Decade Of Dodging US Taxes Gets UK Lawyer 20 Months in Prison

According to Law360, a Manhattan federal judge sentenced English lawyer Michael Little to 20 months in prison on November 20, 2018 for helping the children of a deceased investor dodge taxes on their $14 million inheritance over a decade and for failing to pay his own taxes, ruling also that the former Royal Marine lied as he testified in his own defense.

U.S. District Judge P. Kevin Castel ordered Little, 68, to report to federal prison on Feb. 19. The sentence came in well below a request by prosecutors for a prison term in the range of 10 to 12 years as contemplated by official guidelines.

“Evasion unpunished breeds more evasion,” the judge said, saying Little’s tax-dodging was born of greed and arrogance but adding he was unlikely to offend again

upon leaving custody.

Judge Castel held off on the government’s request to order Little to pay roughly $4.4 million of restitution. Little contests the amount, and the matter will be briefed in coming weeks.

The judge did find that Little lied repeatedly on the witness stand during his trial earlier this year. A jury convicted Little on 19 criminal counts on April 10, finding:

• he obstructed the IRS,
• conspired with the family of deceased investor Harry Seggerman to file false tax returns from 2001 to 2010,
• failed to report foreign bank accounts, and
• failed to file his own taxes from 2005 to 2010.

Among other lies Little told the jury, he said he did not enter into a conspiracy with the Seggermans, prosecutors said in a court filing after the verdict. That contention was adopted by Judge Castel, who found Little also lied when he told the jury he had had no intention to break the laws of the U.S.

Prosecutor Christopher DiMase said Little’s conduct amounted to “an egregious pattern of lies and deception.”

Acting as his own counsel, as he did at trial, Little pushed back against many of the prosecution’s characterizations of his conduct during the lengthy sentencing hearing, which stretched over three hours.

“I am being blamed for their misdeeds,” Little said of the Seggerman family.

Four of Harry Seggerman’s children, all government cooperators who have admitted guilt, took the stand during the trial to testify against Little. That included Seggerman’s daughter Yvonne Seggerman, who told the jury that Little was present at a 2001 meeting at the Four Seasons hotel in Manhattan when a plan to avoid paying the IRS was crafted.

“They will pay for their crimes at the time of their sentencing,” Judge Castel said, calling both Little and the Seggerman family “tax cheats.”

Little had asked for a non-prison sentence, saying his legal saga has “broken” his health and telling Judge Castel that he suffered a heart attack on July 1. Little also said in court filings that he has reported all income to British tax authorities.

But the prosecution noted Tuesday that he did not do so until after he was criminally charged. Little was arrested in May 2012.

Little said at the end of Tuesday’s hearing that he intends to file an appeal.

The case is U.S. v. Little, case number 1:12-cr-00647, in the U.S. District Court for the Southern District of New York.

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Venezuelan Billionaire News Network Owner and Former Owner of Dominican Republic Bank Charged in Money Laundering Conspiracy Involving Over $1 Billion in Bribes

According to the DoJ, a Venezuelan billionaire who owns Globovision news network was charged in an indictment unsealed yesterday for his role in a billion-dollar currency exchange and money laundering scheme.  A former Venezuelan national treasurer and a former owner of Banco Peravia bank in the Dominican Republic each pleaded guilty in proceedings unsealed today for their roles in the scheme.

Raul Gorrin Belisario (Gorrin), 50, a Venezuelan citizen with a residence in Miami, Florida, was charged in an indictment filed on Aug. 16, 2017 in the Southern District of Florida with one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA), one count of conspiracy to commit money laundering and nine counts of money laundering. 

The case has been assigned to U.S. District Judge William P. Dimitrouleas of the Southern District of Florida.  Alejandro Andrade Cedeno (Andrade), 54, a Venezuelan citizen residing in Wellington, Florida and a former Venezuelan national treasurer, pleaded guilty under seal on Dec. 22, 2017 before U.S. District Judge Robin L. Rosenberg of the Southern District of Florida to one count of conspiracy to commit money laundering. 

Gabriel Arturo Jimenez Aray (Jimenez), 50, a Venezuelan citizen residing in Chicago, Illinois and former owner of Banco Peravia bank, pleaded guilty under seal on March 20, 2018 in the Southern District of Florida before Judge Rosenberg to one count of conspiracy to commit money laundering.  Charges against Andrade and Jimenez were unsealed today.

The indictment alleges that Gorrin paid millions of dollars in bribes to two high-level Venezuelan officials, including Andrade, to secure the rights to conduct foreign currency exchange transactions at favorable rates for the Venezuelan government.  In addition to wiring money to and for the officials, Gorrin allegedly purchased and paid expenses for them related to private jets, yachts, homes, champion horses, high-end watches and a fashion line.  To conceal the bribe payments, Gorrin made payments through multiple shell companies.  Gorrin allegedly partnered with Jimenez to acquire Banco Peravia, a bank in the Dominican Republic, to launder bribes paid to Venezuelan officials and proceeds of the scheme.

As part of his guilty plea, Andrade admitted that he received over $1 billion in bribes from Gorrin and other co-conspirators in exchange for using his position as Venezuelan national treasurer to select them to conduct currency exchange transactions for the Venezuelan government.  As part of his plea agreement, Andrade agreed to a forfeiture money judgment of $1 billion and forfeiture of all assets involved in the corrupt scheme, including real estate, vehicles, horses, watches, aircraft and bank accounts.  His sentencing is scheduled for Nov. 27.

As part of his guilty plea, Jimenez admitted that, as part of the scheme, he conspired with Gorrin and others to acquire Banco Peravia, through which he helped launder bribe money and scheme proceeds.  His sentencing is scheduled for Nov. 29.

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TCJA Divots Golf Corse Expenses and Takes a Bite out of the Meal Deduction.

Taking clients to ballgames? Tax law change makes it costlier.

Businesses, especially smaller firms, may scale back on treating clients to major league baseball games, golf outings and the like after Congress and President Donald Trump ended a tax break for such entertainment.

Tax reform law commonly referred to as H.R. 1 Tax Cuts and Jobs Act of 2017 has changed the deductibility of certain meals, entertainment and transportation expenses.

• Prior to 2018, a taxpayer could deduct 50 percent of business meals and entertainment and 100 percent of meals provided through an in-house cafeteria or meals provided for the convenience of the employer (i.e., de minimis fringe benefit).
• Under the new law, effective January 1, 2018:
• entertainment is no longer deductible and
• meals provided through an in-house cafeteria or for the convenience of the employer are subject to the 50 percent limitation.

Maximize tax deductions and save time on tax preparation by setting up separate general ledger accounts for business meals (50 percent deductible), entertainment (nondeductible), and recreational/social employee expenses (100 percent deductible).

The tax overhaul that Trump signed Dec. 22 eliminated a 50 percent deduction for business-related expenses for “entertainment, amusement or recreation.” Suddenly, luxury boxes at stadiums and arenas—along with theater and concert tickets—will be more costly for firms that use them to woo clients.

Businesses that use the entertainment deduction extensively, including law, investment, accounting and lobbying firms, will have to gauge the effects on their bottom lines. Smaller businesses will be less able to absorb the cost.

“I am a long-time, long-suffering season-ticket holder to the New York Jets, so a lot of time, I take clients,” said Charles Capetanakis, a lawyer and CPA at Davidoff Hutcher & Citron LLP, a mid-sized law firm in New York. Eliminating the deduction “is really going to hurt the small businesses that need to promote their business by entertaining clients.”

The loss of the entertainment deduction is a kind of counterpoint to the Republican Congress’s sweeping tax cuts for businesses. The overhaul slashed the corporate rate to 21 percent from 35 percent. It also created a new 20 percent deduction for many partnerships, limited liability companies, sole proprietorships and other “pass-through” businesses, whose owners pay individual tax rates on the income they earn.

One impact from the loss of the entertainment-expense deduction may be “smaller spends” on professional sports tickets, said Robert Delgado, the principal-in-charge of the compensation and benefits group of the Washington national tax practice at KPMG LLP. But the degree of any reduction “remains to be seen,” said Ed Sturm, a managing director at Deloitte Tax LLP, who heads the tax practice’s meals, travel and entertainment service areas.

“Each company will have to decide for itself whether the higher after-tax cost of these expenses makes good business sense,” Sturm said.

Some have already begun grappling with that decision.

The loss of the entertainment expenses “is painful,” said Washington lobbyist Ryan Ellis, who specializes in tax issues. But there’s still a bright side. Congress didn’t touch another break: Businesses still have a 50 percent deduction for clients’ meals—whether catered or at a restaurant.
Asked how K Street lobbyists in Washington would entertain clients going forward, Ellis said: “At restaurants.”

Planning tip 1 : Maximize tax deductions and save time on tax preparation by setting up separate general ledger accounts for business meals (50 percent deductible), entertainment (nondeductible), and recreational/social employee expenses (100 percent deductible).

The new law addresses transportation two times. It disallows a deduction for the expense of any qualified transportation fringe benefit provided to an employee of the taxpayer. Qualified transportation fringe benefits include transportation in connection with travel between the employee’s residence and place of employment, any transit passes and qualified parking. Qualified parking means parking provided to an employee on or near the business premises of the employer or on or near a mass transit station. The new law later goes on to say no deduction is allowed for any expense incurred for providing any transportation to an employee of the taxpayer in connection with travel between the employee’s residence and place of employment, “except as necessary for ensuring the safety of the employee.” No guidance has been provided to clarify the meaning of this “safety” clause.

Planning tip 2: If an expense is incurred to provide any transportation to an employee in connection with travel between the employee’s residence and place of employment to ensure the safety of employees, document these safety reasons to substantiate your deduction for these expenses.

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Sources:

TAX CUTS AND JOBS ACT

Taxprotoday

2017 TCJA Allows Small Businesses to Expense More

The Internal Revenue Service reminded small business taxpayers in IR-2018-223 that changes to the tax law mean they can immediately expense more of the cost of certain business property. Many are now able to write off most depreciable assets in the year they are placed into service.

The Tax Cuts and Jobs Act (TCJA), passed in December 2017, made tax law changes that will affect virtually every business and individual in 2018 and the years ahead. Among those for business owners are tax rate changes for pass-through entities, changes to the cash accounting method for some, limits on certain deductions and more.

Section 179 expensing changes

A taxpayer may elect to expense all or part of the cost of any Section 179 property and deduct it in the year the property is placed in service. The new law increased the maximum deduction from $500,000 to $1 million. It also increased the phase-out threshold from $2 million to $2.5 million. These changes apply to property placed in service in taxable years beginning after Dec. 31, 2017. For most businesses, this means the 2018 return they file next year.

Section 179 property includes business equipment and machinery, office equipment, livestock and, if elected, qualified real property. The TCJA also modifies the definition of qualified real property to allow the taxpayer to elect to include certain improvements made to nonresidential real property. See New rules and limitations for depreciation and expensing under the Tax Cuts and Jobs Act for more information.

New 100 percent, first-year ‘bonus’ depreciation

The 100 percent depreciation deduction generally applies to depreciable business assets with a recovery period of 20 years or less and certain other property. Machinery, equipment, computers, appliances and furniture generally qualify. The law also allows expensing for certain film, television, and live theatrical productions, and used qualified property with certain restrictions.

The deduction applies to business property acquired after Sept. 27, 2017, and placed in service after Sept. 27, 2017, and before Jan. 1, 2023. In general, the bonus depreciation percentage is reduced for property placed in service after 2022. See the proposed regulations for more details.

Taxpayers may elect out of the additional first-year depreciation for the taxable year the property is placed in service. If the election is made, it applies to all qualified property that is in the same class of property and placed in service by the taxpayer in the same taxable year. The instructions for Form 4562, Depreciation and Amortization, provide details.

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Settle Your Back Taxes for a Fraction of What You Owe! - OIC

Settle Your Back Taxes for a Fraction of What You Owe - Tax Evaluation Waiting! Stop IRS Collections Now.”

--Google search ad results, September 2018

According to The fundamentals of the IRS OIC program - accountingtoday.com, what’s true about  the above mentioned search term is that the IRS has a program that allows taxpayers to settle their tax debts for less than the amount they owe. The formal name for this tax debt settlement program is the IRS Offer in Compromise. That brings us to what’s false.

Despite ads that imply the OIC is a common and reasonable solution for many people, the reality is that few people qualify for this program. In fact, while more than 16 million people and 3 million businesses owe the IRS, only 25,000 settled their tax debts using the OIC last year.

The reason is simple: From the IRS perspective, most taxpayers can afford to pay their taxes with their current assets or over time or with a payment plan, so those people wouldn’t qualify for an OIC. Every year, millions of taxpayers pay their taxes on monthly payment plans.

 

The OIC program is geared toward a narrow segment of taxpayers, people who will never be able to pay all of the debt with their future income or assets before the IRS runs out of time to collect it (generally 10 years from the date the tax was assessed). For most people, there are IRS alternatives to the OIC that work out much better for their situation.

Next year, it will be more important than ever for taxpayers to understand their IRS payment options. In 2019, the IRS projects that 3 to 4 million new taxpayers (on top of the 30 million who already file with a balance due) will owe taxes due to tax reform and a growing gig economy. These basics will help taxpayers choose the right option with the IRS.

 

For more information regarding OICs go to The fundamentals of the IRS OIC program - accountingtoday.com

 

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