Category Archives: criminal tax law

In IR-2020-33, the IRS disclosed that leaders from five international tax organizations came together in Sydney, Australia, during the week of February 17, 2020 to review the J5’s progress in their fight against transnational tax crime and set priorities for the year ahead.

The Joint Chiefs of Global Tax Enforcement (J5) was formed in 2018 after a call to arms from the OECD Taskforce on Tax Crime and has been working together to gather information, share intelligence and conduct coordinated operations, making significant progress in each country’s fight against transnational tax crime.

The J5 includes the Australian Taxation Office (ATO), Her Majesty’s Revenue and Customs (HMRC) from the UK, Internal Revenue Service (IRS) Criminal Investigations from the US, the Canadian Revenue Agency (CRA) and the Dutch Fiscal Information and Investigation Service (FIOD).

Together, each country is better equipped in the fight against those who commit, promote and enable international tax crimes and money laundering.

Last month, the group executed a globally coordinated day of action against an international financial institution suspected of facilitating money laundering and tax evasion.  
Evidence, Intelligence And Information Collection Activities Such As Search Warrants, Interviews And Subpoenas

Were Undertaken In Each Country And Significant Information Was Obtained And Shared As A Result.

 

Australian Taxation Office (ATO) Deputy Commissioner and Australia’s J5 Chief, Will Day said the investigation into this financial institution and its clients is just one example of the work the ATO has been doing with the J5 to investigate Australians who are using offshore arrangements to evade their tax obligations.

“Tackling the abuse of correspondent banking arrangements was at the heart of our day of action last month, and we are looking beyond just a single financial institution in Central America. We have fears there are many hundreds of Australians caught up in these arrangements and working with our J5 partner agencies we are continuing to tighten the net on those who are engaging in and enabling transnational tax crime.”

“The effectiveness and success of the J5 is underpinned by a strong understanding of the common risks and threats we face. By working together to identify and understand these issues, we are able to shape and strengthen our operational, tactical and strategic response to focus on those areas that cause the most impact. We’re tackling tax crime together,” Day said.

The group has shared expertise to identify the most common and impactful mechanisms, enablers and structures that are being exploited to commit transnational tax crime and will be focusing on those criminals who present the greatest threat to the J5 countries in 2020.

Simon York, Chief and Director of Her Majesty’s Revenue and Customs (HMRC)’s Fraud Investigation Service said:
 

That The Introduction Of Automatic Exchange of
Financial Information Between Countries,
Registers of Beneficial Ownership, Information

 

From Worldwide Data Leaks And Improved Tax Enforcement Had Made Hiding Wealth Offshore Increasingly Difficult.

 

“What this work shows is that tax evaders and organized criminals are resorting to ever more complex and obscure methods to hide their illicit gains and wealth. To stay one step ahead we have brought together world leading analysts to unpick their complex trails.

Being a partner in the J5 means that we have five times the analytical capability, five times the data and five times the insight at our disposal. Harnessing this, we are now shining a light on evaders across the world, targeting our next wave of enforcement activity and ensuring no big-time tax criminal remains beyond our collective reach.”

“Seeing the transformation of the J5 from a group of countries with similar challenges and similar goals to a fully integrated organization that is seeing operational successes is very exciting and should be a model for international collaboration at all levels,” said Don Fort, Chief of IRS Criminal Investigation.

“The information shared, efficiencies gained, and investigations started based on the collaboration within this group have moved the needle by years in terms of results and successes. I expect 2020 will be a game changer for the J5 and criminals will not know what hit them.” Fort said.

Hans van der Vlist, Chief and General Director Fiscal Information and Investigation Service (FIOD), the Netherlands said “The J5 challenge in the United States at the end of 2019 was important in our fight against crypto criminality. The operational cooperation within the J5 is beginning to pay off and we see that the cooperation also has an impact on local investigations. For instance, last Monday the FIOD had action days in the Netherlands in two crypto investigations."

Canada Revenue Agency (CRA) Chief Eric Ferron said “To attack sophisticated criminal tax evasion, we need coordinated action and to be sharing best practices. This is why we value our partnership with the J5; it has allowed us to broaden our reach, better equipping all member countries to combat tax crimes. We look forward to continued collaboration and providing results as they become available.”

On January 28, 2020 we posted Postmark Rule Did Not Apply to Late-Filed Tax Return Requesting a Refund where we discussed that a district court has held that the postmark rule did not apply to a late-filed tax return that sought a refund of taxes paid. But the court noted that this is an issue of first impression for the 7th Circuit Court of Appeals which might have a different view.

The court brought up an issue that it said was a question of first impression for the 7th Circuit Court of Appeals. The issue was that perhaps there are two different filing dates for the taxpayers' tax return and their refund claim (even though both were done with one document). The return was filed when it was received by the IRS, under  Emmons. But maybe the refund claim was filed when it was mailed.

While the district court said it could find no support for this theory (and, in fact, the IRS cited many cases that consistently treated the date that an untimely tax return was received as the filing date of the administrative claim), it said that the 7th Circuit might have a different view.

Now in Harrison (DC WI 1/29/2020) 125 AFTR 2d ¶2020-397 the district court, vacating its own decision, has held that the postmark rule did apply to a late-filed tax return that sought a refund of taxes paid.

Under the postmark rule, a tax return is deemed to have been filed on the date of mailing but only if the postmark date is before the due date for the return. (Code Sec. 7502(a)(2))

But the postmark rule does apply, in some situations, to claims for refunds even if the postmark is after the due date for the return. Where a claim for credit or refund is made on an original tax return, and the timely mailing rule wouldn't apply to the return itself because it was postmarked after the return due date, the rule will apply separately to the claim for credit or refund if: (1) the postmark date is within the period that is three years (plus the period of any extension of time to file) from the day the tax is paid or considered paid; (2) the claim for credit or refund is delivered after this three-year period; and (3) the conditions of the postmark rule are otherwise met. (Reg. § 301.7502-1(f)(1))

The amount of a refund cannot exceed the portion of the tax paid within the period, immediately preceding the filing of the claim, equal to three years plus the period of any extension of time for filing the return. (Code Sec. 6511(b)(2)(A)) The period is often referred to as the look-back period.

A tax return that claims a refund qualifies as a claim for refund under Code Sec. 6511. (Reg. § 301.6402-3(a))

Taxes withheld during the year are deemed to have been paid on the 15th day of the fourth month following the close of the tax year. (Code Sec. 6513(b)(1)).

Twenty days after the original district court decision, the taxpayers motioned the court to reconsider based on Reg. § 301.7502-1(f)(1).

Upon seeing the taxpayer's new information, the IRS conceded it had no basis to oppose the motion for reconsideration, and the IRS confirmed that it will issue a refund in the amount sought in the taxpayer's complaint, plus statutory interest.

The district court vacated its previous decision that, since the tax return was filed late, the postmark rule did not apply. In accordance with Reg. § 301.7502-1(f)(1), the postmark rule did apply.

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 orToll Free at 888-8TaxAid (888) 882-9243

Posted by Ronald A. Ma