Category Archives: criminal tax law

According to Law360, the estate of a deceased corporate attorney told the Eleventh Circuit  that the U.S. government wrongly taxed $3 million claimed by his stepchildren, arguing that the amount was properly deducted as a contracted business transaction under the Internal Revenue Code.

Representing the estate of Richard Spizzirri during oral arguments in Miami, Joanne M. O'Connor of Jones Foster told a three-judge panel that the individual payouts of $1 million to Spizzirri's three stepchildren were listed in a prenuptial agreement with his fourth wife — Holly Lueders, the childrens' mother — and are therefore deductible as claims "contracted bona fide and for an adequate and full consideration in money or money's worth" under IRC Section 2053.

O'Connor further argued that the payments to the children in the third modification of the agreement were "clearly transactional and an ordinary course of business in terms of the situation they were in at the time where she's agreeing to ratify and confirm her waiver of support rights."

After Spizzirri died in 2015, the stepchildren sued the estate in probate court to get their money. The estate then deducted the payments under Section 2053, which allows the estate to deduct such claims "contracted bona fide" and without them being considered gifts. 

The Stepchildren Weren't Included In Spizzirri's Will, But Were Included In The Prenup's Agreement's Modification In 2005.

The Internal Revenue Service rejected the deductions, finding that the estate was liable for more than a $2.2 million deficiency and assessed a more than $450,000 penalty, court records show. The Tax Court upheld the rejection in February 2023 after finding that the three $1 million payouts had donative intent.

U.S. Circuit Judge Britt Grant questioned O'Connor on whether the course of business was normal given Spizzirri's "incredibly odd family circumstances." 

"Do we look at what he usually would have done or what an ordinary person would have usually done?" Judge Grant said. In this case, O'Connor said the ordinary course of business "refers to the particular circumstances."

U.S. Circuit Judge Robert Luck noted the prenup or antenuptial agreement allowed for the one-time payments to the stepchildren.

"The agreement said ... we want you to put this in the will. In other words, we wouldn't even be here if the decedent had actually complied with his obligations under the antenuptial agreement."

But Judge Luck also added that contract provisions are read as a whole, saying the agreement "seems to suggest that the entire package was done as a way to resolve all marital and estate issues."

Arguing for the government, Pooja Boisture of the U.S. Department of Justice said the agreement's provisions should be read independently, saying the 2005 modification was a "testamentary freedom," or the right to distribute his wealth has he sees fit after death, and "has no value in money or money's worth."

Boisture added that Spizzirri's stepchildren had an expectation of inheritance taken from the agreement's modification. In the modification, Boisture said Spizzirri intended to put the stepchildren in his will.

"If that is not an example of an expectation of inheritance, I do not know what is," Boisture said.

 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

According to DoJ, a former Florida woman was sentenced yesterday to three years in prison for willfully failing to file tax returns and naturalization fraud.

According to court documents and statements made in court, Lucia Andrea Gatta was an Italian citizen, born in Chile. In 2001, Gatta moved to and began residing in the United States, and in 2012 she became a naturalized U.S. citizen.

Starting with tax year 2005, Gatta stopped filing tax returns or paying taxes on her income to the IRS. 

From 2011 To 2013, Gatta Possessed Millions Of Dollars
In Assets Held In A Foreign Bank Account In Switzerland
That Earned Her Hundreds Of Thousands In Interest
And Dividend Income Every Year.

U.S. citizens and permanent residents are required to file with the U.S. Treasury Department a FinCEN Form 114 - Report of Foreign Bank and Financial Accounts (FBAR) if the combined balance of all foreign accounts they own, have a financial interest in or signature authority over is more than $10,000 at any point during a calendar year. For those years, Gatta did not file an annual FBAR reporting her interest in her Swiss bank account.

During her citizenship application process, Gatta falsely reported that she had not committed crimes, including her willful failure to file tax returns. Instead, Gatta lied to immigration officials about her income and claimed that her family financially supported her. She also submitted to a U.S. immigration officer false documents that purported to show she had minimal income.

Once Gatta knew she was under criminal investigation, she left the United States for Italy and contested her extradition for over 18 months. But in August 2023, the Italian government ordered Gatta’s extradition to the United States to face charges for her willful failure to file tax returns for tax years 2011 through 2013 and naturalization fraud.

In addition to the term of imprisonment, U.S. District Judge Aileen M. Cannon ordered Gatta to serve one year of supervised release and to pay a $50,000 fine.

 Do You Have Undeclared Offshore Income?

Read more at: Tax Times blog

As we pointed out on May 10, 2023 in our post IRS Dirty Dozen List Targets 3 Schemes With International Elements the IRS has been targeting Foreign Captive Insurance as noncompliant with US tax rules.

In these transactions, U.S. business owners of closely held entities participate in a purported insurance arrangement with a Puerto Rican or other foreign corporation in which the U.S. business owner has a financial interest. The U.S. business owner (or a related entity) claims a deduction for amounts paid as premiums for “insurance coverage” provided by a fronting carrier, which reinsures the “coverage” with the Puerto Rican or other foreign corporation. Despite being labeled as insurance, these arrangements lack many of the attributes of legitimate insurance. The characteristics of the purported insurance arrangements typically will include one or more of the following: implausible risks covered (or duplicative coverage of risks already covered by commercial insurance), excessive premiums indicative of non-arm’s length pricing and a lack of business purpose for entering the arrangement.

Where appropriate, the IRS will challenge the purported tax benefits from these types of transactions and impose penalties. The IRS Criminal Investigation Division is always on the lookout for promoters and participants of these types of schemes. Taxpayers should think twice before including questionable arrangements like this on their tax returns. After all, taxpayers are legally responsible for what's on their return, not a promoter making promises and charging high fees. Taxpayers can help stop these arrangements by relying on reputable tax professionals they know and trust.

Now tax courts are green with the IRS and into recent holdings Jones et al. v. Commissioner, docket numbers 17165-19, 17169-19, 17177-19, 17178-19, 17187-19, 17201-19, 17205-19 and 17206-19, in the U.S. Tax Court and Farmers and Merchants Bancshares Inc. & Subsidiaries v. Commissioner, docket number 3394-25, in the U.S. Tax Court the Tax Court has held that the arrangements did not qualify as insurance.

In Jones, the court held that Shareholders in a California company cannot deduct their premium payments for insurance coverage from a captive insurer, the U.S. Tax Court ruled Tuesday, saying the arrangement did not constitute insurance for federal tax purposes. 

The ruling turned on whether the arrangement passed muster as insurance, the court said. Despite Sani-Tech's effort to meet the required risk distribution by pooling its risks with other, unrelated captives, the court found Clear Sky did not achieve risk distribution. There was a circular flow of money and the policies were not arm's-length contracts, the court said. Furthermore, Clear Sky was not operated as an insurance company, some of its policies were likely invalid and the premiums were unreasonable, the court said. 

In Farmers and Merchants Bancshares Inc. the court disallowed two years' worth of tax deductions tied to a reinsurance captive finding that the arrangement had no economic purpose other than tax avoidance.

The IRS warns anyone thinking about using one of these schemes – or similar ones – that the agency continues to improve investigation and enforcement in these areas by utilizing new and evolving data analytic tools and enhanced document matching.

Whether anchored offshore or in the U.S., abusive transactions and schemes remain a high priority for the IRS. 

The IRS also created the Office of Fraud Enforcement (OFE) and Office of Promoter Investigations (OPI) to coordinate service-wide enforcement activities against taxpayers committing tax fraud and promoters marketing and selling abusive tax avoidance transactions and schemes to effectuate tax evasion.

Like Your Freedom?

 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 14, 2025 we posted Courts Order 6,700 IRS Employees to Be Rehired But They Can Still Be Properly Fired by May 15, where we discussed that two judges ordered federal agencies on February 14, 2025 to reinstate tens of thousands of workers with probationary status who had been fired across 19 agencies as part of President Trump’s government-gutting initiative. 

“The Court has read news reports that, in at least one agency, probationary employees are being rehired but then placed on administrative leave en masse,” the order said. “This is not allowed by the preliminary injunction, for it would not restore the services the preliminary injunction intends to restore.” Both judges ordered that the agencies offer to reinstate any probationary employees who had improperly been terminated. Neither order was a final decision in the case.  

Now according to The Tax Adviser,  the federal government will pay about 7,000 IRS probationary employees, who were laid off less than a month ago, not to work while lawsuits over layoffs wind their way through the court system, the agency said in an email.

Acting IRS Commissioner Melanie Krause said in the email sent to all IRS employees that the probationary workers, who were laid off Feb. 20, would be reinstated and placed on administrative leave until further notice.

The Email Sent To Probationary Workers Advised
Them “Not [To] Report To Duty Or Perform Any Work
Until Receiving Further Guidance.”

The email cited an order from a U.S. District Court judge in Maryland that 18 federal agencies, including Treasury, reinstate “certain probationary workers” at least temporarily.

Probationary employees who sought details about the administrative leave received a second email that said the workers will receive back pay and that all benefits, such as life insurance and health, vision, and dental coverage, will be reinstated. Meanwhile, other job losses loom at the IRS, Krause’s email said.

The Trump administration wants to cut the IRS workforce by 20% by May 15, including those who have already left or were fired.

Officials at the Elon Musk-led group advising the administration want Acting IRS Commissioner Melanie Krause to eliminate 18,141 jobs across the agency. This includes the roughly 12,000 employees terminated as part of new-hire layoffs.

 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