Category Archives: criminal tax law

In addition to the term of imprisonment, U.S. District Judge Marcia G. Cooke ordered Betancourt to serve three years of supervised release and to pay approximately $9,033,318 in restitution to the United States.

According to Law360, a federal judge ruled on February 24, 2020 that prosecutors can use documents from the Panama Papers leak at the criminal trial of an accountant facing tax conspiracy charges, despite defense attorneys’ complaint that the information was stolen.

U.S. District Judge Richard M. Berman ruled during a hearing in his Manhattan courtroom that prosecutors can use documents leaked from Panamanian law firm Mossack Fonseca at the March trial of Elder Gaffey & Paine PC accountant Richard Gaffey. The judge also signed off on prosecutors calling a German criminal investigator to the stand to bolster the documents' authenticity.

Gaffey stands accused of helping clients conceal overseas assets to avoid paying taxes in the U.S. with the help of former Mossack Fonseca attorney Ramses Owens.

The now defunct law firm, which specialized in handling offshore accounts, made news in 2016 when the International Consortium of Investigative Journalists obtained more than 11 million leaked documents detailing the firm’s work moving money for wealthy and powerful clients.

Ahead of the hearing, prosecutors told the judge in a filing that they had obtained documents related to one of Gaffey's clients through a request to German criminal investigators, who got their hands on the entire database.

Gaffey's attorneys complained in their own filing that it remains unclear how the documents were obtained or who had access to them before they found their way to Germany. They argued the Panama Papers leak was on par with former CIA programmer Joshua Schulte's alleged disclosures to WikiLeaks, which are the subject of an ongoing criminal trial.

"It is offensive to public policy to prosecute individuals by relying on documents only obtained through criminal conduct at the same time that the government aggressively prosecutes people who engage in exactly the same conduct," Gaffey's attorneys wrote.

On February 24, 2020, Judge Berman approved their request to call a German agent as a witness to testify about how reliable German authorities have found the database and why they believe it is authentic, including that some of the documents matched those separately obtained in raids by German police.

Judge Berman sided with prosecutors on the issue. In support of allowing the terms, the judge pointed to a 2006 ruling in U.S. v. Stein, the case involving allegations of illegal tax shelters created by KPMG, that rejected a bid by the defendants to cut terms including "tax shelter" from their indictment.

According to a recent government statistics, there are roughly 9 million US citizen living outside the US, many of whom are citizens by birth but have little or no family or economic ties to this country.

For many, the answer is no, and when they learn of their obligations, they seek to "turn in" their U.S passports, or at least explore the option of renouncing their U.S. citizenship. What many find out is that it is not so simple for the accidental citizen, particularly for those who have accumulated some level of wealth over their lifetime.

These procedures are only available to U.S. citizens with a net worth of less than $2 million (at the time of expatriation and at the time of making their submission under these procedures), and an aggregate tax liability of $25,000 or less for the taxable year of expatriation and the five prior years.

If these individuals submit the information set forth below and meet the requirements of these procedures, they will not be “covered expatriates” under IRC 877A, nor will they be liable for any unpaid taxes and penalties for these years or any previous years.

These procedures may only be used by taxpayers whose failure to file required tax returns (including income tax returns, applicable gift tax returns, information returns (including Form 8938, Statement of Foreign Financial Assets), and Report of Foreign Bank and Financial Accounts (FinCEN Form 114, formerly Form TD F 90-22.1)) and pay taxes and penalties for the years at issue was due to non-willful conduct. Non-willful conduct is conduct that is due to negligence, inadvertence, or mistake or conduct that is the result of a good faith misunderstanding of the requirements of the law.

 

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The IRS has issued Rev Proc 2020-17, 2020-12 IRB, that exempts from information reporting requirements certain tax-favored foreign trusts that are established and operated exclusively or almost exclusively to provide pension or retirement benefits, or to provide medical, disability, or educational benefits. The procedure also provides guidance on how to request abatement, or a refund, of penalties for failure to comply with these information reporting requirements. 

1. An applicable tax-favored foreign trust means a tax-favored foreign retirement trust or a tax-favored foreign non-retirement savings trust.
2. An eligible individual means an individual who is, or at any time was, a U.S. citizen or resident and who is compliant (or comes into compliance) with all requirements for filing a U.S. federal income tax return (or returns) covering the period such individual was a U.S. citizen or resident, and to the extent required under U.S. tax law, has reported as income any contributions to, earnings of, or distributions from, an applicable tax-favored foreign trust on the applicable return (including on an amended return).
   

3. A tax-favored foreign retirement trust means a foreign trust for U.S. tax purposes that is created, organized, or otherwise established under the laws of a foreign jurisdiction (the trust’s jurisdiction) as a trust, plan, fund, scheme, or other arrangement (collectively, a trust) to operate exclusively or almost exclusively to provide, or to earn income for the provision of, pension or retirement benefits and ancillary or incidental benefits, and that meets certain requirements established by the laws of the trust’s jurisdiction. 
4. A tax-favored foreign non-retirement savings trust means a foreign trust for U.S. tax purposes that is created, organized, or otherwise established under the laws of a foreign jurisdiction (the trust’s jurisdiction) as a trust to operate exclusively or almost exclusively to provide, or to earn income for the provision of, medical, disability, or educational benefits, and that meets certain requirements established by the laws of the trust’s jurisdiction.

Procedures for Requesting Abatement or Refund of IRC Sec. 6677 Penalties.

Since the IRC Sec. 6677 penalties no longer apply to eligible individuals who fail to report applicable tax-favored foreign trusts, the IRS has provided such individuals who have been assessed or paid IRC Sec. 6677 penalties within the IRC Sec. 6511(a) limitations period, with procedures for requesting abatement of penalties assessed or refund of penalties paid.

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Marini & Associates, P.A.

for a FREE Tax Consultation Contact us at:

www.TaxAid.com or www.OVDPLaw.com or

Toll Free at 888-8TaxAid (888)882-9243.