Category Archives: criminal tax law

According to Law360, The U.S. Supreme Court's groundbreaking decision to curb the U.S. Securities and Exchange Commission's in-house fraud enforcement could hamper the IRS' ability to assert certain penalties, including in contested conservation easement cases, and challenge the U.S. Tax Court's authority to review them.

In a 6-3 decision in a case known as SEC v. Jarkesy et al., a majority of the Supreme Court justices in June struck down the SEC's longtime use of tribunal administrative proceedings to impose securities fraud penalties on a hedge fund manager and his investment firm. They said the antifraud provisions the agency had sought to enforce mirrored common-law fraud, which warrants a federal jury trial to adjudicate them under the Seventh Amendment.

Although the underlying dispute in the Jarkesy case does not pertain to the tax code, the opinion's constraints on SEC enforcement may trickle down to other regulatory agencies, including the Internal Revenue Service. The effect could be a further restriction of tax administration amid other Supreme Court decisions this summer that have reduced agencies' powers, including in Loper Bright Enterprises v. Raimondo, Relentless Inc. v. Department of Commerce and Corner Post Inc. v. Board of Governors.

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     Contact the Tax Lawyers at

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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

In Report #2024-300-037, TIGTA’s systemic review of 103,460 NFTLs that were filed from July 1, 2022, to June 30, 2023, in which a CDP notice was required to be sent to the taxpayer, and a separate review of a statistical sample of 117 NFTLs from the same population, identified a total of 272 taxpayers that were potentially not timely mailed a CDP notice as required by I.R.C. § 6320(a). 

TIGTA also identified thousands of levies that were issued during the period when taxpayers had the right to request a lien CDP hearing.  TIGTA’s analysis of NFTLs filed from July 1, 2022, to June 30, 2023, identified: 

• 5,801 cases in which levies were issued during the 30-calendar-day period while the taxpayer had the right to elect a CDP hearing.

• 4 cases in which levies were issued while the taxpayer's appeal was pending.

In addition, taxpayer representatives should be provided copies of all taxpayer correspondence if designated by the taxpayer.  

From the statistical sample of 117 NFTLs, there were 41 cases in which the taxpayer designated their authorized representative to receive notices. However, in three of the 41 cases, the IRS did not provide CDP notices to the taxpayers’ authorized representatives.  

TIGTA also reviewed procedures for filing NFTLs in cases where taxpayers were in a disaster zone due to Hurricane Ian.  TIGTA determined that the IRS did not take any of the required preemptive steps that were available to it to suspend collection activity on taxpayers that were impacted by the hurricane on September 28, 2022. 

TIGTA recommended that the IRS:  

1. take corrective action on the cases identified in the statistical sample in which the lien notice was not mailed timely; 
2. ensure that the corrective actions initiated on the cases systemically identified are completed, and safeguards are implemented to protect against the recurrence of the causal issues; 
3. direct the Director, Collection, to establish Field Collection Internal Revenue Manual procedures that prohibit field employees from taking levy action during the 30-calendar-day period that the law provides taxpayers can elect lien CDP hearings; 
4. apply the retention standard when evaluating IRS Collection employees, managers, and executives who intentionally disregard IRS policies designed to protect taxpayers; and 
5. review disaster procedures for NFTL processing and consider updates, as needed, to reduce burden for taxpayers impacted by disasters. The IRS agreed with four of the five recommendations provided in this report.  

For recommendation 3, the IRS did not agree to establish Field Collection IRM procedures to prohibit field employees from taking levy action on taxpayers during the period the law provides taxpayers to elect a lien CDP hearing, which potentially impacted 5,801 taxpayers. 

Have An IRS Tax Problem?

Marini & Associates, P.A. 

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According to Law360, a woman who operates a New Zealand winery must pay $238,000 in penalties and an extra $105,000 in interest and fees for failing to report her New Zealand financial accounts to the U.S. government, the Ninth Circuit ruled.

Timberly Hughes, who represented herself, failed to show that a district court erred in determining that she willfully failed to file reports of foreign bank and financial accounts, the Ninth Circuit said in its opinion. However, the panel overturned the lower court's decision that the U.S. could not calculate interest from the date of the Internal Revenue Service's notification letter to her. While the letter contained an inaccurate calculation of the penalty, which the IRS later corrected, it put Hughes on notice that she failed to report, the panel said.

The California federal district court had held in March 2023 that Hughes was liable for $238,000 for failing to file FBARs in 2012 and 2013 for bank accounts in New Zealand, but it declined to add over $15,000 in interest and over $90,000 in late payment fees. The IRS originally sent Hughes a demand letter in 2016 with an incorrect amount. A second demand letter recalculated the amount but set interest and late fees from the original date. The district court said the government failed to show why the date of the erroneous letter should still be used for calculating interest and fees. Both sides appealed.

Hughes argued that the lower court conflated negligence with recklessness in determining that she willfully failed to file. If recklessness were sufficient to find willfulness, then nearly every violation of the FBAR rules could be deemed willful, she said in court documents.

The Ninth Circuit disagreed. Other circuits have clearly held that recklessness requires proof of something more than negligence, it said. It requires a finding that the filer ought to have known there was a grave risk that the filing requirement was not met, the panel said. 

Have an FBAR Penalty Problem?  

 

 

 Contact the Tax Lawyers at 

Marini& Associates, P.A. 

 

 

for a FREE Tax Consultation at: 

www.TaxAid.com or www.OVDPLaw.com 
or Toll Free at 888-8TaxAid (888) 882-9243

Read more at: Tax Times blog

The IRS released IR 2024-223, 8/23/2024 which reports and highlighting significant improvements made in the second year of funding from the Inflation Reduction Act. The report showcases advancements in taxpayer service, technology upgrades, and compliance efforts. Other achievements include increased electronic filing and scanning capabilities, enhanced efforts to disrupt tax scams, and focusing on tax compliance for certain individuals and businesses. 

The IRS ramped up efforts to pursue high-income, high-wealth individuals who failed to pay tax bills, collecting over $1 billion so far. A new initiative focused on high-income non-filers, targeting over 125,000 instances of unfiled returns since 2017. The IRS' Strategic Operating Plan mentioned that the increased areas of enforcement includes areas where audit coverage declined, including employment taxes.

Prior to the Inflation Reduction Act, more than a decade of budget cuts prevented IRS from keeping pace with the increasingly complicated set of devices that aggressive taxpayers use to hide their income and evade paying their share. The IRS is now taking swift and aggressive action to close this gap.

• The IRS ramped up efforts to pursue high-income, high-wealth individuals who failed to pay a tax bill. These high-end collection cases are concentrated among taxpayers with more than $1 million in income and more than $250,000 in recognized tax debt. Out of a total of 1,600 of these cases, the IRS has assigned 1,500 to revenue officers, with over $1 billion collected so far.
• 
  

  The IRS announced a new effort focused on high-income individuals who have failed to file federal income tax returns in more than 125,000 instances since 2017. Non-filers receive IRS
  compliance letters alerting them that the IRS is aware of their missing return and encouraging them to file or contact the IRS. The new initiative involves more than 25,000 people with more than $1 million in income, and over 100,000 people with incomes between $400,000 and $1 million between tax years 2017 and 2021.

  

• Other elements of the agency’s renewed compliance focus include:
• Abusive use of partnerships. Last month, the IRS announced a new series of steps to combat abusive partnership transactions that allow aggressive taxpayers to avoid paying what they owe.
• Activities involving large corporations and partnerships. These efforts include opening examinations of 76 of the largest partnerships in the U.S., representing a cross section of industries including hedge funds, real estate investment partnerships, publicly traded partnerships, large law firms and other industries. Other activities include expanding the large corporate compliance (LCC) program.
• Aircraft use. In February, the IRS announced plans to begin dozens of audits involving personal use of business aircraft. The audits are focused on aircraft usage by large corporations, large partnerships and high-income taxpayers. The IRS are examining whether the use of jets is being properly allocated between business and personal use.

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