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Addressing the due process clause, Judge Susan Reisner said, “[t]axing a business based on its employing one full-time employee in the taxing state does not violate the Due Process Clause.” She added the corporation, Telebright Corp. Inc., “has sufficient ‘minimum connection' with this State to permit taxation consistent with the Due Process Clause.”

Under Section 311 of the Patriot Act, Treasury can take a range of measures against foreign governments or financial institutions that engage in money laundering. The senators’ amendment gives Treasury the same tools to combat foreign governments or financial institutions that significantly impede U.S. tax enforcement. For example, Treasury could prohibit U.S. banks from accepting wire transfers or honoring credit cards from banks found to significantly hamper U.S. tax enforcement efforts.

Modifications made earlier in the day to the amendment (S. Amdt 1818) by Sen. Carl Levin (D-Mich.) made the amendment more amenable to senators of both parties by saying Treasury could stop the transactions of tax havens and financial institutions that “significantly impede” U.S. tax enforcement.

The final version of the amendment also added language noting that if a jurisdiction or financial institution is cooperating with the United States, that fact may be favorably considered in evaluating whether it is significantly impeding enforcement. Staff said the amendment would raise $900 million over 10 years.

“Each year the United States loses literally tens of billions of dollars from people using offshore tax havens to dodge their tax obligations,” Levin said on the Senate floor.

A final vote on the measure is expected on March 13, 2012. Then it is off the the Republican controlled House of Representatives, where is may not receive such a warm reception.

It’s time to put an end to offshore tax abuses that allow tax cheats to profit at the expense of honest taxpayers,” said Whitehouse. “I’m proud to support Senator Levin’s amendment, which will give the U.S. Treasury greater powers to crack down on offshore tax abusers and the banks that aid them.”

Stay tuned... Same Tax Times... Same Tax Channel!

That’s according to a study released by the Florida Yacht Brokers Association and the Marine Industries Association of South Florida.

The new law puts an $18,000 sales-and-use tax cap on boats purchased or brought into Florida. The new sales-and-use tax cap generated in excess of $13.46 million in direct sales tax revenue for the state, compared with a $1.5 million first-year loss that a Florida legislative staff analysis had projected.

Thomas J. Murray and Associates Inc. conducted the initial research and subsequent survey.
Prior to July 1, 2010, all boats sold and or delivered in Florida were subject to a 6 percent sales-and-use tax unless they were specifically exempt. A new 34-foot powerboat that cost $400,000, for example, would cost $24,000 more in taxes.

Among the survey’s findings:

• The average sales price for post-cap transactions in Florida was $907,002 — nearly double the pretax value of closings that took place in Florida prior to the cap.

• In the post-cap era, transactions for which either no sales tax was paid or the closing was conducted out of state dropped from 21.5 percent in the pre-cap era to an estimated 12.8 percent after the sales tax cap was implemented.

“The results of our survey research demonstrate beyond a doubt that setting a reasonable tax basis for high dollar purchases provides an incentive for more boats to be purchased, provisioned and kept plying the waters of Florida,” FYBA spokesman Jeff Erdmann, owner of Bollman Yachts of Fort Lauderdale, said in a statement. “More boats sold and registered in Florida means more business and jobs for Floridians.”

Background, Mr. and Mrs. Kawashima were legal residents of the United States having moved to Los Angeles from Japan in 1984. According to an article in the Los Angeles Times they opened several sushi restaurants in the West San Fernando Valley area of Southern California. They were accused of violating various criminal tax laws, and in 1997 Mr. Kawashima pled guilty to a single count of violating Internal Revenue Code (IRC) Section 7206(1) (filing a false tax return). Mrs. Kawashima pled guilty to IRC Section 7206(2) (aiding and assisting in the filing of a false tax return). The tax loss was around $245,000. This would have included interest and penalties so the actual tax would have been much lower. It is possible that the Kawashimas pled guilty to charges under IRC Section 7206 to avoid the IRS bringing tax evasion charges under IRC Section 7201. Tax evasion carries a maximum penalty of 5 years, and a $250,000 fine; whereas filing a false tax return "only" has a penalty of $100,000 and 3 years in prison.

Neither the 9th Circuit opinion, nor the Supreme Court opinion stated whether they served any jail time, but according to the Los Angeles Times they repaid the full amount due to the IRS. The Kawashimas probably assumed that their tax problems ended there, but in 2001 the Immigration and Naturalization Service (INS), as it was then known, brought removal proceedings, against the Kawashimas seeking their deportation alleging that they had committed an "aggravated felony." These proceedings were brought pursuant to 8 USC § 1227(a)(2)(A)(iii) (stating that "[a]ny alien who is convicted of an aggravated felony at any time after admission is deportable"). An aggravated felony is defined in 8 USC Section 1101(a)(43)M)(i) as any offense that "involves fraud or deceit in which the loss to the victim or victims exceeds $10,000."

The Kawashimas argued that filing a false tax return was not an aggravated felony. They relied on a related section of the law which specifically states that the commission of tax fraud pursuant to IRC Section 7201 is an offense which may lead to deportation. From that the Kawashimas criminal tax lawyers concluded that Congress intended that the only tax crime which would qualify for deportation is tax fraud, and not any other lesser tax crime.

Unfortunately for the Kawashimas in a divided 6-3 opinion the Supreme Court disagreed, clearing the way for the Kawashimas deportation. In her dissent, Justice Ginsburg pointed out that as a policy matter the majority made a bad choice because it would discourage immigrants from pleading guilty to tax crimes since in addition to any jail time they would be exposed to being deported.

Criminal tax lawyers will need to advise their alien clients of this distinct possibility as one of the many factors to take into account when deciding whether or not to plead guilty to any tax crime. The concern for FBAR (foreign bank account report) non-filers is that without regard to whether or not failure to file an FBAR is a deportable offense individuals who do not file FBARs generally have filed false tax returns by checking the "no box" on Schedule B signifying they don't have a foreign bank account when in fact they do.

If you have been contacted by the IRS Criminal Investigation unit, or have any criminal or civil tax problems contact the tax litigation attorneys at Marini & Associates, P.A. for a confidential consultation.