Thursday, April 30, 2020

Bank Hapoalim Admits to Conspiring with U.S. Taxpayers to Hide Assets and Income in Offshore Accounts

According to DoJ, Bank Hapoalim (Switzerland) Ltd. plead guilty today April 30, 2020 and criminal charges were filed against Bank Hapoalim B.M. for conspiring with U.S. taxpayers and others to hide more than $7.6 billion in more than 5,500 secret Swiss and Israeli bank accounts and the income generated in these accounts from the Internal Revenue Service (the IRS).

BHS’s Chief Executive Officer appeared on behalf of the bank to enter the guilty plea before U.S. District Judge Mary Kay Vyskocil.

As part of today’s resolutions, along with resolutions entered into with state and federal partners, Bank Hapoalim B.M. (BHBM), Israel’s largest bank, and Bank Hapoalim (Switzerland) Ltd. (BHS), its Swiss subsidiary, agreed to pay approximately $874.27 million to the U.S. Treasury, the Federal Reserve, and the New York State Department of Financial Services.

Today’s resolution is the second-largest recovery by the Department of Justice in connection with its investigations since 2008 into facilitation of offshore U.S. tax evasion by foreign banks.

Today’s Resolutions And Payment Of $874 Million Make Clear That Tax Evasion Cannot Be Taken Lightly,”
said Deputy Attorney General Jeffrey A. Rosen.
 
 
 “Today, Bank Hapoalim is being held accountable for its conduct – it has admitted to its crimes and will surrender all fees it earned, repay the United States for lost tax revenue, and pay a substantial fine.”

“Israel’s largest bank, Bank Hapoalim, and its Swiss subsidiary have admitted not only failing to prevent but actively assisting U.S. customers to set up secret accounts, to shelter assets and income, and to evade taxes,” said U.S. Attorney Geoffrey S. Berman of the Southern District of New York. The combined payment approaching $1 billion reflects the magnitude of the tax evasion by the Bank’s U.S. customers, the size of the fees the Bank collected to provide this illegal service, and the gravity of the illegal conduct.”

"There Is No Excuse For A Foreign Financial Institution To Unlawfully Assist Wealthy Americans In Flouting Their Responsibilities To Pay Their Taxes," said IRS Criminal Investigation Chief Don Fort.
 

“With today’s guilty plea, Bank Hapoalim is taking responsibility for their role in deliberately breaking the law and undermining the integrity of this nation’s tax system. Offshore tax evasion is a top priority for IRS Criminal Investigation and we are wholeheartedly committed to bringing offenders to justice. Today’s resolution serves as proof that financial institutions engaging in tax fraud face dire criminal and financial consequences for their behavior.”

According to documents filed today in Manhattan federal court:

BHBM is Israel’s largest bank and operates primarily as a retail bank with approximately 250 branches throughout Israel and more than 2.5 million accounts.

In addition to retail banking services, BHBM offered private banking services for onshore and offshore customers through its retail branches and its Global Private Banking Center.

BHBM also wholly owned Poalim Trust Services Ltd., which provided trust formation and management services.

Outside Israel, BHBM owned BHS, a Swiss subsidiary that provided private banking. BHS is headquartered in Zurich and at times during the prosecution period had branches in Geneva, Luxembourg, and Singapore. BHBM also had branches in New York, Miami, the Cayman Islands, the United Kingdom, and Jersey.

From at least in or about 2002, and continuing until at least in or about 2014, the Bank conspired with employees, U.S. customers, and others to:

(1) defraud the United States with respect to taxes;
(2) file false federal tax returns; and
(3) commit tax evasion.

Employees of BHBM and BHS assisted U.S. customers in concealing their ownership and control of assets and funds held at the Bank, which enabled those U.S. customers to evade their U.S. tax obligations, by engaging in the following conduct:

  • Assisting U.S. customers with opening and maintaining accounts in the names of pseudonyms, code names, trust accounts, and offshore nominee entities;
  • Opening customer accounts for known U.S. customers using non-U.S. forms of identification; Enabling U.S. taxpayers to evade U.S reporting requirements on securities’ earnings in violation of the Bank’s agreements with the IRS;
  • Providing “hold mail” services for a fee, avoiding any correspondence regarding the undeclared account being sent to the U.S.;
  • Offering back-to-back loans for U.S. taxpayers to enable them to access funds in the United States that were held in offshore accounts at the Bank in Switzerland and Israel; and
  • Processing wire transfers or issuing checks in amounts of less than $10,000 that were drawn on the accounts of U.S. taxpayers or entities in order to avoid triggering scrutiny.
At Least Four Senior Executives of The Bank, Including Two Former Members of BHS’s Board Of Directors, Were Directly Involved In Aiding And Abetting
Tax Evasion of U.S. Taxpayers.

  • Under today’s resolutions, the Bank is required to cooperate fully with ongoing investigations and affirmatively disclose any information it may later uncover regarding U.S.-related accounts.
  • The Bank is also required to disclose information consistent with the Department of Justice’s Swiss Bank Program relating to accounts closed between Jan. 1, 2009, and Dec. 31, 2019.
The Agreements Provide No Protection From Criminal or Civil Prosecution For Any Individuals.
 
 

BHBM will pay a total of $214.38 million, which has three parts and BHBM has agreed to pay a penalty of $100,811,585. BHS will pay a total of $402.53 million
 
This Agreement Marks The Third Time An Israeli Bank Has Admitted To Similar Criminal Conduct And Subsequently Turned Their Clients Over To The IRS For Prosecution.
 
The Bank Leumi Group (in December 2014) and Mizrahi-Tefahot Bank Ltd. (in March 2019) entered into DPAs with the Department of Justice admitting that they conspired with U.S. taxpayers to prepare and present false tax returns to the IRS by hiding income and assets in offshore bank accounts in Israel and elsewhere around the world.
 
 Do You Have Undeclared Foreign Income?
 
 
Is Your Name Being Handed Over to the IRS?
  
Want to Know if the OVDP Program is Right for You? 
 
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Wednesday, April 29, 2020

They're Back! - That is Right the IRS Has Begun to Recall Employees


The Internal Revenue Service is recalling about 46,000 of its employees furloughed by the government shutdown, nearly 60 percent of its workforce, to handle tax returns and pay out refunds. The employees won't be paid during the shutdown.



With the official start of the tax filing season coming Jan. 28, the Trump administration has promised that taxpayers owed refunds will be paid on time, despite the disruption in government services caused by the partial shutdown now in its fourth week.



There had been growing concern that the shutdown would delay refunds worth hundreds of billions of dollars because the money wouldn't be available for them from Congress.




But Last Week, The Administration Said

Customary Shutdown Policies Will Be Reversed To
Make The Money Available To Pay Refunds On Time.




An IRS document detailing its new shutdown plan shows that 46,052 agency employees will be called back to work, of the total workforce of 80,265. It says the plan will take effect as soon as the Treasury Department issues an official notice.




Only about 10,000 employees are deemed essential and have been working. On Monday April 27th the approximate 10,000 employees to handle "mission-critical" work on-site at agency offices are required to bring their own protective masks.


According to an internal IRS email released by Democratic lawmakers on the House Ways & Means Committee over the weekend, agency employees who are coming in to answer phones, open mail, and handle other tasks will need to bring their own masks, even if they're homemade.



"Although the IRS is seeking to procure personal protective equipment (PPE) such as masks and gloves, each IRS facility may not be able to initially procure the PPE for all employees immediately," the email, from IRS human capital officer Robin Bailey and deputy human capital officer Kevin McIver, reads.


"Employees are therefore required to bring personal face coverings for their nose and mouth area when they come to work," the email continues. "As stated in the CDC recommendations, these face coverings can be fashioned from common household materials, such as clean t-shirts or bandanas. Materials used to create the covering must be conducive to a professional work environment and not contain any images or text that may be deemed inappropriate or offensive to others."


After the release of the email, the service clarified that it expected to be able to provide PPE for most employees this week and that it would initially be seeking volunteers with incentive pay. A statement from the National Treasury Employees Union noted that if enough employees do not respond, the service will begin requiring employees to return to work at physical IRS offices.




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Sources:




 

Tuesday, April 21, 2020

IRS Announces Cross-Border Tax Guidance Related to Travel Disruptions From COVID-19

In Issue Number:IR-2020-77 the Treasury Department and the Internal Revenue Service on April 21, 2020 issued guidance that provides relief to individuals and businesses affected by Travel Disruptions arising from the COVID-19 emergency. 
The guidance includes the following:
 
  1. Revenue Procedure 2020-20, which provides that, under certain circumstances, up to 60 consecutive calendar days of U.S. presence that are presumed to arise from travel disruptions caused by the COVID-19 emergency will not be counted for purposes of determining U.S. tax residency and for purposes of determining whether an individual qualifies for tax treaty benefits for income from personal services performed in the United States;
  2. Revenue Procedure 2020-27, which provides that qualification for exclusions from gross income under I.R.C. section 911 will not be impacted as a result of days spent away from a foreign country due to the COVID-19 emergency based on certain departure dates; and 
  3. An FAQ, which provides that certain U.S. business activities conducted by a nonresident alien or foreign corporation will not be counted for up to 60 consecutive calendar days in determining whether the individual or entity is engaged in a U.S. trade or business or has a U.S. permanent establishment, but only if those activities would not have been conducted in the United States but for travel disruptions arising from the COVID-19 emergency.
The Treasury Department and the IRS are continuing to monitor these and other issues related to the COVID-19 emergency, and updated information about relief will continue to be posted on Coronavirus Tax Relief on IRS.gov.       
 Have a US Tax Problem?
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IRS Topic No. 161 - Returning an Erroneous Refund

In IRS Topic No.161 Returning an Erroneous Refund - Paper Check or Direct Deposit, the IRS explains how to return a refund that a taxpayer has received (either via paper check or direct deposit) that is in that exceeds the amount the taxpayer was entitled to receive.

The IRS says in the Tax Topic that an erroneous refund is a refund a taxpayer received that:

  1. The taxpayer is not entitled to, or
  2. Exceeded the refund amount the taxpayer was entitled to. 
Interest may accrue on an erroneous refund if a taxpayer (1) receives it via check and cashes the check or (2) receives it via direct deposit.

It's an erroneous refund if you receive a refund you're not entitled at all or for an amount more than you're entitled to.

If your refund was a paper Treasury check and hasn't been cashed:
  1. Write "Void" in the endorsement section on the back of the check.
  2. Submit the check immediately, but no later than 21 days, to the appropriate IRS location listed below. The location is based on the city (possibly abbreviated) on the bottom text line in front of the words TAX REFUND on your refund check.
  3. Don't staple, bend, or paper clip the check.
  4. Include a note stating "Return of erroneous refund check" and give a brief explanation of the reason for returning the refund check.
If your refund was a paper Treasury check and has been cashed:
  1. Submit a personal check, money order, etc., immediately, but no later than 21 days, to the appropriate IRS location listed below. The location is based on the city (possibly abbreviated) on the bottom text line in front of the words TAX REFUND on your refund check. If you no longer have access to a copy of the check, call the IRS toll-free at 800-829-1040 (individual) or 800-829-4933 (business) (see telephone and local assistance for hours of operation) and explain to the assistor that you need information to repay a cashed refund check.
  2. Write on the check/money order: Payment of Erroneous Refund, the tax period for which the refund was issued, and your taxpayer identification number (social security number, employer identification number, or individual taxpayer identification number).
  3. Include a brief explanation of the reason for returning the refund.
  4. Cashing an erroneous refund check may result in interest due the IRS.
If your refund was a direct deposit:
  1. Contact the Automated Clearing House (ACH) department of the bank/financial institution where the direct deposit was received and have them return the refund to the IRS.
  2. Call the IRS toll-free at 800-829-1040 (individual) or 800-829-4933 (business) to explain why the direct deposit is being returned.
  3. Interest may accrue on the erroneous refund.
When the amount of the refund (paper check or direct deposit) is different than what was expected, indicating the IRS changed the amount, a notice explaining the adjustment is mailed to your address of record. Please review the information in the notice to determine if the change to the refund is correct. A toll-free telephone number is included on the notice in case you require further assistance.
IRS mailing addresses based on the city (possibly abbreviated) located on the bottom text line in front of the words TAX REFUND on your refund check:
  • ANDOVER – Internal Revenue Service, 310 Lowell Street, Andover MA 01810
  • ATLANTA – Internal Revenue Service, 4800 Buford Highway, Chamblee GA 30341
  • AUSTIN – Internal Revenue Service, 3651 South Interregional Highway 35, Austin TX 78741
  • BRKHAVN – Internal Revenue Service, 5000 Corporate Ct., Holtsville NY 11742
  • CNCNATI – Internal Revenue Service, 201 West Rivercenter Blvd., Covington KY 41011
  • FRESNO – Internal Revenue Service, 5045 East Butler Avenue, Fresno CA 93727
  • KANS CY – Internal Revenue Service, 333 W. Pershing Road, Kansas City MO 64108-4302
  • MEMPHIS – Internal Revenue Service, 5333 Getwell Road, Memphis TN 38118
  • OGDEN – Internal Revenue Service, 1973 Rulon White Blvd., Ogden UT 84201
  • PHILA – Internal Revenue Service, 2970 Market St., Philadelphia PA 19104
Have an IRS Tax Problem?
 Contact the Tax Lawyers at 
Marini & Associates, P.A.   
for a FREE Tax Consultation contact us at:
Toll Free at 888-8TaxAid (888) 882-9243


 
 
 
 
 
 
 
 
 
Uncashed check.  To return an erroneous refund made via a paper Treasury check that has not been cashed:

1. Write "Void" in the endorsement section on the back of the check.

2. Submit the check immediately, but no later than 21 days, to the appropriate IRS location (detailed in the Tax Topic).

3. Don't staple, bend, or paper clip the check.

4. Include a note stating, "Return of erroneous refund check," and give a brief explanation of the reason for returning the refund check.

Cashed check. If the refund was a paper Treasury check that has been cashed:

1. Submit a personal check, money order, etc., immediately, but no later than 21 days, to the IRS.

2. Write on the check/money order: Payment of Erroneous Refund, the tax period for which the refund was issued, and the taxpayer's taxpayer identification number (social security number, employer identification number, or individual taxpayer identification number).

3. Include a brief explanation of the reason for returning the refund.

Direct deposit. If the refund was made via direct deposit:

1. Contact the Automated Clearing House (ACH) department of the bank/financial institution where the direct deposit was received, and have them return the refund to the IRS.

2. Call the IRS to explain why the direct deposit is being returned.

 

 

 

LB&I Not Opening New Exams, But Still Working on Voluntary Disclosures During COVID-19

In a memo entitled LB&I-04-0420-0009: LB&I Compliance Priorities During the COVID-19 Pandemic the IRS Large Business & International (LB&I) Division has clarified its compliance priorities for the period beginning April 14, 2020 and ending July 15, 2020.

This memorandum provides additional guidance regarding LB&I compliance activities which are postponed or allowed through July 15, 2020.

I. Activity Postponed through July 15, 2020
  • LB&I will not start an examination of any new return unless it falls within Category II below.
  • No time should be charged to new Discriminate Analysis Score (DAS) cases without Senior Director approval.
  • Managers have discretion on prior, subsequent, and related returns associated with an existing examination.
II. Activity Continuing
  •  Compliance Assurance Process, Large Corporate Compliance, FATCA, Qualified Intermediary programs and current open examinations: proceed as usual, but without in-person contact.
  • New examinations arising from Voluntary Disclosure Practice cases, claims, and other pre-refund verification programs: proceed as usual, but without in-person contact.
  • Work should continue on Syndicated Conservation Easements campaign, Micro Captive Insurance campaign, IRC 965 campaign and any future campaign related to the Tax Cuts and Jobs Act; but without in person contact. Existing and any new campaigns will be assessed for purposes of categorizing as postponed or allowed with clear communications to follow on which are allowed.
  • Workload reviews of existing inventory will continue.
  • Examiners can charge time to new cases (e.g., audit planning) where taxpayer contact will not be made until after the emergency declaration is lifted.
  • Prior time limits on classification activities are suspended.
  • Other consensual work initiated by taxpayers: proceed as usual, but without inperson contact, for example, Pre-Filing Agreements, Refund Claims.
While the IRS cannot anticipate and provide guidelines for every possible situation, it remains vitally important for all LB&I employees to be sensitive to the individual circumstances of taxpayers and provide them with the appropriate tax administrative actions commensurate with the taxpayer’s situation.

Do You Have Undeclared  Offshore Income?
 
Want to Know Which Voluntary Disclosure Program is Right for You? 

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Marini & Associates, P.A.   

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Monday, April 20, 2020

Physical Presence Tests for 2019 Waived for Several Countries

In a Rev Proc 2020-14, 2020-16 IRB 661, the IRS has waived the residency and presence tests that apply for purposes of the 2019 Code Sec. 911 foreign earned income and foreign housing cost exclusions with respect to certain U.S. individuals in the Democratic Republic of the Congo, Haiti, Iraq, Sudan and Venezuela, due to adverse conditions in those countries.
For 2019, the Treasury Secretary, in consultation with the Secretary of State, has determined that war, civil unrest, or similar adverse conditions precluded the normal conduct of business in the following countries beginning on the specified date:
  • Congo, Democratic Republic of the – January 13, 2019;
  • Haiti – February 14, 2019; 
  • Iraq – May 14, 2019; 
  • Sudan – April 11, 2019; and
  • Venezuela – January 24, 2019. 
For purposes of Code Sec. 911, an individual who left the Democratic Republic of Congo on or after January 13, 2019, will be treated as a qualified individual for the period during which that individual was present in, or was a bona fide resident of, the Democratic Republic of Congo if the individual establishes a reasonable expectation that he or she would have met the requirements of Code Sec. 911(d) but for those conditions.
To qualify for relief under section Code Sec. 911(d)(4), an individual must have established residency, or have been physically present, in the foreign country on or before the date that the Treasury Secretary determines that individuals were required to leave the foreign country. Thus, for example, individuals who were first physically present or established residency in the Democratic Republic of Congo after January 13, 2019, are not eligible to qualify for the exception provided in Code Sec. 911(d)(4) for tax year 2019.
 
Have an International Tax Problem?
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