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?

     Contact the Tax Lawyers at
Marini & Associates, P.A. 

for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
Toll Free at 888 8TAXAID (888-882-9243)


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

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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?

Contact the Tax Lawyers at 
Marini & Associates, P.A.   

for a FREE Tax Consultation contact us at:
www.TaxAid.com or www.OVDPLaw.com 
Toll Free at 888-8TaxAid (888) 882-9243

Wife Accused Of Promoting Abusive Trust Schemes Must Keep GPS Monitor

According to Law360, a wife indicted with her husband on tax evasion charges relating to an abusive trust scheme should not be allowed to remove her ankle monitor, the U.S. government told a Colorado federal court, saying her previous tracking devices sustained suspicious damage.

Marcia Predmore's GPS monitoring devices have already broken twice since September, when a federal magistrate judge ordered her to start wearing a monitor while she awaits trial on charges that she and her husband illegally avoided paying $2 million in personal income taxes from 2016 to 2021, prosecutors said Thursday. 

Though Predmore claimed the breakage happened while she was sleeping or putting on shoes, evidence shows the same plastic piece on the device was shattered in more than one place both times, prosecutors said in a motion opposing her request to remove the device.

Predmore, who is 64 and could face roughly five years (5) in prison, is also a flight risk; a fact that hasn't changed since U.S. Magistrate Judge Susan Prose decided after a two-hour hearing that she should wear the monitor, prosecutors said. Predmore has a visa allowing her to work in Dubai and the resources to charter a private plane there, prosecutors said. She and her husband earned an estimated $1.8 million in 2021 and are signatories on at least 14 bank accounts, according to the motion.

Predmore and her husband, Timothy McPhee, have pled not guilty to all the charges in their indictment, which was unsealed on September 25, 2023, Where the couple are accused of evading their own taxes using a scheme McPhee and his Texas-based business partner, Larry Conner, are accused in the indictment of peddling to other business community starting in 2017.

According to the allegations, McPhee and Conner promoted their strategy at hotel seminars in Colorado, Texas and Mexico, charging customers $25,000 to $50,000 for help diverting their earnings into sham trusts and a purported charitable foundation. McPhee and Conner showed their customers how to use the trusts to hide business income and illegally deduct personal expenses such as family weddings, the indictment said. 
Conner pled not guilty to the charges, which include conspiracy to defraud the government, in October.

Prosecutors criticized Predmore's efforts before the court to characterize her tax evasion charges as the result of co-signing returns with her husband. Predmore is facing six felony charges of willful tax evasion, partly because she hosted and attended the hotel seminars, which were run through a business she co-owned with her husband, they said.

"She knew how the tax shelter worked, and she knew that the 
IRS published guidance on abusive trusts," prosecutors said. "This is not a case in which one spouse manipulated the other. Nor is this a case in which one spouse kept the other in the dark."

Predmore and her husband created four trusts and paid personal expenses from bank accounts they opened for each trust, according to their indictment. They also transferred multiple real estate properties into one of the trusts before selling, according to the charges.

Predmore, calling herself "a nonviolent grandmother, wife, mother and business person," asked the court on January 17, 2023, to remove the ankle monitor, saying that it was unnecessary and that she had "suffered significant problems" with it.

The device broke twice, once when she was putting on her shoes and another time while she was sleeping, she said. Both times she notified the authorities and drove more than an hour to Denver from her home in Estes Park, Colorado, to get a new one.

The government's fear that she would flee the country is "mere speculation and conjecture," she said. She can't travel to Dubai without her passport, which she has already surrendered. And the fact that she had permission to work in the country, where she intended to sell life insurance, doesn't suggest that "she would uproot herself from their chosen home community, family, friends, church and neighbors to live on the other side of the planet," she said.

Prosecutors said that her stories about the damage to the ankle monitor didn't add up, even though a failure analysis performed by the manufacturer showed no visible evidence of tampering. That same analysis observed a broken strap attachment and missing pins, prosecutors said.

Photographs of the broken devices are inconsistent with her explanations and conflict with what she told the court, they said. Predmore initially told authorities that the ankle bracelet fell apart and fell off her leg when she tried to charge the device. Furthermore, when probation authorities asked Predmore why the device had broken a second time, she said perhaps lotion applied to the area could have broken it.

"It seems highly unlikely that this damage occurred either when she placed the device on the charger, while she was putting on her shoes, after applying lotion to the area of the device, or during her sleep," prosecutors told the court.

Have An Abusive Trust?

Do 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
Toll Free at 888 8TAXAID (888-882-9243)


Two Men Indicted On Charges Of Peddling Abusive Trusts

According to Law360, two men promoted and sold abusive tax shelters for the last six years by instructing their clients to use sham trusts to hide business income and illegally deduct personal expenses such as family weddings, according to an indictment in a Colorado federal court in the case of U.S. v. Conner et al., case number 1:23-cr-00390, in the U.S. District Court for the District of Colorado.

Larry Conner, who operated The Business Solutions Group from his home in Frisco, Texas, and Timothy McPhee, who operated Private Banking Concepts from his home in Estes Park, Colorado, told their clients the trust arrangement was legal, according to the indictment, unsealed On September 25, 2023.

The pair were charged with conspiring to defraud the government and multiple counts of helping clients prepare false tax returns. McPhee and his wife, Marcia Predmore, were also charged with evading their own federal income taxes by employing the abusive trust structure that McPhee is accused of promoting. McPhee and Predmore pled not guilty in Colorado federal court.

The Indictment Said Conner And McPhee Peddled The
Tax Avoidance Strategy At Hotel Seminars Throughout Colorado And Texas Starting In 2017. Conner Also Taught Three "Advanced Workshops" On The Method In Cabo San Lucas, Mexico, From 2018 To 2019, The Indictment Said.

An email promotion for one Colorado seminar promised that attendees, who were typically charged attendance fees, would learn "how to recapture the money that is leaving your household never to be seen again without having to earn more," according to the indictment.

Conner And McPhee Charged Their Clients, Most Of
Whom Were Business Owners, A Fee Of $25,000 To $50,000
In Exchange For Helping Them Fraudulently Divert Nearly
All Of Their Income Through A Series Of Sham Trusts And
A Purported Charitable Foundation To Avoid Paying Taxes,
The Indictment Said.

The pair instructed clients to assign legitimate business income to a sham "business trust" to create the appearance that the client hadn't earned the income, the indictment said. That trust then distributed its income to a second sham trust, which distributed it to a third sham trust, according to the indictment.

"Each trust in the series reported deductions matching or exceeding its income, and the third sham trust purportedly 'donated' any remaining income to a private family foundation, which in turn 'loaned' the funds back to the client's business or business trust, tax free," the indictment said.

Conner and McPhee told clients to pay for personal expenses, including mortgage payments, dining costs and weddings, with money held in the trusts, the indictment said. They also told their clients to direct assets including real estate and vehicles to the trusts to avoid the appearance of ownership and to avoid paying income taxes on capital gains from selling the assets, according to the indictment.

Further, Conner and McPhee referred their clients to tax preparers and accountants who prepared financial documents consistent with the abusive strategy, the indictment said. One bookkeeper and tax preparer teamed up to market their services to Conner and McPhee's clients, according to the indictment.

The fraudulent federal tax filings cost the government tens of millions of dollars in tax losses, the indictment said.

Conner and McPhee went to lengths to convince their clients the tax avoidance strategy was legal, the indictment said, circulating their own materials responding to Internal Revenue Service warnings about abusive trust tax-evasion schemes. They also criticized outside accountants who questioned the legality of their strategy, saying the accountants "simply did not understand it," according to the indictment.

A government agent posing as a potential client caught McPhee in February 2022 when he agreed to meet her at a restaurant in Colorado and detailed how the shelter illegally circumvented taxes, according to the indictment.

"McPhee explained that there was '[n]o limitations whatsoever at all' on how a taxpayer could spend the money held in a trust and said that all the money spent from a trust bank account, for example on a pool, car, meals, gifts, entertainment, or home renovations, is a deduction," the indictment said.

In An Earlier Videoconference With The Agent, McPhee
Said He Knew Of A Structure To Reduce Her Tax Liability
By 95% To 98%, According To The Indictment.

McPhee and his wife used the abusive trust arrangement to conceal their own income from the government, the indictment said, creating four trusts and opening bank accounts for each and using them to pay personal expenses. The couple transferred multiple real estate properties to one of the trusts before selling, according to the indictment.

Have An Abusive Trust?

Do 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
Toll Free at 888 8TAXAID (888-882-9243)


Thursday, January 25, 2024

Prepare Now For New Beneficial Ownership Reporting Requirements

Starting January 1, 2024, many business entities will be required to report information to the U.S.
government about who ultimately owns or controls them, including the business’ owners and officers. This new beneficial ownership information (BOI) reporting requirement is part of the Corporate Transparency Act (CTA), which aims to help law enforcement combat financial crime and protect the U.S. financial system from bad actors.

The CTA is part of the Bank Secrecy Act, a set of federal laws that govern financial transactions. As the CTA is not part of the tax code, BOI reports will not be filed with the IRS, but with the Financial Crimes Enforcement Network (FinCEN), an agency of the Department of Treasury.

Which entities are required to comply?

Entities organized in the U.S. and outside the U.S. may be subject to the CTA’s reporting requirements. Companies required to report under the CTA (a “Reporting Company”) include but are not limited to corporations, limited liability companies (LLCs), and other U.S.-registered entities, including many small and medium-sized businesses. Foreign companies required to report may include corporations, limited companies or similar entities formed under the laws of a foreign country and registered to do business in any U.S. state or tribal jurisdiction. However, there are several categories of exemptions under the Act (see the links below for more information).

What information needs to be reported?

Companies must report the full name of the Reporting Company, any trade name or doing business as name, business address, state or Tribal jurisdiction of formation, and an IRS taxpayer identification number. Additionally, information on the entity’s Beneficial Owners and for new entities, the company applicants, is required.

A “Beneficial Owner” is any individual who, directly or indirectly, either: a) Exercises “substantial control” over a reporting company, or b) owns or controls at least 25 percent of the ownership interests of a reporting company.

A “Company Applicant” refers to the individual who filed the document that created or registered the company. The Company Applicant must only be disclosed for reporting companies created or registered on or after January 1, 2024.

When is the deadline to comply?

A reporting company created or registered to do business before January 1, 2024, will have until January 1, 2025, to file its initial beneficial ownership information report. A reporting company created or registered on or after January 1, 2024 and before January 1, 2025 will have 90 days to file.

What are the penalties for non-compliance?

Penalties for non-compliance can be significant, resulting in criminal or civil fines and/or imprisonment. Not filing reports timely can result in a $500 per day penalty, up to $10,000, and imprisonment of up to two years.

Where can I learn more?

For more information, visit the beneficial ownership information (BOI) and Frequently Asked Questions.on the U.S. Department of the Treasury’s Financial Crimes Enforcement Network's (FinCEN) webpage. 

Disclaimer: The information contained herein is for informational purposes and should not be relied upon or construed as tax or legal advise, generally, nor regarding any specific issue or factual circumstance.

Need Help Filing Your BOI Report?

     Contact the Tax Lawyers at
Marini & Associates, P.A. 

for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
Toll Free at 888 8TAXAID (888-882-9243)