Category Archives: criminal tax law

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

According to Law360, an American facing almost $246,000 in penalties for failing to report her foreign bank accounts could pay much less, as the Eleventh Circuit said in U.S. v. Sali Hadley, case number 22-12250, in the U.S. Court of Appeals for the Eleventh Circuit.  The Appeals Court stated that they must review her case in light of a U.S. Supreme Court ruling in February.

The Eleventh Circuit's order, issued Friday, June 2, 2023 said that Bittner v. U.S., in which the high court held that the $10,000 maximum penalty for nonwillful failure to file Reports of Foreign Bank and Financial Accounts, or FBARs, applies per year and not per account, requires another look at the case brought by Sali Hadley.

The U.S. had alleged that Hadley failed to report 18 foreign accounts she held in 2011 and five foreign accounts she held in 2012, according to court documents. 

Hadley had claimed that the penalty was excessive and should be only $10,000 per yearly form reporting the accounts, not per account. The court rejected her claim, holding that the Bank Secrecy Act set the penalty as applying per banking relationship, a finding contrary to the result in Bittner.

Have an FBAR Penalty Problem?  

 

 Contact the Tax Lawyers at 

Marini& Associates, P.A. 

 

 

for a FREE Tax Consultation at: 

www.TaxAid.com or www.OVDPLaw.com 
or Toll Free at 888-8TaxAid (888) 882-9243

Read more at: Tax Times blog

In July 2021, the House of Representatives, Committee on Appropriations, requested that TIGTA “review the IRS’s strategy to recruit and train employees to conduct audits of high earners and large businesses that underreport income as well as to collect taxes from taxpayers who have the ability to pay their outstanding debts, while also protecting taxpayer rights in the course of its enforcement efforts.” 

IRS enforcement function full-time equivalent employees have declined from Fiscal Years (FY) 2010 through 2021 due to budget decreases. This reduction to enforcement function staffing levels has affected the total enforcement revenue collected by the IRS. This audit was initiated to evaluate the IRS’s strategy to recruit employees to conduct audits of high earners and large businesses. A separate report on the IRS’s examination training strategy will be issued later this fiscal year

What TIGTA Found - Does not matter after the Debt Limit Bill!

The IRA provided the IRS with approximately $45.6 billion dedicated to enforcement activities. On May 19, 2021, in written testimony to the Subcommittee on Financial Services and General Government, the IRS Commissioner stated that, among other operational directives, this appropriation will facilitate the hiring and training of auditors to focus on complex investigations of large businesses, partnerships, and global high-wealth taxpayers. The IRS has initiated planning efforts to hire these employees, with the majority working in the IRS’s Large Business and International (LB&I) and Small Business/Self-Employed (SB/SE) Divisions. 

Reductions to IRS enforcement function staffing levels over the last decade have affected the total enforcement revenue collected. The IRS estimated that the gross annual Tax Gap for Tax Years 2014 to 2016 was $496 billion, and projects that for Tax Years 2017 to 2019, it will increase to $540 billion per year. A reduction in the number of enforcement function employees may affect the IRS’s ability to maintain sufficient audit coverage of entities and individuals contributing the most to the Tax Gap and limit its efforts to collect the taxes taxpayers acknowledge they owe but have not paid. 

The IRS estimates that, with existing hiring actions and expected attrition, the LB&I Division could hire approximately 450 positions and the SB/SE Division could hire approximately 2,300 positions without exceeding their authorized staffing levels. 

However, The Hiring Surge Of 10,000 Employees To Assist In Reducing The Tax Return Filing Backlog For The Wage And Investment Division’s Submission Processing And Accounts Management Functions Has Prevented The LB&I And SB/SE Divisions From Hiring More Employees To
Increase Audits Of High Earners.

Further, the LB&I and SB/SE Divisions have not maintained their authorized staffing levels with normal attrition and the hiring of new employees to replace those who have left the business units. 

A draft of the SB/SE Division’s FY 2023 hiring goals includes additional revenue agent hires. Increased examination hiring is also part of the LB&I Division’s overall hiring plan for FY 2023. The IRS issued the IRA Strategic Operating Plan in April 2023. 

Now All of Those Aspirational Objectives to Guarantee
Fairness in The Tax System Are ALL GONE
as a Result of the Debt Limit Bill!

The $20 billion in IRS funding cuts included in the debt limit deal reached by President Joe Biden and House Speaker Kevin McCarthy would be part of the largest-ever rescission of previously authorized funding, the chair of the House tax panel said Tuesday, May 30, 2023 in urging colleagues to support the bill.

Have an IRS Tax Problem?

    Too Bad - There Is Not Going to Be
Any IRS Employees to Help You!

As 52,000 Are Qualified To
Retire in the Next 6 Years!

 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