Category Archives: criminal tax law

The IRS, under its Statistics of Income (SOI) program, has published tables for the Tax Year 2019 Foreign-Controlled Domestic Corporation study. (IRS Tax Stats Dispatch 2022-06)

The tables are based on data from the Form 1120 series for domestic corporations with 50%-or-more stock ownership by a single foreign "person." The data are classified by industry group, country, and age of the corporation.

According to SOI, there were 134,000 federal income tax returns filed by foreign-controlled domestic corporations (FCDCs) for tax year 2019. These returns accounted for 2.1% of all corporate returns filed for that year.

"However, the FCDCs were often large companies, with a combined $15.9 trillion of assets and $6.4 trillion of receipts," SOI stated. 

"They reported 13.9% of the assets and 17.9% of the receipts of all corporations." Manufacturing companies accounted for $2.9 trillion of the FCDC receipts.

Domestic companies with owners based in Japan produced $1 trillion of receipts, followed by owners from the United Kingdom and the Netherlands, with $900 billion each.

Have an IRS Tax Problem?

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or Toll Free at 888 8TAXAID (888-882-9243)

 

Read more at: Tax Times blog

According to Law360, the estate of a dual U.S.-Canadian citizen owes penalties of more than $157,000 for her failure to disclose accounts in Canada and New Zealand, the U.S. Court of Federal Claims ruled in Flint et al. v. U.S., case number 21-1202, in the U.S. Court for Federal Claims.

The court found on August 23, 2022 that Margaret J. Jones failed to file the required disclosures of foreign bank and financial accounts for more than $3 million kept in Canada and New Zealand, where her husband was born. 

Jones' Estate Said The IRS Then Used This Self-Disclosure To Impose An FBAR Penalty Of $157,000 For Failing To Disclose The Existence Of The Foreign Bank Accounts.

"The government lured Mrs. Jones in based upon the IRS promise and the explicit provisions of the contract," the estate said in its complaint. "They then later switched their position and alleged her good faith misunderstanding of the law was irrelevant and she should be strictly liable for other 'willfully blind' penalties."

The accounts date back nearly six decades to when Jones' husband began placing funds in them, around the end of World War II. By the time the IRS caught up, they held millions across 11 accounts, according to Tuesday's ruling.

Jones knew about the accounts but never told her tax preparer, the government said, indicating that she was willfully attempting to hide the assets. It therefore assessed a penalty even after she admitted to the existence of the accounts.

To qualify for the for streamlined programs, the IRS defines non-willful as “conduct that is due to negligence, inadvertence, or mistake or conduct that is the result of a good faith misunderstanding of the requirement of the law.”

The court was unpersuaded by the claims that Jones was tricked by the government. Judge Horn said the government had not in fact changed its position, and noted that the contract specified that the taxpayer may have to pay penalties if found to have deliberately hidden assets.

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Read more at: Tax Times blog

To help struggling taxpayers affected by the COVID-19 pandemic, the Internal Revenue Service today issued Notice 2022-36,which provides penalty relief to most people and businesses who file certain 2019 or 2020 returns late. 

To Qualify For This Relief,
Any Eligible Income Tax Return Must Be Filed
On Or Before Sept. 30, 2022.

Returns covered include: 

• Form 1040, U.S. Individual Income Tax Return;
• Form 1040-C, U.S. Departing Alien Income Tax Return;
• Form 1040-NR, U.S. Nonresident Alien Income Tax
  Return;
• Form 1041, U.S. Income Tax Return for Estates and Trusts;
• Form 1065, U.S. Return of Partnership Income
• Form 1120-S, U.S. Income Tax Return for an S corporation
• Form 1120, U.S. Corporation Income Tax Return;
• Form 1120-C, U.S. Income Tax Return for Cooperative Associations;
• Form 1120-F, U.S. Income Tax Return of a Foreign Corporation;
• Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Trust Treated as Private Foundation;
• Form 990-T, Exempt Organization Business Income Tax Return

The waiver also covers late penalties for foreign tax disclosures for those years, including

• Form 5471, Information Return of U.S. Persons With Respect To Certain Foreign Corporations, and or Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business, is attached to a late-filed Form 1120 or Form 1065;
• Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts, and Form 3520-A, Annual Information Return of Foreign Trust With a U.S. Owner.

However, As Currently Drafted, Only Corporations And Partnerships Are Entitled To This Relief For Late Filing
Penalties For Form 5471 & Form 5472!

The relief also covers a broad range of information returns, including many 1099s and information returns related to health insurance coverage. There are exceptions, including returns subject to fraud penalties. 

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

According to Procedurally Taxing, one key aspect of the .Inflation Reduction Act is its $80 billion in proposed new Internal Revenue Service funding over a ten-year period. There have been a number of excellent main stream media summaries of the funding, including Laura Saunders’ WSJ article What $80 Billion More for the IRS Means for Your Taxes[$] and Alan Rappeport’s NYT article  Yellen Directs I.R.S. to Embark on $80 Billion Overhaul Plan[$]

While we all try to avoid being partisan on this site, this past weekend Leslie Book, a professor of law at Villanova University (my alma mater) wrote an Op-Ed for NBC Think about the potentially dangerous rhetoric that politicians have been using to describe the funding. In the Op-Ed Leslie Book describes that

Sen. Rick Scott, a Florida Republican, is one of several lawmakers attempting to misinform the public about the Inflation Reduction Act, or IRA, and the much-needed infusion of cash it will provide to the IRS. In a letter sent on Tuesday, he warned constituents not to apply for positions with the IRS, pledging to “defund” the jobs if Republicans gain control of Congress after the midterms.

The senator’s warning to not apply for a public sector job was unusual. But more concerning was how the letter blatantly misstates facts and attempt to scare the public into thinking that the IRS will use the additional funding provided to hire thousands of armed agents and threaten Americans’ life and liberty.

Unfortunately, rather than appealing for a common sense of calm, several of Scott’s peers are actually doubling down. Sen. Ted Cruz, the junior senator from Texas, echoed Scott’s sentiments on Twitter, where he claimed the “Democrats are making the IRS bigger than the Pentagon, the Department of State, the FBI, and the Border Patrol COMBINED! Those IRS agents will come after you, not billionaires and big corporations!”

This Isn’t Just Misinformation, This Is Information That Is Designed To Radicalize And The Consequences, As We’ve Already Seen,
Could Indeed Be Disastrous.

This rhetoric is, quite simply, disconnected from reality. 

The IRA that Biden signed into law this past Tuesday provides a stable stream of funds over a 10-year period that will enable the IRS to hire replacement and new employees at an agency that has been struggling to perform basic tasks like processing tax returns and answering phones. 

On top of its current considerable challenges, the IRS has an aging work force, with an estimated 52,000 of its current 83,000 employees past or close to retirement age. 

Meanwhile, Congress is leaning on the IRS to not only collect revenues but increasingly to deliver benefits like pandemic relief stimulus payments, health care subsidies and refundable credits for things like child care, wage subsidies and electric vehicle purchases.

There are real consequences from these lies. The rhetoric can lead to physical harm for IRS employees. Recall that just over a decade ago, a longtime IRS employee was killed when a disgruntled pilot with an anti-IRS grudge flew a plane into an IRS office. 

The IRS has long been a target of extremists, and the single largest incident of domestic terror in the U.S. involved an attack on a federal building in Oklahoma, with IRS employees and their children at the building’s day care center among the victims. 

It is time for politicians to tamp down the rhetoric and focus on improving the IRS. Can our elected officials wean themselves from the polarizing and dangerous demonizing of the IRS? Let’s hope so, before someone else gets killed.

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