IRS CONTINUES to Criminally Prosecutes Employers For Failure To Pay Withheld Payroll Taxes - As Promised!

On October 29, 2019 we ORIGINALLY posted The IRS is Now Criminally Prosecuting Employers For Failure To Pay Withheld Payroll Taxes! where we discussed that the IRS is stepping up criminally prosecuting business owners for failing to turn over withheld payroll taxes.

The November 2022 Lowlights From DoJ include the following employment tax prosecutions:

1. The sole shareholder and president of an Iowa landscaping and construction company, pleaded guilty to evading payment of his company's employment taxes. The company withheld approximately $1 million in payroll taxes but failed to pay over that amount to the IRS. While the shareholder, Kevin Alexander, admitted that he was liable for paying the company's taxes, he sought to conceal some of his assets from the IRS. 
2. The former operator of several Key West staffing agencies, Oleksandr Morgunov, pleaded guilty to defrauding the IRS out of more than $7.9 million in employment taxes. Under Morgunov the staffing agencies facilitated the employment of individuals not authorized to work in the U.S.
3. The former owner of two car rental companies, Ari Weingrad, pleaded guilty to willfully failing to pay over withheld employment taxes to the IRS. Weingrad knew he was responsible for collecting, accounting for and paying over withheld payroll taxes, but willfully failed to remit them.
4. Yigal Ziv, who owned and operated a software company, pleaded guilty to employment tax violations. Ziv was responsible for withholding employment taxes from his employees and filing his business's quarterly employment tax returns. However, although Ziv withheld taxes from his employees' wages, he didn't remit those taxes to the IRS. In addition, he failed to file employment tax returns. 

Thinking of Borrowing From Your Company's

Payroll Tax Withholdings?

You Better Thank Again, if You Like Your Freedom!

Have Payroll Tax Problems?

 

 

 Contact the Tax Lawyers at 

Marini & Associates, P.A.  

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www.TaxAid.com or www.OVDPLaw.com 

or Toll Free at 888-8TaxAid

No Equitable Tolling, As In Boechler, For Jurisdictional 90-Day Filing Deadline

According to Law360, The U.S. Tax Court can't consider a California company's day-late challenge to an IRS bill, the court ruled on November 29, 2022, despite a recent U.S. Supreme Court decision in Boechler concluding that a different tax code deadline was not jurisdictional and didn't necessarily bar late cases.

Hallmark Research Collective's suit challenging the deficiency notice from the Internal Revenue Service is barred by the 90-day deadline for such cases under Internal Revenue Code Section 6213(a), the Tax Court's 17 judges said in a unanimous opinion. 

In coming to its conclusion, the court said the deadline is not analogous to a different tax code deadline that the Supreme Court determined was not jurisdictional in the case Boechler PC v. Commissioner of Internal Revenue. Hallmark had asked the court to reconsider its initial dismissal of the case.

The Tax Court Said The Actual Text, Placement And
History Of Section 6213(A) Indicate That Congress
Intended For The Deadline To Be Jurisdictional.

That Congress has made several amendments to the statute to give taxpayers more flexibility to meet the deadline shows it knew the Tax Court didn't have the authority to give deadline relief itself, the court added.

Hallmark filed its 2015 return late and failed to file its return for 2016, after which the IRS prepared a return on its behalf and sent a deficiency notice outlining taxes, penalties and additions to tax owed for both years, according to the Tax Court's opinion. The company filed its Tax Court petition challenging the deficiency notice one day late in September 2021, after which the Tax Court dismissed its case, finding it lacked jurisdiction because of the untimely petition, according to the opinion.

But the Supreme Court issued its opinion in law firm Boechler PC's case just a few weeks after the Tax Court dismissed the Hallmark case. In their opinion from April, the justices said that statutory filing deadlines must be clearly stated as jurisdictional in order for them to be construed as such.

IRC Section 6330(d)(1)'s filing deadline, the one in dispute in Boechler, doesn't clearly connect to the authority given to the Tax Court to consider collection due process cases, the Supreme Court found. That meant that the Tax Court had the authority to consider the day-late case filed by Boechler, according to the high court.

Hallmark then asked the Tax Court to reconsider dismissing its Section 6213 case, arguing that the Supreme Court's reasoning was applicable to the dispute over the deficiency statute. But the Tax Court found on November 29, 2022 that Section 6213 does clearly predicate the court's jurisdiction on timely filings of deficiency cases, using the same "clear statement" rule that the Supreme Court used in the Boechler case, according to the opinion.

The 90-day deadline requirement being placed in the jurisdictional portion of Section 6213 supports the Tax Court's conclusion that the deadline is meant to be a time bar, the court said. The actual language of the statute also supports this conclusion, as does the fact that Congress has repeatedly amended the statute to accommodate some extenuating circumstances that could inhibit compliance with the deadline, according to the opinion.

"Congress recognized that the Tax Court does not have the power to extend the jurisdictional deadline imposed by Section 6213," the court said. "Thus, Congress, in the course of its amendments, has treated the deadline of Section 6213(a) (and its predecessor statutes) as a jurisdictional deadline that the Tax Court cannot alter or toll."

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)

Another Criminal Prosecution For Willfully Failing to Pay Employment Taxes

A Miami business owner pleaded guilty on November 29, 2022 to willfully failing to pay over employment taxes to the IRS. A sentencing date will be set by U.S. District Judge K. Michael Moore.

According to court documents and statements made in court, Ari Weingrad owned and operated two car rental companies, Rent Max Miami, Inc. and Rent Max North, Inc., both of which had locations throughout Florida. 

As the sole owner and CEO of Rent Max Miami, and as the co-owner and president of Rent Max North, Weingrad knew he was responsible for collecting, accounting for and paying over payroll taxes withheld from his employees’ wages to the IRS. 

Between 2011 and 2016, Weingrad withheld from his employees but did not pay over more than $850,000 in employment taxes owed to the IRS. Instead, he caused Rent Max Miami to spend corporate funds to pay discretionary expenses, including a $50,000 cashier’s check to himself, a $45,000 in cashier’s checks payable to his wife, and expenses related to a 55-foot yacht.

Weingrad faces a maximum penalty of five (5) years in prison for willful failure to pay over employment taxes. He also faces, as well as 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.

 Thinking Not Paying Your Taxes?

You Better Thank Again, if You Like Your Freedom!

  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) 

 

 

 

 

US Man Living In Shanghai Owes $2.3M In FBAR After Dropping Out of His OVDP

According to Law360, an American living in Shanghai owes the Internal Revenue Service $2.3 million after failing to report at least a dozen foreign bank accounts on his 2010 tax forms, the U.S. government told a federal court in a complaint in U.S. v. William A. Chen, case number 1:22-cv-03562, in the U.S. District Court for the District of Columbia.

William A. Chen opened the bank accounts in China during 2005 when he planned to relocate from the U.S., the government said in a complaint filed Nov. 22. He failed to disclose their existence and any interest earned on them, according to the government.

Chen opened the accounts at HSBC, Standard Chartered Bank, Deutsche Bank, Industrial and Commercial Bank of China, Shanghai Pudong Development Bank, Morgan Stanley and Bank of China, the government said in its complaint. He moved to Shanghai in 2006 and currently lives in the city, according to the government.

Chen hired PwC to prepare his 2006 and 2007 tax forms but had checked "no" on Form 1040's Schedule B question asking if he had any foreign accounts, according to the government.

Chen began filing Report of Foreign Bank and Financial Accounts in 2008, the government said, but did not fully disclose his accounts in 2008 or in 2010, the U.S. said. The 2010 failure involved 12 foreign accounts held with HSBC, Standard Chartered Bank and Deutsche Bank, the government said. The aggregate highest balance of the accounts totaled $5.7 million, according to the government.

Chen entered the 2014 Offshore Voluntary Disclosure Program in 2015 but dropped out in 2018. The penalties and interest against him total $2.3 million, the government said.

Have an FBAR Penalty Problem?  

 

 Contact the Tax Lawyers at 

Marini& Associates, P.A. 

 

 

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

Diamond Dealer Did Not Make the Cut and Agrees To Pay $1.3M In FBAR Penalties

According to Law360, A diamond dealer agreed Thursday to pay $1.3 million as part of a consent judgment in New Jersey federal court settling allegations that he failed to report his overseas bank accounts.

Favi Cahan of Toms River, New Jersey, agreed that he willfully failed to file Reports of Foreign Bank and Financial Accounts from 2005 to 2008, according to the decision entered by the U.S. District Court for the District of New Jersey. The U.S. had accused him of owing $1.5 million in penalties and interest.

Cahan became a permanent U.S. resident around 1990, according to court documents. The U.S. claims Cahan traveled to Switzerland in 1997 and opened a bank account at UBS, declaring himself the beneficial owner of assets deposited.

Simultaneously, Cahan granted a brother, Jehuda Cahan, power of attorney over the account, and gave a Swiss asset manager named Felix Kramer full discretion to invest the funds, the U.S. said. By the end of 1997, the U.S. said, the account's balance was about $2.1 million.

From 2005 to 2008, Favi Cahan directed 19 transfers from his UBS account, drawing down the balance from about $1.9 million at the beginning of 2005 to about $1 million in 2008, the U.S. said.

The IRS assessed civil penalties against him in 2020 for $425,000 for each year from 2005 through 2007 and $100,000 for 2008, for a total of $1.375 million. By March 2022, he had accrued interest on his unpaid liabilities and incurred other additions such that his outstanding debt had grown to more than $1.5 million, the government said.

Favi Cahan describes himself as "a scion of the Cahan family — Belgian diamond dealers of renown,'' who distinguished himself "as an aficionado in the influential Antwerp Diamond Bourse'' on FaviCahan.com, which redirects to the website for FCD Corp., a jeweler in Manhattan's Diamond District.

A section on FCD's website said Favi Cahan was a senior executive at Israeli diamond wholesaler LID before he moved to New York City in 1990 and "transferred his passion and talents to 47th Street," joining "the prestigious Diamond Dealers Club."

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) 

Crypto Investors Not Subject To Wash Sale Disallowance

Crypto investors who desire to hanging on to their coins through the ups and downs of the market’s dramatic gyrations. The wash sale may help crypto investors with tax loss benefits.

The wash sale rule prohibits selling securities at a loss and reacquiring them within 30 days. A wash sale occurs when you sell or trade securities at a loss and then buy them or substantially identical securities within 30 days before or after the sale. Some investors attempt to use wash sales to realize a loss and maximize their tax deductions. The wash sale rule does not currently apply to crypto.

The wash sale rule is a regulation set by the Internal Revenue Service that prevents a taxpayer from deducting losses relating to a wash sale. By having this regulation in place, taxpayers are not able to claim artificial losses by trading in and out of a stock to offset capital gains or income. If a taxpayer chooses to repurchase the same or similar security within 30 days, they can add the loss to the cost basis of the security they repurchased. When the new stock is later sold, any capital gains taxes would still be lower.

The wash sale rule currently only applies to assets classified as stocks or securities and other financial instruments that are traded on organized exchanges. 

Cryptocurrency is Classified as Property by the IRS and
is Currently Not Subject to the Wash Sale Rule. 

An investor in a virtual currency can sell their position to lock in a capital loss and immediately repurchase the currency without losing exposure to the cryptocurrency.

Now with Cryptocurrency values declining, it would be advantageous for investors to recognize their current losses and then purchase the same investments if they are still desired investments.

There are exceptions. While the wash-sale rule does not apply to the sales, trade, or purchase of digital currencies such as Bitcoin and Litecoin, cryptocurrency investors should know that it does apply to crypto assets such as synthetic versions of stocks and securities. The IRS and SEC may also consider initial coin offerings (ICOs) to be securities, so the wash-sale rule would apply if such a ruling applies.

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) 

10.5% GILTI Tax Not Meet OECD Pilar Two Min. 15% Tax Rate Requirement

According to Law360, The U.S. measure for global intangible low-taxed income will likely remain out of sync with an international minimum tax agreement now that legislative windows have closed without key GILTI changes. 

Enacted under the 2017 Tax Cuts and Jobs Act, GILTI was meant to target income earned from intangible assets, such as patents or other intellectual property, held in jurisdictions with low tax rates. Foreign income that falls under the provision is immediately pulled into the U.S. for taxation and receives a deduction of 50%, 

Nearly 140 jurisdictions last October agreed in principle on Pillar Two, which would allow countries to apply top-up taxes to make up the difference if members of a corporate group land at effective tax rates below a 15% threshold.

By the time these 140 other countries signed on to the overhaul, the global regime differed from GILTI in two main ways: 

• Pillar Two involved a 15% minimum ETR, and 
• its top-up taxes operated on a country-by-country basis. 

GILTI, in contrast, still had its 10.5% rate and allowed for jurisdictional blending, which allows companies to use excess foreign tax credits from high-tax jurisdictions to cover the GILTI tax in other countries.

Congressional Democrats proposed changes to GILTI on these two key issues under the Build Back Better Act, which passed the House of Representatives in late 2021 but faced roadblocks in the Senate. Under the Inflation Reduction Act, GILTI remained unchanged.

The U.S. isn't the only country that has faced roadblocks with implementing Pillar Two, raising questions about the global outlook for the regime.

OECD officials have said Pillar Two is designed to work as long as there is a "critical mass" of large countries that adopt the rules. 

While it remains to be seen whether or when that critical mass may be reached, several jurisdictions including the U.K., Switzerland, Singapore and Canada, have announced plans to begin the implementation process.

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)