Paul Manafort, Donald Trump’s Campaign Manager, Allegedly Owes $3M In FBAR Penalties

A prosecutor has asked a South Florida federal judge to order Paul Manafort, Donald Trump’s presidential campaign manager in 2016, to pay nearly $3 million in fees to the U.S. government over his failure to disclose foreign income hidden in over two dozen shell corporations and foreign accounts in 2013 and 2014, according to a federal lawsuit. 

In court papers filed on April 28, 2022, Deputy Assistant Attorney General David Hubbert said that Manafort had to pay $2,976,350.15 due to his “willful failure to timely report his financial interest in foreign bank accounts.”

Manafort was hit with the penalties after he didn't report his interest in a number of foreign companies and accounts in 2013 and 2014. Specifically, he didn't report that on his federal income tax returns or through a Report of Foreign Bank and Financial Accounts, or FBAR, for the years 2013 and 2014, prosecutors said.

"Manafort was required to file an FBAR reporting his interests in the accounts no later than June 30, 2014," prosecutors said in the suit. "Manafort was also required to report his interests in the accounts on Schedule B to his 2013 federal individual income tax return."

"Manfort has never filed an FBAR reporting his interest in foreign accounts for 2013," they added.

And the same goes for his interests during 2014, according to the government.

Specifically, Prosecutors Said Manfort Had
A Financial Interest In At Least 18 Accounts In Cyprus,
One Account In The United Kingdom And
Three Accounts In St. Vincent And The Grenadines In 2013. 

And In 2014, He Had A Financial Interest In
The St. Vincent And Grenadines Accounts, They Said.

The U.S. Treasury Secretary assessed the penalties against Manafort in 2020, the government said. Despite the notices and demands for payment, Manafort hasn't paid up, it said.

The government pointed to a pair of high-profile criminal cases involving Manafort. Both garnered convictions: one in Washington, D.C., for obstructing the Russia investigation conducted by special counsel Robert Mueller and unsanctioned lobbying work, and another in Virginia for bank and tax fraud.

However, things began looking up for Manafort in May 2020, when he was moved from prison to home confinement due to COVID-19 concerns. Then former President Donald Trump pardoned Manafort for his federal crimes in December of that year.

Most recently, New York's highest court declined to take up the Manhattan district attorney's appeal of the dismissal of additional state fraud charges against Manafort, after two lower courts agreed the indictment should be dismissed on double jeopardy grounds.

In Thursday's complaint, the government focused on Manafort's guilty plea entered in the District of Columbia case. As part of that plea, Manafort agreed that a statement of offenses and other acts "fairly and accurately described his actions and involvement," prosecutors said. That statement detailed his "willful failure to comply with the FBAR filing requirements for several years, including 2013 and 2014," they said.

The complaint included an excerpt from the statement reading, in part, "From 2008 through 2014, Manafort caused millions of dollars of wire transfers to be made from offshore nominee accounts, without paying taxes on that income."

Prosecutors asked the court to enter judgment against Manafort for his failure to pay and award it interest and additional penalties.

Jeffrey A. Neiman, who's representing Manafort in the case, said in a statement Thursday that the suit "seeks a money judgment against Mr. Manafort for simply failing to file a tax form."

"Mr. Manafort was aware the government was going to file the suit because he has tried for months to resolve this civil matter," Neiman said. "Nonetheless, the government insisted on filing this suit simply to embarrass Mr. Manafort." 

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

Sources:

Law360

The Miami Herald

Inflation Makes Collections Alternatives Easier to Obtain!

As a result of inflation, the IRS increased the Collection Financial Standards on April 25, 2022. The increases reflect increases due to inflation, with substantial increases in Standard Allowable Expenses.

According to Procedurally Taxing, the percentage increases between 2021 and 2022 are significantly higher than they were between 2020 and 2021 for all categories, but the biggest percentage increases were in the “Out of Pocket Health Care” and “Public Transportation” categories. 

These standards can be used in IRS collection-related matters, such requesting currently non-collectable status or an offer in compromise. Important related note: The offer in compromise booklet was also updated this month. The IRS website states that the new forms must be used if you apply for an OIC on April 25, 2022 or later.

Some of the standards can be used with no questions asked, while others serve as a ceiling (i.e. the amount that can be used is the “lesser of” the standard or what the taxpayer actually spends). For certain (and arguably, all) categories, amounts in excess of the standards are allowed if the taxpayer provides a good reason and proof.

All of the current standard amounts are available here: IRS Collection Financial Standards. Here are is a sampling of the changes (based on a household of one):

“No questions asked” amounts:

• Food, Clothing, Other Items: New standard is $785, which is a 9% increase from the 2021 amount of $723. Compared to a 1% increase between the 2020 amount of $715 and 2021.
• Public Transportation: New standard is $242, which is a 12% increase from the 2021 amount of $217. Compared to a 3% decrease between the 2020 amount of $224 and 2021.
• This decrease corresponds with a more substantial increase in vehicle operating costs during the same period, and likely relates to the decreased use of public transportation during the early days of the pandemic.

“No questions asked” or “higher allowed with proof” amounts:

• Out of Pocket Health Care under 65: New standard is $75, which is a 34% increase from the 2021 amount of $56. Compared to a 0% increase between 2020 and 2021, and a 2% increase between the 2019 amount of $55 and 2021.
• Out of pocket health care 65 and older: New standard is $153, which is a 22% increase from the 2021 amount of $125. Compared to a 0% increase between 2020 and 2021, and a 10% increase between the 2019 amount of $114 and 2021.

“Ceiling standard” amounts (though, worth arguing for more if circumstances warrant it):

• Vehicle Ownership Costs: New standard is $588, which is a 10% increase from the 2021 amount of $533. Compared to a 2% increase between the 2020 amount of $521 and 2021.

Local Standards such as “Vehicle Operating Costs” and “Housing and Utilities” also saw increases, although the percentage increases varied based on locality. For example:

• Housing and Utilities (for the top three largest counties):
  • Los Angeles County (California): New standard is $2,544, which is a 7% increase from the 2021 amount of $2,367. Compared to a 1% increase between the 2020 amount of $2,335 and 2021.
  • Cook County (Illinois): New standard is $2,036, which is an 8% increase from the 2021 amount of $1,882. Compared to a 1% increase between the 2020 amount of $1,858 and 2021.
  • Harris County (Texas): New standard is $1,774, which is a 9% increase from the 2021 amount of $1,633. Compared to a 1% increase between the 2020 amount of $1,610 and 2021.

The standards are derived from various sources, such as the Bureau of Labor Statistics Consumer Expenditure Survey, Medical Expenditure Panel Survey, U.S. Census Bureau, and American Community Survey. There are at least two oddities that carry over from the previous numbers, the amount for housekeeping supplies and personal care products are less for a household of three than they are for a household of two.

Finally, the federal poverty limit was also increased earlier this year: 250% of FPL for a household of one is now $33,975, which is a 5% increase from the 2021 amount of $32,200. Compared with a 1% increase between the 2020 amount of $31,900 and 2021.

Can't Pay Your IRS Taxes?  

   

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

 



Know Your Choices to Pay Your Tax Bill! - Part 2

On April 25, 2022 we posted Know Your Choices to Pay Your Tax Bill! - Part 1 where we discussed Paying in full within 120 days (short-term payment plan) and Installment agreements (long-term payment plan). In this Part 2we will discuss two other alternative for taxpayers who do not have the money to pay their current tax liability.

Offer in compromise (OIC). An OIC is an agreement between a taxpayer and IRS that settles the taxpayer's tax liabilities for less than the full amount owed. Taxpayers who can fully pay the liabilities through an installment agreement or other means, won't qualify for an OIC in most cases. IRS says that to qualify for an OIC, the taxpayer must have filed all tax returns, made all required estimated tax payments for the current year, and made all required federal tax deposits for the current quarter if the taxpayer is a business owner with employees. (IRS website)

IRS may compromise a tax liability on any of the following grounds:

1. Doubt as to liability. There must be a genuine dispute as to the existence of amount of the correct tax debt.
2. Doubt as to collectibility. Such doubt exists in any case where the taxpayer's assets and income are less than the full amount of the tax liability.
3. To promote effective tax administration. An offer may be accepted on this ground if: (a) collection in full of the tax owed could be achieved, but (b) requiring payment in full would either create an economic hardship, or would be unfair and inequitable because of exceptional circumstances. (Reg. § 301.7122-1(b))

To request an OIC, the taxpayer must apply using Form 656, Offer in Compromise. The taxpayer also must submit Form 433-A (OIC), Collection Information Statement for Wage Earners and Self-Employed Individuals, and/or Form 433-B (OIC), Collection Information Statement for Businesses.

A taxpayer submitting an OIC based on doubt as to liability must file a Form 656-L, Offer in Compromise (Doubt as to Liability), instead of Form 656 and Form 433-A (OIC) and/or Form 433-B (OIC).

The OIC application generally must be accompanied by a $186 application fee. However, the fee is waived for certain low income taxpayers or if the OIC is based on doubt as to liability. (Form 656-B, Notice 2006-68, 2006-31 IRB 105, Sec. 4.03)

Except with regard to offers filed by low-income taxpayers, or based only on doubt as to liability, an OIC must be accompanied by a nonrefundable payment that depends on how the taxpayer is offering to pay.

A taxpayer may propose to pay in a lump sum, i.e., an offer payable in five or fewer installments within five or fewer months after the offer is accepted. If such an offer is made, the taxpayer must include with the Form 656 a payment equal to 20% of the offer amount. This payment is required in addition to the $186 application fee.

A taxpayer may propose to make periodic payments, i.e., six or more monthly installments made within 24 months after the offer is accepted. When submitting a periodic payment offer, the taxpayer must include the first proposed installment payment along with the Form 656. This payment also is required in addition to the $186 application fee. (Code Sec. 7122(c)(1)

Currently Not Collectible - delay the collection process. Where a payment would create financial hardship, is to ask IRS to delay collection until the taxpayer is able to pay. If IRS determines that the taxpayer cannot pay any of his or her tax debt, it may report the taxpayer's account as currently not collectible and temporarily delay collection until the taxpayer's financial condition improves. Interest and penalties continue to accrue until the tax debt is paid in full. (https://www.irs.gov/businesses/small-businesses-self-employed/temporarily-delay-the-collection-process)

The taxpayer may be asked to complete a Collection Information Statement (Form 433-F, Form 433-A or Form 433-B) and provide proof of financial status (this may include information about assets and monthly income and expenses).

During a temporary delay, IRS will again review the taxpayer's ability to pay, and may also file a Notice of Federal Tax Lien to protect the government's interest in his assets.

Taxpayers requesting a temporary delay of the collection process or to discuss other payment options should contact IRS at 1-800-829-1040 or call the phone number on their bill or notice.

Remember to FILE YOUR RETURN,

Even if You CANNOT Pay Your Tax!

I know this is counterintuitive, since no one wants to bring attention to the fact that they cannot pay their taxes by filing a tax return showing a tax due and not paying the tax. However by filing your return,

1. You begin the running of the Statute of Limitations for assessment & collection,
2. You begin the running the two-year period for discharging this debt in bankruptcy and
3. You reduce your associative tax return penalties from 5% a month for late filing to .05% for late payment penalty. 
• The penalty for filing late is normally 5 percent of the unpaid taxes for each month or part of a month that a tax return is late. That penalty starts accruing the day after the tax filing due date and will not exceed 25 percent of your unpaid taxes.
• If you do not pay your taxes by the tax deadline, you normally will face a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes. That penalty applies for each month or part of a month after the due date and starts accruing the day after the tax-filing due date.

Need Time To Pay Your IRS Taxes?  

   

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

 



 

Should I Stay or Should I Go? - Expatriations Are Up In 1st Quarter of 2022

The number of people who expatriated from the U.S. rose during the first quarter of 2022 compared with the previous quarter, the Internal Revenue Service said in a notice released Monday.

The number of people losing or renouncing their U.S. citizenship rose to 571 in January through March, from 488 in the final quarter of 2021, the IRS said in a list of those choosing to expatriate. 

Expatriation Is The Term The IRS Employs For Loss Or Renunciation Of U.S. Citizenship Under Internal Revenue Code Section 877(A) And Section 877A, The Notice Said.

Expatriation has increased significantly in 2020. 

Should I Stay or Should I Go?

Need Advise on Expatriation?

 

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

Joe Biden's Proposals in His FY 2023 Budget

President Joe Biden’s 2023 federal budget, released Monday April 25, 2022, proposes tax hikes on the ultra-wealthy and corporations while providing billions of dollars in new spending for the Defense Department and the Justice Department.

The proposal sent to Congress touts a reduction in the federal budget deficit of more than $1 trillion over the next 10 years. 

This is paid for, in part, by raising the corporate tax rate from 21% up to 28%, a rate favored by progressive Democrats but opposed by key moderates. Biden also proposes a new 20% minimum tax on the top 0.01% of earners and households worth more than $100 million.

Key revenue raisers:  (Total -$2,545 billion)

1. Raise the corporate tax rate from its current rate of 21% to 28%. 
2. Raise the top individual tax bracket to 39.6%.
3. Impose a 20% minimum tax on the top 0.01% of earners and households worth more than $100 million, the so-called the Billionaire Minimum Tax.
4. Repeal several tax breaks for oil and gas producers and processors.
5. Tax carried interest as regular income, closing the so-called carried interest loophole. and
6. End tax deferrals on the gains from like-kind exchanges.

Increase Taxes on Corporations (-$1,555 billion). The President's budget would raise the corporate income tax rate from 21 percent to 28 percent. This proposal is inclusive of a 20 percent minimum tax (up from 10.5 percent today) on foreign-earned Global Intangible Low-Based Tax Income. The budget would also reform the taxation of foreign business income by incorporating global efforts to combat corporate tax avoidance. 

Increase Taxes on High-Income Households (-$780 billion). The President's budget would increase the top individual income tax rate from 37 percent to 39.6 percent - the top income tax rate prior to the enactment of the Tax Cuts and Jobs Act. It would also establish a 20 percent minimum tax on households with assets worth $100 million or more, tax capital gains as ordinary income for high-income earners, and tax gains at death. Moreover, the budget would close several Estate Tax loopholes by changing rules for certain trusts, improving estate tax administration, improving the valuation of assets, and tightening other exemptions. 

Other Revenue Increases (-$215 billion). The President's budget would close several tax loopholes, including taxing carried interest as ordinary income and repealing "like-kind exchange" rules that allow real estate investors to avoid paying capital gains taxes, among other tax changes. It also proposes reforms to improve tax administration and compliance and would eliminate several fossil fuel tax preferences, such as the expensing of intangible drilling costs. 

 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

 

Source

Committee for a Responsible Federal Budget