Category Archives: criminal tax law

The Department of the Treasury and the Internal Revenue Service on October 7, 2024 issued final regulations identifying certain syndicated conservation easement transactions as "Listed Transactions" – abusive tax transactions that must be reported to the IRS.

Syndicated conservation easements have been included in the IRS’ annual list of “Dirty Dozen” tax schemes for many years.

“These regulations send a clear signal on abusive syndicated conservation easement arrangements, which generate high fees for promoters and willing participants who gamed the tax system with grossly inflated appraisals,” said IRS Commissioner Danny Werfel.

“As The Senate Finance Committee Has Shown In Its Review, Abusive Syndicated Conservation Easement Transactions Are Operating Too Often As Nothing More Than Retail Tax Shelters That Let Taxpayers Buy Deductions At The End Of Any Given Year.”

In these transactions, investors typically acquire an interest in a partnership that owns land and then claim an inflated charitable contribution deduction based on a grossly overvalued appraisal. Going forward, participants and material advisors will need to report their participation in these transactions using Forms 8886 and 8918.

The IRS previously identified certain SCE transactions as listed transactions in Notice 2017-10. These final regulations, consistent with Notice 2017-10, identify certain SCE transactions as listed transactions. The issuance of these final regulations clarifies that participants and material advisors must report these transactions, including any transactions that were completed in taxable years that are still open.

This listed transaction regulation is part of a multifaceted IRS approach that is succeeding in protecting the integrity of the tax system. 

On a related front, the IRS has enjoyed significant success in the courts resulting in a number of syndicated partnerships having their grossly inflated easement valuations reduced for tax purposes to what the actual market value was at the time of the donation, with the partners claiming the inflated deduction often incurring substantial penalties.

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 Law360,  partnership that claimed a $16.7 million tax deduction for donating a conservation easement covering land in Georgia was trying to "fleece the public" with its claims that the land could be used for clay mining, a U.S. Tax Court judge said on October 8, 2024 in L Minerals LLC et al. v. Commissioner, docket number 17076-21, in the U.S. Tax Court slashing the deduction.

In a 69-page ruling, U.S. Tax Court Judge Patrick Urda cut the deduction for JL Minerals LLC to $93,000 and upheld penalties against the partnership for grossly overestimating the value of its contribution. JL Minerals "and its coterie of advisors took Congress's attempt to promote conservation and cynically used it as a cover to fleece the public fisc to the tune of nearly $17 million in baseless deductions," Judge Urda said.

While the partnership defended the value of its 2017 donation, and therefore its deduction amount, with an appraisal claiming the land could be used to mine kaolin, the judge said the "extensive record" in the case proved otherwise.

The record included testimony that multiple kaolin processors had looked at the roughly 65-acre tract, with its steep slopes and ravines, and decided it wasn't worth mining "or even keeping as part of a long-term reserve," Judge Urda 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

The Treasury Inspector General for Tax Administration (TIGTA) released Report Number:  2024-300-064 on September 30, 2024 Titled The IRS Could Collect Over a Billion Dollars in  Taxes From Unreported Wagering Income where they discussed that the IRS has not enforced income tax return filing requirements for recipients of millions of Forms W-2G, Certain Gambling Winnings, reporting billions of dollars in gambling winnings.  

TIGTA reviewed all Forms W-2G issued to individual taxpayers during  Tax Years (TY) 2018 through 2020 (as of March 2023) and found 148,908 individuals who were issued Forms W-2G with a total amount of more than $15,000 per individual in gambling winnings and did not file a tax return.  

These Nonfilers Were Associated With Approximately
$13.2 Billion In Total Gambling Winnings.

Further TIGTA analysis determined that 139,045 of these nonfilers were included in the IRS’s nonfiler case creation process inventory.  

In response to our audit work, the IRS analyzed 17,436 TY 2018 high-income nonfilers with total positive income greater than or equal to $100,000 and calculated that it could potentially increase tax revenue by approximately $1.4 billion through addressing the 139,045 individual nonfilers with gambling winnings.  

In addition, hundreds of Forms W-2G do not include a Taxpayer Identification Number (TIN) required to trace the income to the recipient.  

Finally, the IRS has few processes in place to identify potential excise tax noncompliance by entities accepting wagers, particularly in emerging areas such as online sports wagering. 

TIGTA recommended that the Commissioner, Small Business/ Self-Employed Division:  

1. Begin appropriate enforcement actions for nonfilers with gambling winnings from TYs 2018 through 2020; 
2. Review nonfilers with gambling winnings for TYs 2018 through 2020 who were not identified by the IRS’s nonfiler system; 
3. Analyze Forms W-2G with missing TINs to determine what forms of wagering and/or gambling institutions may be noncompliant; 
4. Expand the wager codes to specifically include sports betting; and 
5. Conduct an environment scan of the current and potential future conditions of the sports betting and online gambling industries.   

The IRS agreed with three recommendations and plans to begin enforcement action, if appropriate, and scan the conditions of the sports betting and online gambling industries.  

However, the IRS disagreed with analyzing Forms W-2G with missing TINs to determine what forms of wagering and/or gambling institutions may be noncompliant.  Lastly, the IRS partially agreed to explore the potential productivity and feasibility of expanding the wager codes. 

 

Contact the Tax Lawyers at 

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.

Read more at: Tax Times blog

Only 90 days remain to ensure your business complies with the Corporate Transparency Act (CTA). 

As we stated in our post Prepare Now For New Beneficial Ownership Reporting Requirements, where we discussed Starting January 1, 2024, many business entities will be required to report information to the U.S. government about who ultimately owns or controls them, including the business’ owners and officers. This new beneficial ownership information (BOI) reporting requirement is part of the Corporate Transparency Act (CTA), which aims to help law enforcement combat financial crime and protect the U.S. financial system from bad actors.

When is the deadline to comply?

A reporting company created or registered to do business before January 1, 2024, will have until January 1, 2025, to file its initial beneficial ownership information report. A reporting company created or registered on or after January 1, 2024 and before January 1, 2025 will have 90 days to file.

What are the penalties for non-compliance?

Penalties for non-compliance can be significant, resulting in criminal or civil fines and/or imprisonment. Not filing reports timely can result in a $500 per day penalty, up to $10,000, and imprisonment of up to two years.

Where can I learn more?

For more information, visit the beneficial ownership information (BOI) and Frequently Asked Questions.on the U.S. Department of the Treasury’s Financial Crimes Enforcement Network's (FinCEN) webpage. 

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