Monday, February 26, 2024

'Empire' Star Terrence Howard Owes Income Tax After Threatening DOJ Atty

According to Law360Empire" actor Terrence Howard owes more than $900,000 in federal income taxes under a default judgment by a Pennsylvania federal judge that follows a months long search by the government to notify the actor of the suit, during which he threatened a government attorney.

U.S. District Judge John F. Murphy granted the government's request for the ruling against Howard of $903,000 following a hearing during which an attorney for the U.S. Department of Justice said authorities investigated voicemail messages Howard left her. Those messages, detailed in court documents, included Howard railing against the injustices of taxation and threatening to "bring [her] down."

"The legal and factual basis for the default judgment is provided in more than sufficient detail in the government's briefing and exhibits," Judge Murphy said in the order, which said interest would continue to accrue on the judgment.

The government expended considerable time and effort in putting that evidence together. The judgment caps a drama-filled, months long attempt by the government to ensure the TV star knew he was being sued for unpaid taxes for 2010, 2011, 2016, 2017 and 2019, and to prove it in court.

The government filed the complaint against Howard in December 2022. In March, the government asked the court for another three months to locate the actor, saying they had sent process servers to Plymouth Meeting, Pennsylvania, the address on file for Howard with the Internal Revenue Service. But the gated property appeared to be unoccupied, and its intercom lacked connectivity, according to a March 15 filing.

An entertainment attorney for Howard told the government that she would contact his tax attorney, who told the government he would discuss the suit with Howard, according to the filing. But by June, the government had come up empty again, telling the court that the tax attorney told them he would not be representing Howard after all, according to a June 20 filing.

"Despite the United States' diligent efforts, the defendant still has not been served with the complaint and summons," the government told the court in the filing, again asking for more time.

A Pennsylvania federal court "expressed concerns about the sufficiency of the purported service," according to an Oct. 5 filing, and asked the government to continue trying to notify Howard about the suit against him.

On Oct. 31, Howard was personally served notice of the lawsuit at a St. Louis Park, Minnesota, address, according to filings.

The government presented additional evidence confirming Howard's knowledge of the suit in a January request to the court to reduce the debt to judgment. Howard had called Ruwe and left a voicemail message saying he was going to be representing himself and would "need assistance in that", according to a Jan. 8 filing, which included a transcript of the message.

Howard Said In The Message That He Believed It Was
"Immoral For The United States Government To Charge
Taxes To The Descendants Of Slaves Who Built This
Country For 400 Years," According To The Filing.

When the voicemail cut off, Howard called the attorney back and left another message, saying the U.S. "should, by default, become the property of the descendants of slaves."

In the second voicemail, Howard calls Ruwe by her full name and says he's going to post the call on the internet and let "the descendants of slaves" know that he's reached out to her.

"We're Gonna Bring You Down," Howard Said,
According To The Transcript, With A Laugh.
"Looking Forward To This."
________________

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Wednesday, February 21, 2024

IRS Begins Audits Of Corporate Jet Usage To Ensure High-Income Groups Don’t Fly Under The Radar On Tax Responsibilities

Using Inflation Reduction Act funding and as part of ongoing efforts to improve tax compliance in high-income categories, the Internal Revenue Service announced on February 21, 2024 plans to begin dozens of audits on business aircraft involving personal use. (IR-2024-46) 

The audits will be focused on aircraft usage by large corporations, large partnerships and high-income taxpayers and whether for tax purposes the use of jets is being properly allocated between business and personal reasons.

The IRS will be using advanced analytics and resources from the Inflation Reduction Act to more closely examine this area, which has not been closely scrutinized during the past decade as agency resources fell sharply. The number of audits related to aircraft usage could increase in the future following initial results and as the IRS continues hiring additional examiners.

“Personal use of corporate jets and other aircraft by executives and others have tax implications, and it’s a complex area where IRS work has been stretched thin. With expanded resources, IRS work in this area will take off. These aircraft audits will help ensure high-income groups aren’t flying under the radar with their tax responsibilities” said IRS Commissioner Danny Werfel.

For someone such as an executive using the company jet for personal travel, the amount of personal usage impacts eligibility for certain business deductions. Use of the company jet for personal travel typically results in income inclusion by the individual using the jet for personal travel and could also impact the business’s eligibility to deduct costs related to the personal travel.

The examination of corporate jet usage is part of the IRS Large Business and International division’s “campaign” program. Campaigns apply different compliance streams to help address areas with a high risk of non-compliance. These efforts include issue-focused examinations, taxpayer outreach and education, tax form changes and focusing on particular issues that present a high risk of noncompliance.

The IRS will begin conducting examinations in the near future as part of the agency’s commitment to ensuring fairness in tax administration.

In addition to work on corporate jets, the IRS has a variety of efforts underway to improve tax compliance in complex, overlooked high-dollar areas where the agency did not have adequate resources prior to Inflation Reduction Act funding.

  • For example, the IRS is continuing to pursue millionaires that have not paid hundreds of millions of dollars in tax debt. The IRS has already collected $482 million in ongoing efforts to recoup taxes owed by 1,600 millionaires with action continuing in this area. 
  • Elsewhere, the IRS is pursuing multi-million-dollar partnership balance sheet discrepancies, ramping up audits of more than 75 of the largest partnerships using artificial intelligence (AI) as well as other areas.

"The IRS continues to increase scrutiny on high-income taxpayers as they work to reverse the historic low audit rates and limited focus that the wealthiest individuals and organizations faced in the years that predated the Inflation Reduction Act,” Werfel said. 

“We are adding staff and technology to ensure that the taxpayers with the highest income, including partnerships, large corporations and millionaires and billionaires, pay what is legally owed under federal law. 

Have an IRS Tax Problem?


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Wednesday, February 7, 2024

Funding Boost For The IRS Could Raise $497B

The Inflation Reduction Act's investment in the Internal Revenue Service could raise $497 billion over a decade, marking a significant increase over the agency's previous estimates of how much revenue the law's funding boost would generate, the agency said Tuesday.

The IRS' previous estimates suggested that the 2022 law's funding boost would bring in $390 billion in revenue between fiscal years 2024 and 2034, but the agency's old process for estimating revenue was "extremely conservative," according to the white paper released by the IRS and the U.S. Department of Treasury.


According to the agency's new estimates, which take into account direct revenue and the effects of "soft notices" in addition to the effects audits have on taxpayer behavior, the funding boost could raise as much as $497 billion.

The new estimates include the effects of "specific deterrence," which finds that taxpayers who are audited are more likely to be compliant during future years, according to the white paper.

The IRS' previous estimates of the Inflation Reduction Act's revenue effects assumed that the agency would maintain its recent operation practices and that those practices would become less effective as they were scaled up, according to the paper.

The New Estimates Consider The Full Range Of Ways That
The Technology, Data And Service Improvements Funded
By The Inflation Reduction Act Will Increase Revenues.

The new estimates assume that the IRS is sufficiently funded from fiscal year 2024 through fiscal year 2034 in addition to the funding provided by the Inflation Reduction Act, the paper said.

Have An IRS Tax Problem?


     Contact the Tax Lawyers at
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or 
Toll Free at 888 8TAXAID (888-882-9243)

 


Thursday, February 1, 2024

How Not To Handle an IRS Investigation - Taxpayer Convicted of Tax Fraud


This is a perfect example of why the things that taxpayer do during an IRS audit, to cover up past IRS noncompliant, can get you criminally convicted. According to the DoJ, a federal jury in Atlanta convicted Saleem Hakim, 54, of tax evasion and failing to file tax returns on January 31, 2024.

According to court documents and evidence introduced at trial, from 2011 through 2013, Hakim brokered the sale of precious metals to his clients. Hakim earned more than $1 million in commissions from the sales, which enabled him to fund a lavish lifestyle that included purchases of high-end watches, jewelry, designer accessories and furs. Despite earning substantial income, he did not file income tax returns for tax years 2011 through 2013.

The evidence introduced at trial also showed that from 2020 through 2022, Hakim and his wife worked for businesses in Atlanta that bought and sold jewelry and luxury handbags. The Hakims earned a combined income of more than $260,000 for those years yet did not file tax returns. 

The evidence established that Hakim attempted to hide his and his wife’s income from the IRS by diverting his income into a trust that he established after being initially charged with tax crimes for tax years 2011 through 2013.

In addition, Hakim attempted to obstruct the investigation into his tax misconduct for 2020 through 2022. A witness testified that after he received a grand jury subpoena for records relating to income that the witness paid to Hakim and his wife, Hakim drafted a letter for the witness falsely stating he did not have any business records in his possession relating to the Hakims and asked the witness to send the letter. The witness sent the letter to federal prosecutors and IRS agents.

Don't Be Cute With The IRS During an IRS Audit!!!

If You Have A Tax Problem, Hire
An Experienced Tax Attorney
To Deal With The Civil Tax Issue



So That It Does Not Become
A Criminal Tax Issue!

Sentencing is scheduled for April 30, 2024. Hakim faces a maximum penalty of five years (5) in prison for each tax evasion charge and one year (1) in prison on each failure to file charge. He also faces a period of supervised release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

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)

Tuesday, January 30, 2024

2024 Treasury Reporting Rules May Be A Shock To Many Beneficial Owners

 


According to Law360a new rule requiring millions of companies to disclose their beneficial owners to the U.S. Department of the Treasury is now in effect, many may not know they are responsible for these reporting obligations.

The rules for reporting beneficial ownership information to the Treasury's Financial Crimes Enforcement Network are intended to unmask shell corporations that may be used for financial crimes including money laundering, and they're primarily aimed at smaller companies. The requirements became effective with the new year. The new reporting requirements could potentially apply to up to 32 million entities. 

Congress enacted the CTA in 2021 as part of the Anti-Money Laundering Act, within the National Defense Authorization Act. Finalized in 2022, the BOI reporting rule requires businesses to submit beneficial ownership information that FinCEN said it will use to create a national database that will help target tax evasion, money laundering and other crimes carried out through shell companies.

FinCEN Has Noted That Beneficial Ownership Information Refers To Identifying Information About The Individuals Who Directly Or Indirectly Control A Company.


Reporting companies have to report the name, date of birth and residential address of each of their beneficial owners and provide identification such as a passport or driver's license.

The rule requires companies formed before Jan. 1, 2024, to complete their filings by Jan. 1, 2025. Companies formed during this year will have 90 days to complete their filings.

Individuals Who Willfully Violate The BOI Reporting Requirements May Face Civil Fines Of Up To $500 Per Day That The Violation Continues, Criminal Fines Of Up To $10,000, And Up To Two Years Of Imprisonment, According To FinCEN.

Certain "large" companies, which FinCEN defines as those with more than 20 full-time employees in the U.S. and at least $5 million in gross receipts or sales, among other things, are exempt from the BOI reporting requirements.

Erin Bryan, co-chair of Dorsey & Whitney LLP's consumer financial services group, said companies should figure out whether the beneficial ownership rule's filing requirements apply to them.

"There are 23 exemption categories, but it is not always obvious whether an exemption applies to a particular company," Bryan said in an email. "Corporate families may even discover that some of their entities qualify for exemptions while others do not."

Bryan noted that beneficial owners include individuals who own at least 25% of a company and those who have "substantial control" over the company. Companies need to disclose each beneficial owner's name, date of birth and address, and they are required to submit a photo of a government ID.

Bryan Said That In Her Experience, the
High-Net-Worth And Foreign Investors Have Been 
Reluctant To Provide That Kind Of Information,
"So The Conversations Should Not Be Left To The Last Minute."

FinCEN has said that companies can avoid penalties if they correct mistakes or omissions in their original reports within 90 days of its filing deadline. But the agency noted companies could face civil and criminal penalties for disregarding BOI reporting obligations.

Need Help Filing Your BOI Report?


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or 
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CPA Tech Entrepreneur Charged in Offshore Tax Evasion Scheme

According to DoJ, an indictment was unsealed in St. Paul, Minnesota, charging a former Excelsior, Minnesota, man with tax evasion, assisting in the preparation of false tax returns and making false statements to federal agents. 

According to the indictment, from 2014 through 2018, David V. Erickson, a licensed CPA, engaged in a scheme to conceal from the IRS income that he earned abroad by falsely characterizing the funds he received as loans. Erickson allegedly owned and operated Halstead Bay Holdings (HBH), a Minnesota-based consulting company. HBH allegedly received payments from several foreign companies that Erickson partially owned. These foreign companies allegedly provided marketing and payment processing systems for an adult content website.

Erickson allegedly caused his foreign companies to transfer millions of dollars held offshore to bank accounts in the United States that he controlled. He allegedly directed his bookkeeper and others to falsely characterize those payments as nontaxable loans in HBH’s accounting records. HBH’s purported debt allegedly grew to nearly $5 million by the end of 2018. Erickson allegedly used the funds for personal expenses, including the purchase of a $1.3 million home and a luxury vehicle.

The indictment further alleges that Erickson provided false information to his accountants and bookkeepers, and, in turn, filed false federal income tax returns with the IRS. Erickson also allegedly lied to IRS Criminal Investigation special agents by claiming he had no authority to direct the foreign companies to send money.

If convicted, he faces a maximum penalty of five years (5) in prison for each tax evasion count and for making a false statement to IRS-CI agents and three years (3) in prison for each count of assisting in the preparation of false tax returns. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

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)

Shall I Stay or Shall I Go? - IRS Reports That US Expatriations Jumped Nearly 45% During The Fourth Quarter Of 2023!

On July 21, 2023 we posted Shall I Stay or Shall I Go?  - IRS Reports Nearly 55% Increase in US Expatriations In 2nd Quarter of 2023 where we discussed that he number of people expatriated from the United States rose nearly 55% during the second quarter of 2023 compared with the previous quarter, the Internal Revenue Service said in a published notice.

Now the Internal Revenue Service said in its notice that the number of people who expatriated from the U.S. jumped nearly 45% during the fourth quarter of 2023 compared with the previous quarter. 


The Number Of People Losing Or Renouncing Their U.S. Citizenship Increased to 1145 For the 4th Qtr of 2023.
A 45% Increase From The 3rd Quarter of 2023.

Included on the list are those who lost U.S. citizenship under Internal Revenue Code Section 877(a) and Section 877A, according to the notice, as well as long-term residents who are treated as losing citizenship under Section 877(e)(2).

According to CNBC the top reason why Americans abroad want to dump their U.S. citizenship include:
  • Nearly 1 in 4 American expatriates say they are “seriously considering” or “planning” to ditch their U.S. citizenship, a survey from Greenback Expat Tax Services finds.  
  • About 9 million U.S. citizens are living abroad, the U.S. Department of State estimates.
  • More than 4 in 10 who would renounce citizenship say it’s due to the burden of filing U.S. taxes, the Greenback poll shows.


Should I Stay or Should I Go?


Need Advise on Expatriation?
 

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Marini & Associates, P.A.   


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