Category Archives: criminal tax law

The Internal Revenue Service Criminal Investigation (IRS-CI) released its Fiscal Year 2024 (FY24) Annual Report today that details significant cases involving crimes ranging from tax fraud to cybercrime, enhanced domestic and foreign partnerships and investigative statistics from FY24 that took place from Oct. 1, 2023, to Sept. 30, 2024.

This year’s report highlights several firsts for the agency:

• the first sentencings tied to syndicated conservation easement schemes, 
• the first indictment and guilty plea of a U.S. taxpayer solely for not paying taxes on gains from cryptocurrency sales, 
• the first time Treasury agencies have led a task force and public outreach series to combat fentanyl trafficking, and 
• a historic financial settlement by the world’s largest cryptocurrency exchange for violating anti-money laundering and sanctions laws.

In FY24, IRS-CI initiated more than 2,667 criminal investigations, obtained 1,571 convictions, and reclaimed its 90% conviction rate. The agency’s investigative work identified over $9.1 billion in fraud from tax and financial crimes, obtained court orders totaling $1.7 billion in restitution to the IRS and seized criminal assets totaling approximately $1.2 billion.

Other significant items in this year’s annual report include:

• IRS-CI extended the agency’s international footprint by launching a new attaché post in Nassau, Bahamas, and a Cyber attaché post in Singapore.
• The International Training Team delivered more than 30 trainings to over 930 participants from more than 70 countries. These trainings play a critical role in global partnerships and investigations.
• Combatting cybercrime continued to be a focus for the agency. In FY24 alone, IRS-CI initiated 111 new cybercrime investigations, and defendants in these cases continue to receive prison sentences averaging more than five years.

The report also includes case examples for each U.S. field office, details about the specialized services provided by IRS-CI, and additional statistics about the agency for FY24.

IRS-CI is the law enforcement arm of the IRS, responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money laundering, public corruption, healthcare fraud, identity theft and more. IRS-CI special agents are the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code. The agency has 20 field offices located across the U.S. and 14 attaché posts abroad.

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On December 4, 2024 we posted STOP BOI Filings (for now) - Texas DC Issues Nationwide Injunction Against The CTA And Its Impending January 1, 2025 Filing Deadline, where we discussed that the Texas District Court Issued a nationwide injunction against the enforcement of the CTA and BLI reporting requirements in Top Cop Shop, Inc. et al. vs. Garland.

The government filed its notice of appeal of the decision of the U.S. District Court for the Eastern District of Texas in Texas Top Cop Shop Inc. v. Garland on December 5, 2024. 

Litigation is currently split between courts ruling on the act’s constitutionality. In March the U.S. District Court for the Northern District of Alabama granted summary judgment for the National Small Business Association in National Small Business United v. Yellen, turning aside arguments that the CTA could be viewed as a proper exercise of congressional authority under the commerce clause, Congress's taxing power, or Congress's power to oversee foreign affairs and national security.

More recently, the government has successfully defended the CTA in district court. In Community Associations Institute v. Yellen, the U.S. District Court for the Eastern District of Virginia on October 24 denied the group's injunctive and declaratory relief motion attempting to prevent enforcement of the CTA.

In Firestone v. Yellen, No. 3:24-cv-01034, the U.S. District Court for the District of Oregon in September denied a request for a preliminary injunction against the CTA from seven individuals challenging the constitutionality of the law. The court found that the plaintiffs were unlikely to prevail. Both of those cases are also on appeal to the Fourth and Ninth Circuits, respectively.

While The Recent Injunction Brings Hope To Some Hoping To Avoid This Reporting, It Creates Uncertainty For Everyone Else.

Some lawyers are suggesting that it is unclear whether this injunction will still be in effect by the reporting deadline of December 31, 2024. 

Therefore, Filing The Reports By Year-End,
Or At Least Being Ready To Do So, Appears To Be
Advisable In The Face Of Such Uncertainty.

Remember that this injunction it’s only a preliminary injunction and not a permanent one, which can be overruled and return the status quo prior to the ruling, requiring reporting by December 31, 2024.

On the other hand, many Americans are hoping for a favorable outcome from an eventual higher court ruling, striking down this law as unconstitutional. There are also those Americans who are hoping that the Trump Administration will prevent enforcement of the CTA and/or request Congress to remove it.

Until then remember there are hefty penalties of $500 per day up to $10,000, as well as criminal penalties, can apply for compliance failures. 

The preliminary injunction only delays enforcement of the CTA until a court issues a final ruling on the merits of the constitutionality of the CTA or an appeals court overturns the injunction. 

Need Help Filing Your BOI Report?

     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 Jenner v. Commissioner, 163 T.C. No. 7 (2024), the United States Tax Court ruled on the applicability of Collection Due Process (CDP) requirements to Foreign Bank Account Reporting (FBAR) penalties. The case, decided on October 22, 2024, involved Stephen C. Jenner and Judy A. Jenner as petitioners against the Commissioner of Internal Revenue.

The Jenners were assessed FBAR penalties for allegedly failing to timely file foreign bank account reports from 2005 to 2009.

The Treasury's Bureau of the Fiscal Service informed the Jenners that funds would be withheld from their monthly Social Security benefits to satisfy these debts. 

The Jenners requested a CDP hearing, which was denied by the IRS.

The Tax Court held that FBAR penalties are not subject to the requirements of I.R.C. §§6320 and 6330. The court ruled that it lacked jurisdiction in this case.

The Tax Court's decision was based on several key factors:

• Nature of FBAR Penalties: The court determined that FBAR penalties are not taxes imposed by the Internal Revenue Code.
• Scope of CDP Requirements: Sections 6320 and 6330 of the Internal Revenue Code, which govern CDP rights, apply specifically to unpaid taxes.
• Jurisdiction: Since FBAR penalties are not taxes, the Tax Court concluded it did not have jurisdiction over the case.
• Collection Mechanism: The court noted that the collection mechanism for FBAR penalties is not lien or levy, which are the methods typically subject to CDP procedures. 
• Query can the IRS execute a levy on their Social Security Income without first going the District Court to obtain an FBAR judgment? 

This ruling clarifies the distinction between tax penalties and FBAR penalties in terms of procedural rights. It emphasizes that FBAR penalties, while administered by the IRS, are not subject to the same collection due process protections as tax liabilities under the Internal Revenue Code. 

The decision limits the avenues for contesting FBAR penalty collections and underscores the separate legal framework governing these penalties compared to regular tax assessments.

Read more at: Tax Times blog

On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a preliminary injunction in favor of the plaintiffs in the case of Texas Top Cop Shop, Inc. et al. vs. Garland. 

In so ruling, “[t]he Court has determined that the CTA and Reporting Rule are likely unconstitutional for purposes of a preliminary injunction. 

It has not made an affirmative finding that the CTA and Reporting Rule are contrary to law or that they amount to a violation of the Constitution.” 

The Court Went Further And Ruled That This Is A
Nationwide Injunction, Applying Against Enforcement Of
The CTA And Its Impending January 1, 2025 Filing Deadline.

The Court stated: “…the CTA, 31 U.S.C. § 5336 is hereby enjoined. Enforcement of the Reporting Rule, 31 C.F.R. 1010.380 is also hereby enjoined, and the compliance deadline is stayed under § 705 of the APA. Neither may be enforced, and reporting companies need not comply with the CTA’s January 1, 2025, BOI reporting deadline pending further order of the Court.”

The CTA required that an estimated 32.6 million existing business entities disclose their beneficial owners to the Treasury Department’s Financial Crimes Enforcement Network before 2025. The government argued that the law’s function, to crack down on anonymous shell companies and deter money laundering, terrorism financing, and other illicit economic activity, falls within Congress’s regulatory duties.

But the CTA still fails to pass muster, even if anonymous corporate operations can be regulated by Congress, because the Constitution’s Commerce Clause can’t be leveraged to compel the disclosure of information for law enforcement purposes, the court’s opinion said.

We note this is a preliminary injunction, and we urge reporting companies to pay attention for additional updates and proceedings in this and other cases which could modify or change this order.

Need Help Filing Your BOI Report?

     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