J5 Undertake Unprecedented Multi-Country Day of Action To Tackle International Tax Evasion

The IRS announced in IR-2020-18 that the J5 conducted a globally coordinated day of action to put a stop to the suspected facilitation of offshore tax evasion has been undertaken this week across the United Kingdom (UK), United States (US), Canada, Australia and the Netherlands. 

The action occurred as part of a series of investigations in multiple countries into an international financial institution located in Central America, whose products and services are believed to be facilitating money laundering and tax evasion for customers across the globe.

It is believed that through this institution a number of clients may be using a sophisticated system to conceal and transfer wealth anonymously to evade their tax obligations and launder the proceeds of crime.

The coordinated day of action involved evidence, intelligence and information collection activities such as search warrants,

interviews and subpoenas.

Significant information was obtained as a result and investigations are ongoing. It is expected that further criminal, civil and regulatory action will arise from these actions in each country.

This is the first major operational activity for the Joint Chiefs of Global Tax Enforcement, known as the J5, formed in mid-2018 to lead the fight against international tax crime and money laundering. This group brings together leaders of tax enforcement authorities from Australia, Canada, the UK, US and the Netherlands.

“This is the first coordinated set of enforcement actions undertaken on a global scale by the J5 – the first of many,”

said Don Fort, US Chief, Internal Revenue Service Criminal Investigation.

 “Working with the J5 countries who all have the same goal, we are able to broaden our reach, speed up our investigations and have an exponentially larger impact on global tax administration. Tax cheats in the US and abroad should be on notice that their days of non-compliance are over,” Fort said.

Australian Tax Office (ATO) Deputy Commissioner and Australia’s J5 Chief, Will Day, said that this operation shows that the collaboration between the J5 countries is working. “Today’s action shows the power of our combined efforts in tackling global tax crime, fraud and evasion.”

“This multi-agency, multi-country activity should degrade the confidence of anyone who was considering an offshore location as a way to evade tax or launder the proceeds of crime.” 
The ATO has commenced investigations into Australian based clients of this institution who are suspected to have undeclared income. The Australian Criminal Intelligence Commission (ACIC) is playing a supportive intelligence role, and investigations into more clients may follow.

“Never before have criminals been at such risk of being detected as they are now.

 

Our increased collaboration, data analytics and intelligence sharing mean there is no place worldwide you can hide your money to avoid contributing your obligations,” Day said.

Hans van der Vlist, Chief and General Director Fiscal Information and Investigation Service (FIOD), the Netherlands, said, “This is the first outcome of an operational collaboration between five countries on tackling professional enablers that facilitate offshore tax crime.

The international investigation started on information obtained by the Netherlands. By sharing this information and working together an international impact is created. Together as the J5 we will try to close the net on tax criminals.” 
Canada Revenue Agency (CRA) Chief Eric Ferron said, “I am very pleased with the role the CRA is playing in what will be the first of many major operational activities for the J5. This coordinated operation shows that the collaboration between J5 countries is working. Tax evaders beware; today’s action shows that through our combined efforts we are making it increasingly difficult for taxpayers to hide their money and avoid paying their fair share.”
Simon York, Chief and Director of Her Majesty’s Revenue and Customs (HMRC)’s Fraud Investigation Service said, “Tax evasion is a global problem that needs a global response and that is what the J5 provides. This kind of international action shows that we can, and we will take on the most collaboration underlines our commitment to tackling these harmful, sophisticated and complex crimes and that we are committed to levelling the playing field for honest businesses and taxpayers.
“International tax evasion robs our public services of vital funds, undermines economies and, left unchecked, can enrich the dishonest at the expense of the honest majority.
Working together, HMRC and our J5 partners are closing the net on tax criminals, wherever they are, to ensure nobody is beyond our reach. The message to them is clear – the J5 are closing in.”

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Postmark Rule Did Not Apply to Late-Filed Tax Return Requesting a Refund

A district court has held that the postmark rule did not apply to a late-filed tax return that sought a refund of taxes paid. But the court noted that this is an issue of first impression for the 7th Circuit Court of Appeals which might have a different view.

A tax return is generally deemed to have been filed when the IRS receives the return. (Emmons, (1989) 92 TC 342). But, under the postmark rule, a tax return is deemed to have been filed on the date of mailing but only if the postmark date is before the due date for the return. (Code Sec. 7502(a)(2)).

Mr. and Ms. Harrison paid income taxes throughout 2012 via withholding from their wages. They were granted an extension to file their 2012 income tax return to October 13, 2013. They did not file a return then.

Approximately three years later, on October 11, 2016, the taxpayers mailed their 2012 tax return via certified mail seeking a refund of taxes withheld. The return was received by the IRS on October 17, 2016.

The court found, and the IRS did not object to, that the taxpayers' tax return was also an administrative claim for a refund.

The IRS denied the taxpayers' refund claim since no taxes were paid during the look-back period. The IRS deemed the filing date to be the day it received the return, October 17, 2016.

The look-back period then extended back only until April 17, 2013 (three years plus extension).

Since the taxpayers effectively paid their taxes on April 15, 2013 under Code Sec. 6513(b)(1), there were no taxes paid during the look-back period and, hence, no money to refund.

The taxpayers contended that the filing date for their claim was the mailing date, October 11, 2016. This would have extended the look-back period to April 11, 2013.

The district court held that, since the tax return was filed late, the postmark rule did not apply. Therefore, the filing date was the date the IRS received the return and there was no taxes to refund.

The court brought up an issue that it said was a question of first impression for the 7th Circuit Court of Appeals. The issue was that perhaps there are two different filing dates for the taxpayers' tax return and their refund claim (even though both were done with one document). The return was filed when it was received by the IRS, under  Emmons. But maybe the refund claim was filed when it was mailed.

While the district court said it could find no support for this theory (and, in fact, the IRS cited many cases that consistently treated the date that an untimely tax return was received as the filing date of the administrative claim), it said that the 7th Circuit might have a different view.

 

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Former Large Business & International Senior Counsel for the Office of Chief Counsel, IRS, Joins Marini & Associates, PA.

Marini & Associates, PA  is pleased to announce that Sergio Garcia-Pages, Esq., former Senior Counsel for the LB&I Division of the Office of the Chief Counsel, IRS, South Florida, has become "Of Counsel" to our firm.    

Mr. Garcia-Pages has in-depth knowledge of the IRS and significant U.S. Tax Court experience. He is available to collaborate with tax accountants and tax attorneys regarding tax planning for their clients, and to assist, develop, and execute sound settlement and controversy strategies during IRS Audits, IRS Appeals proceedings, U.S. Tax Court proceedings, and IRS Collection efforts of assessed taxes.

Mr. Garcia-Pages is admitted to practice law in Florida, the U.S. Tax Court, and the Federal District Court for the Southern District of Florida.

He is able to transact business in English and he is also literate and fluent in Spanish.

Prior to joining Marini & Associates, P.A.

Mr. Garcia-Pages was a 42-year veteran of the Office of the Chief Counsel, IRS, where he spent the last ten years of his career, either alone or as part of a team of attorneys, advising revenue agents during the audits of taxpayers serviced by the Large Business & International Division (LB&I) of the IRS, such as high net worth individuals and publicly traded companies in various industries.

Sergio has valuable experience addressing factual and legal issues of different complexity involving Federal tax law, both domestic and international, including transfer pricing issues and the application of penalties. He has settled or tried civil fraud penalty cases. Sergio advised IRS agents over the years on multiple tax matters involving real estate acquisition, development and disposition, and is familiar with many of the underlying issues and tax planning techniques.

As Senior Counsel for LB&I, Sergio was known for his keen ability to value the contentious positions of the Government and taxpayers based on hazards of litigation, and for resolving cases on the merits without litigation. He was also well regarded for litigating complex-large-stake cases before the U.S. Tax Court.

Representative Cases 

Sergio's litigation experience runs the gamut of factual and technical issues involving domestic and international tax issues, as well as penalties, including the civil fraud penalty.

Significant cases which Sergio successfully litigated in the U.S. Tax Court during the past decade, as lead attorney or active member of the litigation team, include:

• FPL Group, Inc. v. Comm'r, 115 T.C. 554 (2000) (electric utility's judicial request to expense $210.9 million denied as an unauthorized change in method of accounting) (summary judgment);
• Salina Partnership, LP (FPL Group, Inc.) v. Comm'r, T.C. Memo. 2000-352 (disallowing a $344 million mismatch of partnership inside and outside basis used as a tax shelter technique) (trial);
• G.D. Parker, Inc. v. Comm'r, T.C. Memo. 2012-327 (upholding 30% withholding taxes on constructive dividends made by a Florida corporation through two tiers of foreign corporations up to nonresident alien shareholder, and applying the step transaction doctrine to reallocate a loss reported by the domestic corporate taxpayer from the sale of the stock of a foreign affiliate to that entity's foreign corporate shareholder) (trial);
• Kardash v. Comm'r, T.C. Memo. 2015-51, aff'd, 866 F.2d 1249 (11th Cir. 2017) (upholding transferee liability of minority shareholders under Florida Uniform Fraudulent Transfer Act who received dividends from corporate transferor that attempted to evade $120 million in federal income taxes) (trial);
• Smith v. Comm'r, 151 T.C. No. 5 (Sept. 18, 2018) (upholding IRS determinations that a U.S. citizen received a distribution of untaxed Subpart F E&Ps from a Hong Kong CFC taxable as ordinary income rather than a "qualified dividend" taxable at a preferential rate, that residency certificates issued by the Cyprus Ministry of Finance should not be accorded dispositive effect under the "act of state" doctrine for purposes of determining residency under the LOB provisions of the income tax treaty between the United States and the Republic of Cyprus, and that the cancellation of an account receivable was a constructive dividend from the Cypriot CFC to the U.S. taxpayer taxable at ordinary income tax rates) (cross motions for summary judgment);
• Coal Holding Property, LLC v. Comm'r, 153 T.C. No. 7 (Oct. 28, 2019) (disallowing a charitable contribution deduction of $155.5 million for a conservation easement donation to a Tennessee land conservancy) (summary judgment).

Education  

• Brooklyn College, C.U.N.Y., BA 1975 (with distinction)
• University of Pennsylvania School of Law, JD 1978
• University of Miami School of Law, LLM Tax 1986
• University of Miami School of Law, Graduate Program in Taxation, Adjunct Professor, Federal Income Tax Consequences of Property Transactions, 2017-2019. 

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IRS Criminal Investigation is Hiring More Agents!

IRS Criminal Investigation expects to hire more agents, pursue more crypto cases

The Internal Revenue Service’s Criminal Investigation division identified $1.8 billion in tax fraud in 2019, with a 91.2 percent conviction rate for all financial crimes, according to the division’s 100th annual report released Thursday, which also highlighted a continued focus on employment tax, cryptocurrency and cybercrime.

This year’s report, which marked the agency's 100th anniversary, continued a general downward trend of investigations and prosecutions for CI over the last few years. In a conference call with reporters, CI chief Don Fort attributed the trend to fewer special agents, as many retire and those who remain in service devote time to inheriting those cases and training new agents. Fort estimated that 130 to 150 agents retire every year, and that the time between onboarding new agents and completion of their first case averages two to three years.

The overall number of CI investigations initiated in 2019 was 2,485, down from 2,886 in 2018 and 3,019 in 2017. Meanwhile, $4.4 billion in proceeds from other (non-tax fraud) financial crimes were identified in 2019, 1,726 warrants were executed, and 1.24 petabytes of digital data were seized.

“We are in a hiring posture now,” Fort explained. “I’m very hopeful we’ve reached the bottom in terms of staffing. We end the year with 2,000 special agents, which puts us at 1970s levels.” Fort expects to onboard more in-depth special agents over the next year. “I’m really excited about that, and hopeful it’s not a one-time event. We have the support for a number of years of robust hiring, to get the numbers back up."

Overall, Fort characterized the past year, his third as chief, as “exciting times” as CI ramps up hiring, continues to take advantage of technology like data analytics, and collaborates with other agencies to combat newer threats related to cryptocurrency and cybercrime.

“We’ve had tremendous cases represented by every field office in every state; a lot of positive momentum there,” Fort said. “As we’ve been challenged in the manpower perspective for the last five to six years, we have used that time wisely. We’ve made investments in cyber, cyber investigations in tax and non-tax, working in data analytics with the Nationally Coordinated Investigations Unit [which became an official CI section this year]. The success we’ve seen there, we’ve invested wisely in the last few years. With the investment in those areas, we’re seeing the fruits of our labor.”

Another area of momentum for CI has been in employment tax enforcement, one of the few areas where the unit saw an upswing in investigations initiated (250), prosecution recommendations (104), informations/indictments (73), those sentenced (50) and the incarceration rate (84 percent), all an increase over 2018.

“In particular, employment tax, we made that a point of emphasis for CI and the IRS as a whole,” Fort said. “The time spent on employment tax has gone up considerably. There is a tremendous amount of noncompliance in that area. It’s a huge part of what funds the federal government. We’ve absolutely made that a point of emphasis. It’s the goal of field officers to work a balanced program area. All noncompliance tax threats in a particular area, as well as money laundering and bank secrecy threats. I can confirm employment tax will continue to be an area of emphasis for us.”

Abusive return preparer program enforcement also experienced some positive shifts in 2019. While the number of investigations in the category were down this year, at 163, the number of prosecution recommendations (203) and sentencings (154) were up slightly over last year, keeping the incarceration rate at a flat 78 percent.



In terms of collaboration with outside agencies, Fort identified the Joint Chiefs of Global Tax Enforcement, or J5, formed in 2018 among CI and its counterparts in four other countries to battle international tax evasion, as one recent success.

Other examples of interagency successes, though acknowledged by Fort to be more dated, were the shutdowns of darknet markets Silk Road and AlphaBay, in 2013 and 2017, respectively, “a great example of multi-agencies, under the Department of Justice, helping to solve crimes.”

“The most recent success in cryptocurrency was the Welcome to Video case, the child exploitation case,” Fort said, referring to what the DOJ called the “largest dark web child porn marketplace” when it took down the website in October. The use of bitcoin on the site led to CI’s involvement in tracking the cryptocurrency.

Fort anticipates that this kind of collaboration will continue in the years ahead.

“The next wave of crime, in front of our eyes, requires us to employ new ways of investigation in solving these crimes. The crimes are money- and greed-based, conducive to our work in following the money. We all have our own skills and capabilities. We have a lot of initiatives underway to partner with federal agencies and collaborate internationally.”

CI has also been partnering with academia to deepen its expertise in data analytics, working with universities and colleges that are utilizing the technology in innovative ways.

In the next year, Fort expects CI to help take down more dark web marketplaces and create more of a tax focus on cryptocurrency. Fort emphasized that CI currently has many open cases related to cryptocurrency and cybercrime that the agency hopes to make public by the end of this fiscal year.

Have a Criminal 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 orToll Free at 888-8TaxAid (888) 882-9243
 
 
 
 
 
 
 
 
 
 
 

Source:


accountingTODAY

How Will The IRS Know? - IRS Whistleblower Office Collected More than $616 Million in 2019!

On June 5, 2019, we posted IRS Whistleblower Office Collects Over $1.44 Billion & Paid a Record $312M to Tipsters where we discussed that the Internal Revenue Service’s Whistleblower Program made 217 awards to whistleblowers totaling $312,207,590 and collected $1,441,255,859 in fiscal year 2018, according to a new report. the in its 2019 Annual Report to Congress, the Whistleblower Office reported that it made 181 awards to whistleblowers totaling $120,305,278 (before sequestration), which includes 24 awards under IRC § 7623(b).

Proceeds collected were $616,773,127. Included in the proceeds collected, as a result of § 7623(c), are the non-Title 26 amounts collected for criminal fines, civil forfeitures, and violations of reporting requirements amounting to $110,003,100. Title 26 amounts collected were $506,770,027.

Whistleblower claim numbers assigned in FY 2019 decreased by 7.3 percent from those submitted in FY 2018, and closures increased by 29.8 percent.

The Tax Relief and Health Care Act (TRHCA 2006) added IRC § 7623(b), which enacted significant changes in the Internal Revenue Service (IRS) award program for whistleblowers. TRHCA set a new framework for the consideration of whistleblower submissions and established the Whistleblower Office within the IRS to administer that framework. The TRHCA 2006 requires that the Secretary of the Treasury conduct an annual study and report to Congress on the use of IRC § 7623. The annual study and report to Congress includes any legislative or administrative recommendations for IRC § 7623 and its application. This report discusses the IRS Whistleblower Program activities for FY 2019 in satisfaction of the reporting obligations under the TRHCA 2006.

The Whistleblower Office coordinates with other IRS units, analyzes information submitted, and makes award determinations. If a submission does not meet the criteria for IRC § 7623(b) consideration, the Whistleblower Office may consider it for an award pursuant to its discretionary authority under IRC § 7623(a). A whistleblower must meet several conditions to qualify for the IRC § 7623(b) award program. The information must be:

• Signed and submitted under penalties of perjury, 
• Related to an action in which the proceeds in dispute exceed $2,000,000, and 
• Related to a taxpayer, and for individual taxpayers only, one whose gross income exceeds     $200,000 for at least one of the tax years in question.

If the information meets the above conditions and substantially contributes to an administrative or judicial action that results in the collection of proceeds, the IRS will pay an award of at least 15 percent, but not more than 30 percent, of the proceeds. 

The award percentage decreases for cases based principally on information disclosed in certain public sources or when the whistleblower planned and initiated the actions that led to the tax law violations. Whistleblowers may appeal the Whistleblower Office’s award determinations under IRC § 7623(b) to the United States Tax Court (Tax Court).

The IRS pays awards from proceeds, and as such, award payments cannot be made until the taxpayer has exhausted all appeal rights and the taxpayer no longer can file a claim for refund or otherwise seek to recover the proceeds from the government. Therefore, the IRS generally cannot make award payments for several years after the whistleblower has filed a claim. 

 

_____________________________

 

Want a Reward of Between 15- 30% of

Underpaid IRS Tax Liabilities for

Blowing the Whistle on a Tax Cheat? 
________________________________________

 

____

 

Contact the Tax Lawyers at

Marini & Associates, P.A.

 

for a FREE Tax Consultation at:

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