Category Archives: criminal tax law

Why are some Americans Individuals expatriating?

• Trump Did Not Win the Election?
• Obama-Care with its associated additional 3.8% Obama Care Tax make you feel like leaving the country?
• You're so sick of liberal Democrats trying to socialize the United States by taxing wealthy people?

• Or maybe you're a naturalized U.S. citizen or permanent resident who has prospered here, but would now like to move back the old country for retirement or to start a new  venture?

According to CNBC the top reason why Americans abroad want to dump their U.S. citizenship include:

So Where Do Wealthy People Move To
When They Expatriate From The US?

According to Henley & Partners, Private wealth migration trends look set to revert to pre-Covid patterns in 2023, with Australia reclaiming the top spot for net millionaire arrivals as it did between 2015 and 2019, and China suffering the biggest net outflows of high-net-worth individuals as it has since 2013. 

Notable exceptions are former top wealth magnets, the UK and the USA, according to the Henley Private Wealth Migration Report 2023, which tracks wealth and investment migration trends worldwide. 

Millionaire migration figures can be a telling real-time barometer for the health of an economy as wealthy people are extremely mobile and they therefore tend to be the first to move when the need arises. The countries that consistently attract affluent families through migration tend to be economically robust and usually have low crime rates and offer attractive business opportunities.

The top five destinations for net inflows of high-net-worth individuals in 2023 are projected to be

1. Australia, 
2. the UAE, 
3. Singapore, 
4. the USA, and 
5. Switzerland. 

On the flip side, the largest net outflows of millionaires are expected to come from 

1. China, 
2. India, 
3. the UK, 
4. Russia, and 
5. Brazil.

Australia is expected to attract the highest net inflow of high-net-worth individuals in 2023. This large influx of the world’s wealthiest is nothing new. Australia consistently attracts sizeable numbers of millionaires every year, mainly from Asia and Africa, but more recently also from high-income countries such as the UK.

Need Advise on Expatriation?

 

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

The U.S. Tax Court has held that an office manager at a physician's office was an employee, and additionally the physician did not qualify for employment tax relief pursuant to Section 530 of the Revenue Act of 1978 (T.C. Memo 2023-64, 5/18/2023).

Petitioner, Cardiovascular Center LLC, (CVC) operated a limited liability company with Dr. Frank Kresock as its sole member. CVC was treated as a disregarded entity for federal tax purposes, with its income and deductions reported on Dr. Kresock’s personal tax returns. Janine Smith worked at CVC with Dr. Kresock in his medical practice as the office manager and as a registered health information technologist. Four other CVC employees worked as medical assistants.

The employees were paid on a biweekly basis, with a cashier’s check signed by Kresock pursuant to an "employee" time sheet they signed. The timesheets were approved by Smith. The workers were paid an hourly wage. The workers often worked in excess of 70 hours, and were paid overtime as required. However, Smith was not issued regular paychecks. Rather, Kresock paid her personal bills, including mortgage payments on homes titled in her name, since Kresock and Smith resided together.

All of the workers were supervised by Kresock, and followed office procedures that were established by Kresock and Smith. None of the workers realized a profit or loss because of their job, and there were no formal employment contracts. The workers determined their own schedules, where they were permitted to arrive and leave, at any time.

CVC did not file or furnish Form 1099-MISC, Miscellaneous Income, or W–2, Wage and Tax Statement, reporting the compensation paid to the workers, nor did it file any associated employment tax returns (Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return, and Form 941, Employer’s Quarterly Federal Tax Return) for the tax periods at issue.

The Tax Court considers a worker’s employment status by applying common law concepts, which, in this case, included the following factors: 

1. the degree of control exercised by the principal over the worker; 
2. which party invests in the work facilities used by the worker; 
3. the worker’s opportunity for profit or loss; 
4. whether the principal can discharge the worker; 
5. whether the work is part of the principal’s regular business; 
6. the permanency of the relationship; and 
7. the relationship the parties believed they were creating. 

The Tax Court notes that no single factor is dispositive and that all facts and circumstances must be considered.

After consideration of the record and the relevant factors, the Tax Court concluded that the relationship between CVC and Ms. Smith, and CVC and the workers is best characterized as an employment relationship. According to the Court, the critical factor of whether CVC exercised control over the workers was met. Additional factors such as the investment in the work facilities used by the workers, the workers’ opportunities for profit or loss, whether the work was part of CVC’s regular business, and the permanency of the relationship all led significantly in favor of the finding that this was an employment relationship.

Section 530 provides relief from federal employment taxes even if the relationship between the business and the worker would otherwise require the payment of those taxes.

To qualify for the relief, a taxpayer must: 

1. not have treated the worker as an employee for tax purposes (historic treatment requirement); 
2. must have filed all federal tax returns (including information returns) with respect to the worker for periods after 1978 on a basis showing the worker's treatment as a non-employee (reporting consistency requirement); 
3. must have had a reasonable basis for not treating the worker as an employee, (reasonable basis requirement); and 
4. must not have treated as an employee any individual holding a position “substantially similar” to that of the worker in question (substantive consistency requirement).

The tax court found that CVC failed to prove the reasonable basis requirement, and failed to satisfy the second requirement of section 530 because it failed to file Forms 1099-MISC for the tax periods at issue.

The court therefore determined that CVC was not entitled to section 530 relief, and was liable for the federal employment taxes reflected in the notice of determination.

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

On March 30, 2023 we posted Current US Resident Ordered To Repatriate $17.9M For FBAR Violations - What Next? where we discusssed that Isac Schwarzbaum had moved his assets offshore and sold his house in the wake of an $18 million penalty for failing to report foreign bank accounts, The court ordered  him to transfer enough money from his overseas accounts to cover the debt.

Now according to Law360, the U.S. District Court ruled on June 9, 2022 Isac Schwarzbaum, a dual U.S.-German citizen, fighting nearly $18 million in tax liabilities for hiding his foreign bank accounts cannot wait for his appeal to be decided before repatriating his assets to a U.S. bank account.

While Isac Schwarzbaum argued that repatriation would force him to liquidate his securities and cause him to realize significant transaction costs and capital gains, U.S. District Judge Beth Bloom said the mere possibility of those costs is not enough to constitute the irreparable harm Schwarzbaum needs to prove to be granted a stay.

Schwarzbaum also failed to provide the court with an affidavit supporting the veracity of the costs he believed he would incur by transferring his overseas assets to a U.S. bank, Judge Bloom said in her order.

Schwarzbaum asked for a stay in April, but Judge Bloom said that not only did Schwarzbaum fail to show he would be irreparably harmed by moving his money to a U.S. bank, but also failed to show that the U.S. government wouldn't be harmed by it.

While Schwarzbaum argued a stay would be brief and did not risk assets being lost, the government countered that a stay without bond would leave it "exposed to a complete and irreparable loss," according to the order. The government also told the court that Schwarzbaum's foreign holdings have decreased by $12 million since 2019, which Schwarzbaum attributed to the economic effects of the pandemic.

Judge Bloom said she agreed with the government that granting a stay without bond would leave the U.S. exposed.

The Question Now Is How Does The IRS
Levy On Assets Outside The US? 

or 

Against a Taxpayer Who Is No Longer AUS Resident,
Where Mr. Schwarzbaum Leaves The US?

Can't Wait To See The Answer To This One!

Do You Have Undeclared Offshore Income?

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

The IRS unveiled proposed rules on June 6, 2023 that would require disclosure of certain tax-free Maltese retirement accounts following recent attempts to regulate what it said were abusive pension plans that took advantage of the U.S.-Malta tax treaty.

The agency is seeking feedback on the proposed rules, which would designate certain Malta personal retirement funds and substantially similar arrangements as listed transactions that would have to be reported to the Internal Revenue Service or be subject to stiff penalties.

The U.S. Department of the Treasury and the IRS "believe that transactions involving a Malta personal retirement scheme described in the proposed regulations, and substantially similar transactions involving a retirement arrangement established in Malta, unless specifically excepted, are tax avoidance transactions and should be identified as listed transactions," the agency said in the preamble to the proposed rules.

The U.S. and Malta agreed in December 2021 that investment arrangements that allowed noncash contributions and did not limit contributions to funds from employment or self-employment would not be considered retirement plans under the two countries' 2008 tax treaty. Earlier in 2021, the IRS placed Maltese pension plans on its "Dirty Dozen" list of abusive tax shelters, along with syndicated conservation easements and abusive micro-captive arrangements.

Listed Malta retirement arrangements under the proposed rules involve a U.S. citizen or resident alien who doesn't include earned or gained income on a personal retirement account established under Malta's Retirement Pensions Act of 2011 in federal taxable income due to an interpretation that the treaty exempts such transactions.

They also involve a U.S. citizen or resident alien not reporting a distribution from a Malta personal retirement account in federal taxable income due to a similar interpretation of the tax treaty, according to proposed rules.

The IRS plans to exempt policyholders that transferred their foreign pension or retirement arrangements to a Malta retirement account in accordance with foreign law and claimed exemption from U.S. income tax for earnings or distribution filed before the publication of the proposal, according to proposed rules.

Treasury and the IRS "are aware that the United Kingdom allows tax-deferred transfers from its pension or retirement schemes to certain 'qualified recognized overseas pension schemes' (or QROPS), including Malta personal retirement schemes," the proposed rules said.

The IRS scheduled a public hearing for Sept. 21 on the proposed rules. The agency unveiled the proposal following several court decisions that struck down IRS subregulatory notices that designated certain potentially abusive arrangements as listed transactions.

Taxpayers Who Have Engaged In Any Of These Transactions

 Or Who Are Contemplating Engaging In Them Should Carefully Review The Underlying Legal Requirements 

And Consult Independent, Competent Advisors

Before Claiming Any Purported Tax Benefits.

Taxpayers who have already claimed the purported tax benefits of one of these four transactions on a tax return should consider taking corrective steps, such as filing an amended return and seeking independent advice. 

Where appropriate, the IRS will challenge the purported tax benefits from the transactions on this list, and the IRS may assert accuracy-related penalties ranging from 20% to 40%, or a civil fraud penalty of 75% of any underpayment of tax.

 

The IRS remains committed to having a strong, visible, robust tax enforcement presence to support voluntary compliance. To combat the evolving variety of these potentially abusive transactions, the IRS created the Office of Promoter Investigations (OPI) to coordinate service-wide enforcement activities and focus on participants and the promoters of abusive tax avoidance transactions. 

The IRS has a variety of means to find potentially abusive transactions, including examinations, promoter investigations, whistleblower claims, data analytics and reviewing marketing materials.

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