cryptocurrency is Classified as Property by the IRS and
is Currently Not Subject to the Wash Sale Rule

An investor in a virtual currency can sell their position to lock in a capital loss and immediately repurchase the currency without losing exposure to the cryptocurrency.

Now with Cryptocurrency values declining, it would be advantageous for investors to recognize their current losses and then purchase the same investments if they are still desired investments.

There are exceptions. While the wash-sale rule does not apply to the sales, trade, or purchase of digital currencies such as Bitcoin and Litecoin, cryptocurrency investors should know that it does apply to crypto assets such as synthetic versions of stocks and securities. The IRS and SEC may also consider initial coin offerings (ICOs) to be securities, so the wash-sale rule would apply if such a ruling applies.

Have an IRS Tax Problem?

a stack of cash

 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