Category Archives: criminal tax law

According to Law360, the Internal Revenue Service's Large Business & International division will likely hire fewer employees and suffer from a declining workforce this year as a result of delayed funding and attrition, an official said on June 2, 2022.

The IRS division won't be able to hire as many new agents as a result of agency funding being delayed in a fiscal 2022 omnibus spending package that was enacted in March, said John Hinding, director of the cross-border activities practice area for LB&I. Hinding spoke in Washington, D.C., during a conference hosted by the U.S. branch of the International Fiscal Association. 

The IRS typically hires on a fiscal year basis that ends in September, which leaves little time for the agency to complete its hiring processes, Hinding said.

The failure of Senate Democrats to pass the Build Back Better Act, which passed the House of Representatives and included a bigger increase in funding for the IRS, also put a damper on hiring expectations, Hinding said.

"I Think We're Looking At Decreased LB&I This Year, And Certainly Decreased Numbers Of People Due To Attrition 

In The Cross-Border Activities Area," Hinding Said.

IRS and Treasury officials, including IRS Commissioner Chuck Rettig, have urged Congress to increase funding for the tax collection agency as it grapples with a significant backlog of unprocessed tax returns and delays in agency actions.

Lawmakers have recently been enacting slight increases in the agency's budget, from $11.5 billion for fiscal 2020 to $11.9 billion for fiscal 2021. Congress also recently provided the IRS with a $12.6 billion budget for fiscal year 2022 in an omnibus spending legislation that Biden signed. That amount is an increase of $675 million over the prior year.

Rettig Has Said A Substantial Portion Of The $675 Million Funding Increase Would Go Toward Cost-Of-Living Adjustments & That The IRS Needed Multiyear Funding.

Rettig also said in April that Congress hasn't provided the IRS with the multiyear investment it needs to modernize its technology, which has been a major contributor to the significant delays that taxpayers are experiencing.

In terms of technology, Hinding said during an earlier panel Thursday that the agency and the cross-border activities practice area in particular have emphasized improving its ability to share data and analytics across divisions, and are in the early stages of learning how to best approach that issue. "We've been trying to do that, I think in earnest since we reorganized in 2016. 

But I Think It's Safe To Say We're Well Behind Google
In Terms Of What We Can Do With Data At This Point
In Time," Hinding Said.

"In the international space, I think we're pretty fortunate that because of the dollar values and importance over the years, more of that is available to us to see, which allows us to try to be better and smarter about our selection of work, to try to use the data to do that."

If You 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

In IR-2022-114, issued June 1, 2022, the IRS announced that it intends to boost its workforce and better help taxpayers and businesses and it's looking to hire over 4,000 contact representative positions at several IRS offices nationwide this summer.

A contact representative provides administrative and technical assistance to individuals and businesses primarily over the phone, through written correspondence or in person. These full-time positions fall under a special hiring condition called direct-hire authority  Full-time, bilingual (Spanish) positions are also available. No prior tax experience is required.

"The IRS continues to increase its workforce in 2022 to improve the taxpayer experience," said IRS Taxpayer Experience Officer and Wage and Investment Commissioner Ken Corbin. 

"We Have A Variety Of Jobs Available All Over The Country.

Contact Representatives, Among Other Things, Deal Directly With Taxpayers By Helping Them With Their Tax Obligations."

The IRS offers competitive pay and benefits, on-the-job training, and opportunities for advancement. The pay range for these positions begin at a GS-05 level. So for Miami that would mean a starting salary of $38,481 a year. Shift availabilities vary by location but there are openings for day shift, (hours between 6 a.m. – 6 p.m.) mid shift (10 a.m. – 10 p.m.) and swing shift (2 p.m. – 1:30 a.m.) in 22 cities nationwide, including Puerto Rico.

Virtual information-sharing events

The agency is hosting virtual information sharing events in June where the IRS will explain the required qualifications and job duties for the contact representative position and provide tips for navigating the application process. Participants will also hear from employees who will provide insights about the work they do day-to-day.

In-person events

In-person events will be held mostly in June, are open to the public and will be held in the following cities: Andover, Mass.; Atlanta, Ga.; Philadelphia, Pa.; Fresno and Oakland, Calif.; Brookhaven, N.Y.; Cincinnati, Ohio; Memphis, Tenn.; and Caguas, Puerto Rico. Registration for these and more can be found on the IRS careers page.

Interested job seekers are encouraged to bring their resumé and two forms of identification (i.e., state driver's license and/or state identification card, birth certificate, U.S. passport, military ID or Social Security card). 

Qualified Applicants Will Receive Tentative 
Job Offers At The In-Person Events.

Preregistration is recommended and social-distancing is required to attend the in-person job fairs. Per Centers for Disease Control and Prevention (CDC) guidelines, mask wear is optional for these job fair sites. For complete details on the virtual events and to register to attend one of the in-person events, visit: jobs.irs.gov/events.

The IRS is an equal opportunity employer. All employees must be U.S. citizens, pass an FBI fingerprint check and tax compliance verification, and meet the mandatory education, training, and experience qualification requirements.

Have an IRS Tax Problem?

     Contact the Tax Lawyers at

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

The IRS released its Data Book which presents information on collections and penalties resulting from individuals’ or entities’ failure to comply with the tax code. Failure to comply with filing, reporting and payment requirements may result in civil penalties or, in some cases, criminal investigation. 

IRS’s Collection function collects Federal taxes that have been reported or assessed but not paid and secures tax returns that have not been filed. 

Additionally, this section presents data on the IRS Independent Office of Appeals workload. The mission of Appeals is to resolve tax controversies without litigation, on a basis that is fair and impartial to both the taxpayer and the Federal Government.

In Table 26 the IRS Presents Civil Penalties Assessed & Abated:

• In Fiscal Year (FY) 2021, the IRS collected more than $92.6 billion in unpaid assessments on returns filed with additional tax due, netting $59.5 billion after credit transfers (Table 25XLSX).
• The IRS assessed $37.3 billion in civil penalties in FY 2021. Of this, $17.1 billion was assessed in civil penalties on individual and estate and trust income tax returns (Table 26XLSX).
• During FY 2021, the IRS Appeals Office closed 66,522 cases, including those received in a prior fiscal year (Table 27XLSX).

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

WASHINGTON – The Internal Revenue Service today began its "Dirty Dozen" list for 2022, which includes potentially abusive arrangements that taxpayers should avoid.

The potentially abusive arrangements in this series focus on four transactions that are wrongfully promoted and will likely attract additional agency compliance efforts in the future. Those four abusive transactions involve charitable remainder annuity trusts, Maltese individual retirement arrangements, foreign captive insurance, and monetized installment sales.

"Taxpayers should stop and think twice before including these questionable arrangements on their tax returns," said IRS Commissioner Chuck Rettig. 

 

The IRS reminds taxpayers to watch out for and avoid advertised schemes, many of which are now promoted online, that promise tax savings that are too good to be true and will likely cause taxpayers to legally compromise themselves.

 

Taxpayers, tax professionals and financial institutions must be especially vigilant and watch out for all sorts of scams from simple emails and calls to highly questionable but enticing online advertisements.

 

The first four on the “Dirty Dozen” list are described in more details as follows: 

1. Maltese (or Other Foreign) Pension Arrangements Misusing Treaty. In these transactions, U.S. citizens or U.S. residents attempt to avoid U.S. tax by making contributions to certain foreign individual retirement arrangements in Malta (or possibly other foreign countries). In these transactions, the individual typically lacks a local connection, and local law allows contributions in a form other than cash or does not limit the amount of contributions by reference to income earned from employment or self-employment activities. By improperly asserting the foreign arrangement is a “pension fund” for U.S. tax treaty purposes, the U.S. taxpayer misconstrues the relevant treaty to improperly claim an exemption from U.S. income tax on earnings in, and distributions from, the foreign arrangement.
   

2.  Puerto Rican and Other Foreign Captive Insurance. In these transactions, U.S owners of closely held entities participate in a purported insurance arrangement with a Puerto Rican or other foreign corporation with cell arrangements or segregated asset plans in which the U.S. owner has a financial interest. The U.S. based individual or entity claims deductions for the cost of “insurance coverage” provided by a fronting carrier, which reinsures the “coverage” with the foreign corporation. The characteristics of the purported insurance arrangements typically will include one or more of the following: implausible risks covered, non-arm’s-length pricing, and lack of business purpose for entering into the arrangement.

3.  Use of Charitable Remainder Annuity Trust (CRAT) to Eliminate Taxable Gain. In this transaction, appreciated property is transferred to a CRAT. Taxpayers improperly claim the transfer of the appreciated assets to the CRAT in and of itself gives those assets a step-up in basis to fair market value as if they had been sold to the trust. The CRAT then sells the property but does not recognize gain due to the claimed step-up in basis. The CRAT then uses the proceeds to purchase a single premium immediate annuity (SPIA). The beneficiary reports, as income, only a small portion of the annuity received from the SPIA. Through a misapplication of the law relating to CRATs, the beneficiary treats the remaining payment as an excluded portion representing a return of investment for which no tax is due. Taxpayers seek to achieve this inaccurate result by misapplying the rules under sections 72 and 664.

4.  Monetized Installment Sales. These transactions involve the inappropriate use of the installment sale rules under section 453 by a seller who, in the year of a sale of property, effectively receives the sales proceeds through purported loans. In a typical transaction, the seller enters into a contract to sell appreciated property to a buyer for cash and then purports to sell the same property to an intermediary in return for an installment note. The intermediary then purports to sell the property to the buyer and receives the cash purchase price. Through a series of related steps, the seller receives an amount equivalent to the sales price, less various transactional fees, in the form of a purported loan that is nonrecourse and unsecured. 

Taxpayers Who Have Engaged In Any Of These Transactions

 Or Who Are Contemplating Engaging In Them Should Carefully Review The Underlying Legal Requirements 

And Consult Independent, Competent Advisors

Before Claiming Any Purported Tax Benefits.

Taxpayers who have already claimed the purported tax benefits of one of these four transactions on a tax return should consider taking corrective steps, such as filing an amended return and seeking independent advice. 

Where appropriate, the IRS will challenge the purported tax benefits from the transactions on this list, and the IRS may assert accuracy-related penalties ranging from 20% to 40%, or a civil fraud penalty of 75% of any underpayment of tax.

 

While this list is not an exclusive list of transactions the IRS is scrutinizing, it represents some of the more common trends and transactions that may peak during filing season as returns are prepared and filed. Taxpayers and practitioners should always be wary of participating in transactions that seem “too good to be true.” 

The IRS remains committed to having a strong, visible, robust tax enforcement presence to support voluntary compliance. To combat the evolving variety of these potentially abusive transactions, the IRS created the Office of Promoter Investigations (OPI) to coordinate service-wide enforcement activities and focus on participants and the promoters of abusive tax avoidance transactions. 

The IRS has a variety of means to find potentially abusive transactions, including examinations, promoter investigations, whistleblower claims, data analytics and reviewing marketing materials.

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