Category Archives: criminal tax law

According to Law360, a New York federal judge approved an $80,000 settlement in a $330,000 dispute between a woman and the federal government over improperly reported overseas accounts. The case is U.S. v. Bouskila, case number 2:21-cv-04243, in the U.S. District Court for the Eastern District of New York.

Cecile Bouskila will pay the $80,000 settlement as well as 1% annually accruing interest from the date of the amount-due notice, a 6% annually accruing late-payment penalty from 90 days after that notice and other post-judgment interest, according to the order. 

The Internal Revenue Service Had Previously Assessed
$330,000 In Penalties For Bouskila's Failure To Timely
File Reports Of Foreign Bank And Financial Accounts,
Or FBARs, From 2004 Through 2011.

In March, the U.S. Supreme Court ruled in a separate case that the $10,000 maximum penalty dictated by the Bank Secrecy Act is applicable per annual form, rather than per account. Bouskila had previously argued that sentiment, claiming that she was liable for a maximum penalty of $80,000.

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Read more at: Tax Times blog

In Sanders, (6/20/2023) 160 TC 16, the Tax Court dismissed a pro se taxpayer's petition because it was e-filed late. The taxpayer encountered technical difficulties with the court’s electronic filing platform DAWSON. However, DAWSON was accessible to the public on the taxpayer's last day to file and since he filed his petition 11 seconds late, his petition was untimely.

The court rejected the taxpayer's argument that DAWSON was inaccessible him on the last day for filing. 

Under Tax Court rules, when a "filing location" is inaccessible to the public, a taxpayer may have additional time to file a petition. Under Code Sec. 7451, a filing location is the Tax Court Clerk's office, or "any online portal made available by the Tax Court" for e-filing petitions.

Inaccessibility isn't defined in Code Sec. 7451. However, the Tax Court found that while inaccessibility includes an outage of an electronic filing system, inaccessibility does not include user error or technical difficulties on the user's side. According to the court, the record showed that DAWSON was operational at all relevant times and the taxpayer logged in multiple times on the last day for filing his petition. Although the taxpayer's login attempt at 11:59:15 failed, another petitioner was able to file before midnight. This successful login showed that DAWSON was working properly.

The court also specifically rejected an amicus argument that the timely mailing rule should apply to electronically filed petitions. The timely mailing rule is an exception to the general rule that a document is filed when received. Under that rule, a document that is properly mailed before its due date, but received after that date, is considered filed on the date it was postmarked. The court previously held that the timely mailing rule doesn't apply to an e-filed petition in Nutt, (5/2/2023) 160 TC No. 10.

In Nutt, the Commissioner mailed a notice of deficiency to the Nutts on April 14, 2022, determining an income tax deficiency and an accuracy-related penalty for 2019. Notwithstanding the actual mailing date, the notice was dated April 18, 2022, and the notice stated that the last day to file a petition with this Court was July 18, 2022. That date was a Monday and was not a legal holiday in the District of Columbia.

The notice stated that the Nutts could “get a petition form and the rules for filing from the Tax Court’s website at www.ustaxcourt.gov, or by contacting the Office of the Clerk at . . . 400 Second Street, NW, Washington, DC 20217.”

The Commissioner also sent a letter dated June 7, 2022, to the Nutts in which he reduced the amount of the deficiency and reminded the Nutts of the July 18, 2022, deadline to file a petition in the Tax Court.

While residing in Alabama, the Nutts electronically filed their Petition. At the time of filing, the Court’s electronic case management system (DAWSON) automatically applied a cover sheet to their Petition. The cover sheet shows that the Court electronically received the Petition at 12:05 a.m. eastern time on

July 19, 2022, and filed it the same day. When the Court received the Petition, it was 11:05 p.m. central time on July 18, 2022, in Alabama.

The IRS filed a motion to dismiss the petition for lack of jurisdiction, arguing that, unlike the rule governing tax return filings, the date a petition is treated as filed before the court is determined by the court’s time zone, rather than the taxpayer’s.

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On August 7, 2023  we posted New Beneficial Ownership Information Requirement for Most Businesses Beginning January 1, 2024, where we discussed that neginning on January 1, 2024, many corporations, limited liability companies, and other entities created or registered to do business in the United States must report information about their beneficial owners, the persons who ultimately own or control the company, to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).

Now according to Law360, the U.S. Treasury Department's financial crimes unit will start applying new reporting requirements for small businesses in about five months.

But Many Of The Roughly 32 Million Companies Affected By The Disclosure Rules May Not Yet Be Aware Of Them.

Final regulations from the Financial Crimes Enforcement Network aim to expose anonymous shell companies by requiring reports of beneficial ownership information from small businesses, many of which may not work with attorneys or accountants who keep them informed about compliance obligations, according to specialists. Resource constraints may also hamper FinCEN's public outreach regarding the rules, which were finalized in September and will go into effect on Jan. 1, 2024.

Small businesses would likely be concerned about how to interpret terms such as "beneficial owner," according to Niles Elber, a member at Caplin & Drysdale. But most of them probably don't even know about FinCEN's reporting rules, he said.

"They're trying to get the word out and provide some guidance," Elber said, noting for example the FAQ posting in March. "But who in God's green earth is going to the FinCEN website?"

According to the final regulations, a beneficial owner is defined as any individual who meets at least one of two criteria: exercising "substantial control" over the reporting company, or owning or controlling at least 25% of the ownership interest of the company.

The rules exempt so-called large operating companies, which are defined as having more than 20 full-time employees in the U.S. and more than $5 million in gross receipts or sales on their federal tax returns. Businesses in heavily regulated industries, banking and securities, for example, are also exempt under the CTA.

Approximately 32.6 Million Companies Will Be Subject To
The Reporting Requirements In The First Year They're
In Effect And Approximately 5 Million New Companies
Will Fall Under The Rules Each Subsequent Year,
According To Estimates From FinCEN.

Candice Basso, a spokesperson for FinCEN, told Law360 that the Treasury unit has "conducted extensive outreach" to various stakeholders, including the small business community, to inform them about their reporting obligations and to better understand their questions and concerns. FinCEN is also working on an upcoming small entity compliance guide that will contain checklists to help reporting entities collect and report information on beneficial ownership, as well as a webinar that will describe the reporting process, she said.

Meanwhile, FinCEN's limited resources have raised questions about how selective the unit will be when enforcing penalties for noncompliance with the beneficial ownership rules.

FinCEN's potential limitations with informing small businesses about the beneficial ownership rules could leave certain education efforts to banks, but any outreach from financial institutions may depend on their own compliance obligations under the CTA.

Banks are currently subject to a customer due diligence, or CDD, rule that requires financial institutions to identify and verify the beneficial owners of companies that open accounts. The CTA requires FinCEN to revise portions of the CDD rule to bring it into conformity with the new legislation and the Anti-Money Laundering Act as a whole.

"I suspect that what's going to happen is banking is going to be the deputies that are going to have to break this news to most people," he said.

In the meantime, it's unclear what banks may do when they compare information that they collect under the CDD rule against information that their customers submit to the database or if banks try to make the comparison at all.

FinCEN proposed rules in December that spell out when governments and banks may be granted access to the beneficial ownership information submitted by small businesses. According to the regulations, banks can use the database only to facilitate CDD compliance.

Despite the challenges that FinCEN may face in educating millions of small companies about the rules, specialists say the CTA is designed to affect a broad range of businesses so it's more difficult for shell companies to evade detection.

This objective means that FinCEN should be "writing the rule broadly to include in their reporting as many corporate entities as possible while narrowly limiting the exemptions to the smallest possible set permitted by the law," according to the letter.

Quick added, "If you try to narrow it down too much, the people you're dealing with are very sophisticated and are going to find a way to get around it."

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Read more at: Tax Times blog

According to the IRS, a Colorado man was sentenced today to 15 months in prison for evading the payment of more than $700,000 in employment taxes he owed to the IRS.

According to court documents and statements made in court, Frank Stevens of Bow Mar, Colorado, co-owned restaurants and an oil production business, which had employees from whose paychecks he withheld income and Social Security and Medicare taxes. 

Starting in approximately 2002 and continuing for many years, Stevens did not pay over the withheld payroll taxes to the IRS or file the required quarterly employment tax returns for his businesses. 

After failing to collect from the businesses, the IRS assessed the tax against Stevens personally. To prevent the IRS from collecting through bank levies the taxes he owed, Stevens kept the balances of his personal and business bank accounts low, often leaving them with only $0.01. 

Stevens transferred, or directed employees to transfer, just enough funds to cover expenses and then moved any remaining money to a bank account not subject to IRS levy. In total, Stevens caused a tax loss of approximately $737,128.

In addition to the term of imprisonment, U.S. District Judge Daniel D. Domenico ordered Stevens to serve three (3) years of supervised release and to pay a $10,000 fine and $1,096,138.14 in restitution to the United States.

Have an IRS Tax Problem?

     Contact the Tax Lawyers at

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