Category Archives: criminal tax law

An IRS official speaking at a Federal Bar Association virtual meeting on March 3, 2021 said that three of the IRS’s service centers are facing new mail backlogs due to winter storms and quarterly return filings. The official, De Lon Harris, deputy commissioner for examinations, Small Business/Self-Employed Division, couldn’t estimate how long it would take the IRS to process its incoming mail. 

According to Harris, the IRS is processing payments received immediately. The IRS’s top priority for submissions to process are 2020 tax returns claiming refunds, he said.

However, Harris also said that the IRS’s Austin, TX, Kansas City, MO, and Ogden, UT service centers are a couple of weeks behind in opening mail due to a combination of closures due to the winter storms (Austin) and taxpayers filing quarterly business returns that were due at the end of January (Kansas City and Ogden). The fourth service center, in Fresno, CA, is opening mail the same day it’s received, Harris said.  

When asked about the processing of net operating loss (NOL) carryback claims, which are supposed to be processed within 90 days, Harris noted that the COVID-19 pandemic is continuing to cause processing delays, “but we no longer have these semi-truck trailers sitting at the campuses full of mail like we did several months ago.”

The IRS likely received more NOL carryback claims than usual in 2020 because the Coronavirus Aid, Relief, and Economic Security (CARES) Act (PL 116-136; March 27, 2020) allows business with NOLs incurred in 2018, 2019 or 2020, to carry back those NOLs five years so they can get a refund of previously paid taxes.

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Source  

Thomson Reuters

Read more at: Tax Times blog

According to Law360, A married couple lost their attempt to reverse a $511,000 OVDP settlement agreement they made with the IRS that had settled their failure to report their Swiss bank account holdings when a D.C. federal judge ruled they had entered into it voluntarily.

Robert Harrison and Julianne Sprinkle could not show that they signed their agreement under duress, the court said Thursday, dismissing the case. If they thought their case required judicial review, they should have paid the penalty and pursued the administrative process of seeking a refund, according to the court.

Harrison and Sprinkle took advantage of the Internal Revenue Service's Offshore Voluntary Disclosure Program in 2018 to resolve their failure to file Report of Foreign Bank and Financial Accounts for an unreported Swiss bank account worth up to $1.2 million, the judge said. The OVDP program involves a 27.5% penalty on the highest balance in an undeclared foreign account in exchange for lower civil penalties and possible amnesty from criminal prosecution.

The couple tried to switch to another amnesty program, Streamlined Domestic Procedures, which has a 5% penalty. but the IRS rejected their petition. The couple thus had to choose between the OVDP or going to court and risking a higher penalty. They chose the OVDP and paid $511,000 in penalties and interest in 2018. As part of their settlement, they waived the right to pursue an administrative remedy with the IRS, according to the opinion.

Two years later, the pair tried to nullify the settlement. They claimed they took the OVDP offer under duress, given their fear of a potential penalty should they go to court. 

They also argued the IRS violated the Administrative Procedure Act and due process by failing to provide guidance on the criteria used to switch to the streamlined program.

The court rejected the couple's arguments. Suing under the APA is proper only when there are no forms of adequate remedy, the court said. Harrison and Sprinkle had an opportunity to pursue their damages by paying their penalty and pursing a tax refund suit against the IRS. They did not, the court pointed out.

The government afforded the couple an opportunity for judicial due process, but they chose to settle their dispute through the OVDP, which included an agreement not to take that route, the court added.

The couple's duress claim fails as well, according to the court. The IRS did not threaten them with a particular action, and the steep penalty they might have faced in losing a court action resulted from an act of Congress, not the IRS, the ruling said.

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In a memo to all IRS employees, the IRS says it is implementing a temporary deviation from its regular procedures that will allow electronic or digital signatures on various forms that currently require handwritten signatures, i.e., that are not e-fileable. The decision was made due to taxpayer representatives' concerns about securing handwritten signatures during the coronavirus pandemic.

The memo notes that electronic and digital signatures may be created by many different technologies. No specific technology is required for this purpose during this temporary deviation.

The memo is effective for the forms listed below, that are signed and postmarked from January 1, 2021, through June 30, 2021.

The forms are:

• Form 3115, Application for Change in Accounting Method;
• Form 8832, Entity Classification Election;
• Form 8802, Application for U.S. Residency Certification;
• Form 1066, U.S. Income Tax Return for Real Estate Mortgage Investment Conduit;
• Form 706, U.S. Estate (and Generation-Skipping Transfer) Tax Return;
• Form 706-NA, U.S. Estate (and Generation-Skipping Transfer) Tax Return;
• Form 709, U.S. Gift (and Generation-Skipping Transfer) Tax Return;
• Form 1120-ND, Return for Nuclear Decommissioning Funds and Certain Related Persons;
• Form 1120-RIC, U.S. Income Tax Return for Regulated Investment Companies;
• Form 1120-C, U.S. Income Tax Return for Cooperative Associations;
• Form 1120-REIT, U.S. Income Tax Return for Real Estate Investment Trusts;
• Form 1120-L, U.S. Life Insurance Company Income Tax Return;
• Form 1120-PC, U.S. Property and Casualty Insurance Company Income Tax Return;
• Form 1128, Application to Adopt, Change or Retain a Tax Year;
• Form 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts;
• Form 3520-A, Annual Information Return of Foreign Trust With a U.S. Owner;
• Form 8453 series, Form 8878 series, and Form 8879 series regarding IRS e-file Signature Authorization Forms; and
• Form 8038, Information Return for Tax-Exempt Private Activity Bond Issues; Form 8038-G, Information Return for Tax-Exempt Governmental Obligations; and Form 8038-GC, Information Return for Small Tax-Exempt Governmental Bond Issues, Leases, and Installment Sales.

This is effective for the forms listed above, that is in them postmarked from January 1, 2021 through June 30, 2021.

The IRS previously allowed electronic or digital signatures for a smaller group of forms through December 31, 2020. 

Have IRS Tax Problems?

     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

On March 11, 2021 the DoJ announced the filing of a criminal Information against RAHN+BODMER CO. (“R+B”), a financial institution located in Zurich, Switzerland. The Information charges R+B with one count of conspiring to help U.S. accountholders evade their U.S. tax obligations, file false federal tax returns, and otherwise defraud the Internal Revenue Service (“IRS”) by hiding hundreds of millions of dollars in offshore bank accounts at R+B. 

They also announced a deferred prosecution agreement with R+B (the “Agreement”), under which R+B admits to its unlawful conduct in assisting U.S. accountholders in violating their legal duties. R+B’s admissions are contained in a detailed Statement of Facts attached to the Agreement. 

The Agreement Requires R+B To Provide Ongoing Assistance To The Department of Justice And To Pay A Total of $22 Million In Restitution, Forfeiture, And Penalties.

If R+B abides by all of the terms of the Agreement, the Government will defer prosecution on the Information for three years and then seek to dismiss the charge. 

Rahn+Bodmer now admits, it aided U.S. taxpayers in evading their tax responsibilities to the tune of more than $16 million. 

This venerated banking institution knowingly offered banking services that assisted its U.S. customers in evading their tax obligations, and affirmatively schemed to conceal from the IRS the assets and income of U.S. accountholders. 

Through a years-long scheme, the R+B bank hid the assets of U.S. accountholders to shield them from their tax obligations. Today’s admission and agreement provide a clear path to recovery of funds owed to the U.S. government, and sends a strong signal that offshore accounts are not beyond the reach of special agents with IRS CI.” 

From at least in or about 2004 and continuing until at least in or about 2012, R+B conspired with certain of its U.S. accountholders and others to defraud the United States with respect to taxes, file false federal tax returns, and commit tax evasion. 

R+B’s bankers assisted U.S. accountholders in concealing their ownership and control of assets and funds held in undeclared R+B accounts, which enabled those U.S. accountholders to evade their U.S. tax obligations. R+B admitted to holding undeclared accounts on behalf of approximately 340 U.S. taxpayers, who collectively evaded approximately $16.4 million in U.S. taxes between in or about 2004 and in or about 2012. 

The assets under management that R+B held for undeclared U.S. accountholders increased from approximately $391 million in 2004 to approximately $550 million in 2007, its peak year for undeclared assets under management. In furtherance of the scheme to help U.S. taxpayers hide assets from the IRS and evade taxes, R+B undertook the following actions, among others: R+B opened “numbered” or “pseudonym” accounts for U.S. accountholders in order to reduce the risk that U.S. tax authorities would learn their identities. 

R+B opened and maintained accounts for U.S. accountholders in the names of non-U.S. corporations, foundations, trusts, or other legal entities, thereby helping U.S. taxpayers conceal their beneficial ownership of the accounts. 

R+B agreed to hold bank statements and other account-related mail in Switzerland, rather than send them to the U.S. accountholders in the United States, which helped ensure that documents reflecting the existence of the accounts remained outside the United States and beyond the reach of U.S. tax authorities. 

After Liechtenstein and the United States signed a Tax Information Exchange Treaty in December 2008, R+B transferred the undeclared assets of certain U.S. taxpayers from accounts held in the names of sham foundations organized under the laws of Liechtenstein to new accounts held in the names of new sham foundations organized under the laws of Panama, in an effort to further conceal the accounts from U.S. tax authorities. 

R+B allowed U.S. accountholders and third-party asset managers to make withdrawals by check from undeclared accounts in amounts of less than $10,000, in an apparent attempt to conceal transactions from U.S. authorities. 

On occasion, R+B opened accounts for U.S. taxpayers who were exiting UBS AG and other Swiss banks, and allowed these U.S. taxpayers to continue to conceal their undeclared assets at R+B. 

R+B additionally opened “escrow” accounts on behalf of a Swiss attorney to facilitate the transfer of undeclared assets of U.S. accountholders that had been converted to gold and other precious metals held in a vault at UBS. 

R+B helped U.S. accountholders to repatriate funds to the United States in a manner designed to ensure that U.S. tax authorities did not discover the undeclared accounts, including by transferring the funds of one U.S. accountholder in increments of approximately $100,000 to another Swiss bank before the U.S. accountholder routed the funds to a diamond dealer in Manhattan, where the U.S. accountholder ultimately received them.

R+B, through its bankers, made regular visits to the United States to solicit, open, and service undeclared accounts of U.S taxpayers. Under today’s resolution, R+B is required to cooperate fully with the Department of Justice and affirmatively disclose new information it may later uncover regarding U.S.-related accounts. 

R+B is also required to disclose information consistent with the Department’s Swiss Bank Program relating to accounts closed between January 1, 2009, and December 31, 2019. 

Read more at: Tax Times blog