Director of Company that Used Its NOL's to Offest FIRPTA Gains from Acquired Target Co.'s Cleared In $200M Corporate Tax Fraud Charges

According to Law360,  an ex-managing director at corporate acquisition business MidCoast Financial Inc. was found not guilty by a Pennsylvania federal jury on Wednesday over his alleged involvement in a complex $200 million corporate tax fraud scheme.

Donald Stevenson of North Palm Beach, Fla., 58, was cleared after a six-day trial on charges that he conspired to defraud the U.S. and corruptly endeavored to obstruct and impede the due administration of Internal Revenue Service laws. Stevenson, the only defendant to be acquitted in the scheme, faced 8 years in prison.

Federal prosecutors alleged that Stevenson and others conjured up and participated in an elaborate scheme between 2003 and 2011 to evade more than $200 million in corporate taxes by buying companies with taxable gains and using fraudulent losses to wipe out the gains.

The group pocketed the companies’ cash, filed fraudulent returns and, in some cases, sought and received IRS refunds for prior years, prosecutors claimed. To implement the tax scheme, the U.S. Department of Justice said that the defendants used a four-step process.

The initial purchasers, including MidCoast Financial, owned by Chandrakant Shah and Samyak Veera, bought target companies with cash assets and huge anticipated corporate income tax liabilities, then transferred the companies to straw buyers controlled on paper by Andrew Ahn and Aviel Faliks.

The group then evaded income taxes by using fraudulent transactions designed to create the illusion that the companies had incurred capital and ordinary losses and ultimately distributed the proceeds through hidden means, according to the DOJ.

As part of the scheme, prosecutors alleged that Stevenson, as the head of MidCoast Financial’s acquisition team and the company’s successor, Private Capital Resource Group, Inc., led the effort to identify target companies. Others involved in the scheme have either pled guilty or are fugitives.

Have a Tax Problem?

 

Contact the Tax Lawyers at

Marini & Associates, P.A.

 for a FREE Tax Consultation Contact US at 

www.TaxAid.us or www.TaxLaw.ms

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

Republican and Democratic Lawmakers Vow to Push Tax Treaties Delayed by Sen. Paul!

Over a year ago, we posted U.S. Senator Rand Paul Continues To Block 5 Important Tax Treaties where we discussed that the U.S.-Switzerland tax treaty remains stuck in the Senate after Sen. Rand Paul (R-Ky.) blocked an effort to propel it forward by Senate Foreign Relations Committee Chairman Robert Menendez (D-N.J.)

 When a bipartisan Senate panel lambasted Swiss bank Credit Suisse for helping rich Americans evade billions in taxes, some watching the high-profile hearing couldn’t help but notice that Sen. Rand Paul sticks out like a elephant in the room. Senator Rand Paul on Wednesday June 4, 2014 again blocked the U.S. Senate from moving toward ratifying five pending tax treaties, saying they would make it easier for foreign governments to invade the privacy of Americans.

The Kentucky libertarian, defying business interests that favor the agreements, cited concerns the treaties would allow more inter-government sharing of financial information on citizens. The United States has tax treaties with more than 60 countries, ranging from China to Kyrgyzstan. Their main purpose is to prevent double-taxation of corporate profits.

• No new tax treaties or treaty updates have been approved by the Senate since 2010, when Paul was first elected on a wave of support from supporters of the Tea Party movement.

• Before Paul's election, tax treaties were routinely approved by the Senate.

Under the New Treaties, Foreign Governments intent on Combating Tax Avoidance could Too Easily Access Americans' Personal Tax Information, Paul said. "We can't forget about the innocent Americans who are not breaking the law and do have a right to privacy," Paul said, adding that he wants the treaties rewritten to eliminate information-sharing provisions.

Under Senate rules, one senator can place a "hold" on a motion for a vote, preventing it from reaching the Senate floor.
Earlier this year, the Senate Foreign Relations Committee approved the five tax treaties with:

• Chile,
• Hungary,
• Switzerland,
• Luxembourg and
• the Organisation for Economic Co-operation and Development.

Senate approval is needed for them to take effect. Business lobbyists said that Senate Democrats likely would continue to bring up the tax treaties for debate to draw attention to Paul's objections.

In debate on the Senate floor, Democratic Senator Benjamin Cardin said food-maker McCormick & Co Inc has been hurt by the Senate's inaction on the treaties.

 

Now Republican and Democratic lawmakers vowed on October 28, 2015 to push for the ratification of eight tax treaties which have been held up for years because of one Republican senator's objections, despite support from companies that want consistency in rules for how to do international business.

objects to the agreements for privacy reasons, saying they would allow more inter-governmental sharing of financial information on citizens.

"The Treaties Don't Grant Access

 

 to Taxpayer Records that are Beyond

 

What are Provided in U.S. law," 

 

said Thomas Barthold, chief of staff of the government's Joint Committee on Taxation.

October 28, 2015's hearing discussed tax treaties with Switzerland, Luxembourg, Hungary, Chile, Spain, Poland and Japan and the international convention on mutual assistance on tax matters.

 

Paul, who is running for his party's nomination in the 2016 presidential election, delayed by several hours the chamber's vote on a major budget deal negotiated by congressional leaders and the White House, which he sees as doing too little to control spending.

No new tax treaties or treaty updates have been approved by the Senate since 2010, when Paul was first elected on a wave of support from supporters of the Tea Party movement. Before Paul's election, tax treaties were routinely approved by the Senate.

 

US taxpayers who have undeclared accounts in Credit Suisse or other Swiss banks, may now want to consider applying for the US Offshore Voluntary Disclosure Program (OVDP), which sets a limit to the penalties imposed on them by the Internal Revenue Service (IRS) for failing to declare foreign assets and earnings.

 

Once either:

• The Swiss Banks disclose an account holder's name to the IRS under the non prosecution agreement or 
• Mr. Andreas Bachmann or Josef Dorig or Markus Walder or Susanne Ruegg-Meier or Roger Schaerer discloses an account holder's name to the IRS or
• Any 1 of the other 11 Credit Suisse Bankers, who were indicted in 2011 along with Mr. Dorig, discloses an account holder's name to the IRS 

the OVDP election is no longer available to that account holder!!!

 

Taxpayers Who Wish To Take Advantage

Of The OVDP Must Act Quickly! 

 

Have Un-Reported Income From a Swiss Bank?

 

Value Your Freedom?

Contact the Tax Lawyers at

Marini & Associates, P.A.

 

for a FREE Tax Consultation Contact US at 

www.TaxAid.us or www.TaxLaw.ms

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

 

 

 

Unprecedented Success for US Offshore Amnesty Programs!

According to the Internal Revenue Service:  

Since OVDP Began in 2009, 
There Have Been > 54,000 Disclosures!

The IRS has collected > $8 Billion.

 
We previously discussed this in our post Offshore Compliance Programs Generate $8 Billion and IRS Urges People to Take Advantage of Voluntary Disclosure Programs... You Think? However, the figures have risen sharply since the IRS' last progress report in January this year, when it announced that the OVDP schemes had attracted 54,000 disclosures and USD7 billion in tax.


It is believed that most of the additional 30,000 taxpayers who have volunteered since then, have been attracted by the 'streamlined' program launched in June 2014 for 'non-wilful' taxpayers. This program originated from the IRS' recognition that there were large numbers of American taxpayers expatriates living outside the United States, whose non-compliance with the offshore reporting rules was entirely unintentional and who could be drawn into compliance by offering them immunity from any penalties. 

This strategy has been aided by the Foreign Account Tax Compliance Act (FATCA),which requires foreign banks to report to the IRS accounts held by US taxpayers, which is provided additional incentive for the taxpayers to come clean.

The IRS is now urging others to take up the offer 

while they still have the chance, as 

non-compliant US taxpayers can only use 

the Offshore Voluntary Disclosure Program 

if they are not already under investigation by the IRS. 

US taxpayers can also not enter the program where the IRS has already received information regarding their bank account from their offshore bank.

With FATCA coming into force, the Swiss bank amnesty program under which Swiss banks can avoid US prosecutions if they pay appropriate penalties and cooperate with the investigations of the US Department of Justice, the number of US taxpayers barred from voluntary disclosure is increasing all the time.

For these US taxpayers to enter the program they must now face having to pay penalties of 50 % of their undeclared foreign assets, instead of the 27.5% offered by the OVDP.

The streamlined procedures, initiated in 2012, were developed to accommodate a wider group of U.S. taxpayers who have unreported foreign financial accounts but whose circumstances substantially differed from those taxpayers for whom the OVDP requirements were designed. More than 30,000 taxpayers have used streamlined procedures to come back into compliance with U.S. tax laws. Two-thirds of these have used the procedures since the IRS expanded the eligibility criteria in June 2014.
 
Separately, based on information obtained from investigations and under the terms of settlements with foreign financial institutions, the IRS has conducted thousands of offshore-related civil audits that have produced tens of millions of dollars. The IRS has also pursued criminal charges leading to billions of dollars in criminal fines and restitution.
 
The IRS remains committed to stopping offshore tax evasion wherever it occurs.  Even though the IRS has faced several years of budget reductions, the agency continues to pursue cases in all parts of the world.

Do You Have Undeclared Income from A Foreign Bank

Which is Delivering Names to the IRS?

Do You Value Your Freedom?

Want to Know if the OVDP Program is Right for You?

Contact the Tax Lawyers at 

Marini & Associates, P.A.  

 

for a FREE Tax Consultation

at: www.TaxAid.us or www.TaxLaw.ms or

Toll Free at 888-8TaxAid (888) 882-9243

US Individual Estate & Gift Tax Exemption is $5.45 MM for 2016.

The Internal Revenue Service (IRS) has announced that the individual estate and gift tax exemption will be $5.45 MM per individual for 2016, which translates into a $10.9 MM exemption for Married Couples. This is an increase from the $5.43 MM exemption in 2015. The annual gift tax exclusion remains the same at $14,000 per individual recipient.

The inflation adjustment is important  to wealthy taxpayer's who try to reduce their estates below the exempt amount. The exemption amount was $2 million in 2008, $1 million in 2003 and $675,000 in 2001and prior years. The top federal estate tax rate remains at 40%. 

The federal gift tax is tied to the estate tax, so the inflation indexing helps wealthy taxpayers by allowing them to make tax-free lifetime gifts as well up, to the exemption amount. 

 

 Have a US Estate Tax Problem?

 

Estate Tax Problems Require

an Experienced Estate Tax Attorney

Contact the Tax Lawyers at

Marini & Associates, P.A.

 for a FREE Tax Consultation Contact US at

www.TaxAid.us or www.TaxLaw.ms

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

Robert S. Blumenfeld  - 

 Estate Tax Counsel

Mr. Blumenfeld concentrates his practice in the areas of International Tax and Estate Planning, Probate Law, and Representation of Resident and Non-Resident Aliens before the IRS.

Prior to joining Marini & Associates, P.A., he spent 32 years as the Senior Attorney with the Internal Revenue Service (IRS), Office of Deputy Commissioner, International.

While with the IRS, he examined approximately 2,000 Estate Tax Returns and litigated various international and tax issues associated with these returns.As a result of his experience, he has extensive knowledge of the issues associated with and the preparation of U.S. Estate Tax Returns for Resident and Non-Resident Aliens, Gift Tax Returns, Form 706QDT and Qualified Domestic Trusts.

Sources:

IRS Forbes

6 Techniques to Consider When You Receive an IRS Notice!

The IRS  sends many, many, many, letters and correspondence before they levy or garnished any Taxpayer's wages, bank accounts, or other assets. Many taxpayers take the ostrich approach and ignore the problem, in hopes that it will go away.

If you’re facing an IRS Problem, appropriate action can go a long way towards resolving it!

1. Respond Quickly to All Inquiries and Notices

  

The IRS will send a notice or letter if:

• You have a balance due.
• You are due a larger or smaller refund.
• They have a question about your tax return.
• They need to verify your identity.
• They need additional information.
• They changed your return.
• They are notifying you of delays in processing your return.

2. Read the Entire Notice or Letter Carefully.

Typically, the IRS only needs a response if you don’t agree with the information, the IRS needs additional information, or you have a balance due. If the IRS changed your tax return, compare the information the IRS provided in the Notice or Letter with the information in your original return. If the IRS receives a return that they suspect is identity theft, the IRS will ask you to verify your identity using the web address provided in the letter.

When you get a notice in the mail from the IRS, it will have a file/case/claim or other reference

number on the document. You’ll also notice the document likely arrived days (or weeks) later

than the date on the letter/notice.

3. Contact the IRS if You Have Questions or Disagree With the Notice.

The IRS provides their contact phone number on the top right-hand corner of their correspondence.

Call the that phone number as soon as possible upon receipt of the notice to make certain the IRS is aware you are “pending action.” Be sure you have your tax return and any related documentation available when you call. Alternatively, you can write to the IRS at the address in the correspondence to explain why you disagree. If you write, allow at least 30 days for their response.

4. Respond Within the Required Time Frame.

 
If the IRS ask for a response within a specific time frame, you must respond on time to minimize additional interest and penalty charges or to preserve your appeal rights if you don’t agree.

5. Document all communications with the IRS

If you mail communications to the IRS, send them as certified mail to guarantee arrival and receipt. If you communicate with the IRS by telephone, the responding agent will give you his/her name and ID

number. Be certain to write it down along with the date/time/subject of your call and any

answers or information the agent provides. If you do not get a name and ID number, be sure to

ask and/or confirm before the end of your call. That way if there are any disputes, there is a
record of your communications.

6. Turn Over the Right Paperwork

Inexperienced taxpayers often think that the more paperwork they turn over, the better. The IRS

may even encourage this by stating that they can help you resolve your tax problem. While this may be true, IRS Revenue Agents can and often do make additional adjustments based upon the information and paper work which you supply. Only provide the information that is needed to resolve the problem at hand, not that which may open up a whole new set of problems.

6. Contacting an Experience Tax Attorney Can Help

When you respond quickly to notices and requests for information, you’re likely to find that the

situation can be resolved successfully on your own. But when audits or multiple issues arise, it is advisable to have an Experienced Tax Attorney on your side. 

When you have IRS tax problems, it is very important to handle them very carefully. IRS tax matters are very technical and sensitive; therefore a slight mistake in the process can cost you dearly in the form of loss of money, loss of time and general frustration. The tax laws and procedures involved in settling  your IRS taxes can be very complex and you may not completely understand it.

Dealing with IRS involves navigating the complicated maze of U.S. tax law. A Tax Attorney has the knowledge of tax law and expertise needed to negotiate with the IRS on your behalf to reduce Tax debt & IRS Problems.

The Internal Revenue Service has an army of employees and tax attorneys representing them

and as a taxpayer, you should have the same benefits which result from hiring an Experienced Tax Attorney to represent You, your Business & your Family.

Have a Tax Problem?

 

Contact the Tax Lawyers at

Marini & Associates, P.A.

 for a FREE Tax Consultation Contact US at 

www.TaxAid.us or www.TaxLaw.ms

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

US Supreme Court Asked to Consider Whether the 5th Amendment Trumps the Required Records Doctrine?

On July 21, 2015 we posted "Required Records Doctrine Trumps 5th Amendment Defense For Overseas Accounts!" were we discussed the Third Circuit ruling that a married couple must turn over their foreign bank account records to the Internal Revenue Service, saying the couple can’t shield themselves by asserting their Fifth Amendment right against self-incrimination.

 

This comes after our post "Fifth Amendment Does Not Apply to Offshore Banking Records," where we discuss that under the Required Records Doctrine, and a taxpayer who is the subject of a grand jury investigation into his use of offshore bank accounts cannot invoke the privilege to resist compliance with a subpoena seeking records kept pursuant to the Bank Secrecy Act, the U.S. Court of Appeals for the Seventh Circuit ruled Aug. 27 (In re Special February 2011-1 Grand Jury Subpoena DatedSeptember 12, 2011, 7th Cir., No. 11-3799, 8/27/12). 

 

In 2010, French authorities tipped off the IRS to several U.S. citizens holding undisclosed accounts with HSBC. One of the accounts belonged to Pelsa Business Inc., an entity where Eli Chabot was the beneficial owner, the IRS was told.

The agency responded in 2012 by issuing summonses to the Chabots to testify and produce documentation on their foreign bank accounts, but the couple held to their Fifth Amendment rights and declined. The IRS later revised the summonses to limit their scope only to records that holders of foreign bank accounts are required to keep under the Bank Secrecy Act of 1970, but the Chabots again refused to comply.

On appeal, the Chabots argued:

(1) allowing the government to rely on the required records exception to enforce the summonses in this case will lead to general governmental abrogation of the Fifth Amendment privilege for any “failure to report” crime; 

(2) the information that would be gleaned from compliance with the summonses is almost identical to what the government needs to charge the Chabots with the felony of willful failure to report an overseas account in the Report of Foreign Bank and Financial Accounts, thus requiring the Chabots to incriminate themselves; and

(3) the records that 31 C.F.R. § 1010.420 requires accountholders to keep do not satisfy the three-pronged test for applying the required records exception to the Fifth Amendment privilege.

The government’s response to these arguments is that the Chabots’ records fall within the required records exception to the Fifth Amendment privilege. Therefore, the questions before the panel are whether the Chabots’ account records fall within the required records exception to the Fifth Amendment privilege and, if so, whether the Chabots’ policy concerns are insurmountable barriers to our application of this exception.

Unpersuaded by the overriding effect of the stated concerns, appeals court concluded that the Chabots’ account records fall squarely within the required records exception to the Fifth Amendment privilege.

Therefore, they affirmed the District Court’s grant of the IRS’s petition. The case is U.S.A. v. Chabot et al., case number 14-4465, in the U.S. Court of Appeals for the Third Circuit.

Now according to Law360 appealed in a petition filed earlier this month, Eli and Renee Chabot asked the Supreme Court to consider this U.S. Court of Appeals for the Third Circuit decision, which cited an exception to the Fifth Amendment privilege for records that are required to be maintained by law.

In their petition to the Supreme Court, the Chabots argued that the application of the required records exception in their case went beyond the usual scope of the doctrine. They say that as a result of the 1976 USA v. Fisher case, the Supreme Court has determined that the doctrine obligated witnesses to turn over “testimonial communications,”  communications that simply prove whether documents exist and whether they are authentic.

“The production of these documents, as distinct from the contents of these documents, did little to incriminate the witness,” the couple explained

They said the documents sought in their case, their Foreign Bank Account Reports, would be far more damning, because these filings were obligatory only when certain underlying conditions existed. The couple said that by producing these documents, they could be implicitly acknowledging that their accounts were subject to certain federal statutes.

“Such an admission, combined with the fact that the government knows whether an FBAR was in fact filed by petitioners, forces them to admit facts the government would otherwise have to prove to establish the felony of failure to file an FBAR or to retain the required information,” the couple said.

Do You Have Undeclared Income from an Offshore Bank?

 

Want to Know if the OVDP Program is Right for You?

Contact the Tax Lawyers at 

Marini& Associates, P.A.  

for a FREE Tax Consultation

at: www.TaxAid.us or www.TaxLaw.ms or

Toll Free at 888-8TaxAid (888) 882-9243