Miami-Dade Investor Pleads Guilty in $30 Million Tax Fraud Scheme

According to DoJ, a Miami-Dade County investor has pleaded guilty to filing a false tax return in an effort to shield $30 million in trading proceeds from capital gains taxes, federal prosecutors announced. 

Suresh Gajwani, 78, admitted to submitting fraudulent documents to the Internal Revenue Service, falsely claiming his company qualified for tax exemptions under Puerto Rico’s Act 60. Prosecutors say Gajwani retroactively converted his company to an S Corporation to exploit the tax incentive program, which is intended for bona fide Puerto Rican residents. 

The scheme allowed Gajwani to avoid paying approximately $7 million in capital gains taxes for 2019. As part of his plea agreement, he will pay $15.3 million in restitution, covering taxes, interest, and penalties. 

According to the facts admitted at the change of plea hearing, in 2018, Gajwani was a resident of Miami-Dade County. In October 2019, Gajwani owned a company that held stocks and options that had substantially appreciated in value by tens of millions of dollars.  In anticipation of the tax on those gains, Gajwani sought to take advantage of a tax incentive program offered pursuant to Puerto Rico Act 60. Under the program, bona fide residents of Puerto Rico could apply for an exemption from federal taxes on certain capital gains realized after the individual became a Puerto Rican resident. Gajwani did not become a bona fide resident of Puerto Rico until January 1, 2020, which was after the stock portfolio had accrued built-in gains.  

Gajwani was advised by an accountant and attorney to convert his company to a small business corporation (known as an S Corporation) under the Internal Revenue Code to take advantage of the Puerto Rico capital gains tax exemption. Gajwani was also advised by an attorney that built-in gains for U.S. residents accrued prior to becoming a resident of Puerto Rico could be exempt from federal taxes.

In order to convert the company retroactively, in January 2020, Gajwani submitted a false document to the IRS that claimed that the company had intended to convert as of January 1, 2019. Gajwani knew that he did not intend to treat the company as an S Corporation as of January 1, 2019, and that the real reason for the submission of the paperwork to the IRS was to avoid paying capital gains taxes. Based upon Gajwani’s false statement, the IRS granted Gajwani’s request.

In 2019, Gajwani’s company had a portfolio with approximately $30 million in built-in gains. Had the IRS not allowed Gajwani’s company to convert to an S Corporation retroactively, the company would have owed approximately $7 million in capital gains taxes for 2019.

Gajwani faces up to three years in prison. Sentencing is scheduled for August 30, 2025, before Chief U.S. District Judge Cecilia M. Altonaga.

Federal authorities say the case highlights their commitment to prosecuting tax fraud and ensuring that all taxpayers play by the rules.

Have an IRS Tax Problem? 

 

   
Contact the Tax Lawyers at 

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IRS Provides Additional Transition Relief for Brokers Who Are Required to File Form 1099-DA Until 2027

In IR-2025-67 dated June 12, 2025 The U.S. Department of the Treasury and the Internal Revenue Service extended and modified the transition relief provided in Notice 2024-56 PDF for brokers who are required to file Form 1099-DA, Digital Asset Proceeds From Broker Transactions PDF to report certain digital asset sale and exchange transactions by customers.

Transition relief for brokers required to file Forms 1099-DA

In 2024, Treasury and IRS announced final regulations requiring brokers to report digital asset sale and exchange transactions on Form 1099-DA, furnish payee statements, and backup withhold on certain transactions beginning January 1, 2025. At the same time, the IRS announced in Notice 2024-56 transition relief from penalties related to information reporting and backup withholding tax liability required by these final regulations for transactions effected during 2025. Additionally, Notice 2024-56 also provided limited transition relief from backup withholding tax liability for transactions effected in 2026.

The IRS received and carefully considered comments from the him the transition relief provided in Notice 2024-56 indicating that brokers needed more time to comply with the reporting requirements; today’s notice addresses those comments.

Additional transition relief

Notice 2025-33 extends the transition relief from backup withholding tax liability and associated penalties for any broker that fails to withhold and pay the backup withholding tax for any digital asset sale or exchange transaction effected during calendar year 2026.

The notice also extends the limited transition relief from backup withholding tax liability for an additional year. Specifically, brokers will not be required to backup withhold for any digital asset sale or exchange transactions effected in 2027 for a customer (payee), if the broker submits that payee’s name and tax identification number (TIN) to the IRS’s TIN Matching Program and receives a response that the name and TIN combination matches IRS records. Additionally, relief is provided to brokers that fail to withhold and pay the full backup withholding tax due, if the failure is due to a decrease in the value of withheld digital assets in a sale of digital assets in return for different digital assets in 2027, and the broker immediately liquidates the withheld digital assets for cash.

This notice also provides additional transition relief for brokers for sales of digital assets effected during calendar year 2027 for certain customers that have not been previously classified by the broker as U.S. persons.

 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

Tax Court Grants Innocent Spouse Relief: What the Smith v. Commissioner Case Means for Divorced Taxpayers

On June 12, 2025, the U.S. Tax Court handed down a significant decision in the case of Smith v. Commissioner, offering a valuable lesson for anyone who has ever filed a joint tax return with a spouse. The case centered on Manuela C. Smith, a North Carolina woman who found herself facing a hefty tax bill and penalties—all because her ex-husband, Ulysesus A. Hodge III, had unreported income she knew nothing about. Here’s what happened, why it matters, and what you can learn from it.

The Backstory: Joint Returns, Hidden Income

Manuela Smith and her then-husband filed joint tax returns, as many couples do. What Smith didn’t know was that Hodge had received extra compensation from a business and had a debt discharged—both sources of income he failed to report. When the IRS discovered the omission, both Smith and Hodge were hit with a tax deficiency and an accuracy-related penalty.

But Smith fought back, claiming she was an “innocent spouse” under the law. The IRS actually agreed with her, but Hodge insisted that Smith must have known about the hidden income, since she prepared their returns every year.

The Court’s Decision: No Evidence, No Liability

Tax Court Judge Zachary S. Fried looked at the facts:

·         No Shared Bank Accounts: The couple never shared a bank account, making it harder for Smith to know about Hodge’s finances.

·         No Proof of Knowledge: Hodge couldn’t provide any evidence that Smith actually knew about the unreported income.

·         IRS Support: The IRS agreed Smith was entitled to relief.

Judge Fried ruled in Smith’s favor, granting her innocent spouse relief under Internal Revenue Code Section 6015(c). This means she is no longer responsible for the tax debt and penalties related to her ex-husband’s unreported income.

What Is Innocent Spouse Relief?

When you file a joint tax return, you’re usually both on the hook for any taxes owed—even if only one spouse made the mistake. But the IRS has a provision called innocent spouse relief for situations just like Smith’s. If you can prove you didn’t know (and had no reason to know) about your spouse’s tax misdeeds, you may be able to escape liability.

Key requirements include:

·         You filed a joint return.

·         You’re no longer married (or legally separated, or living apart for at least a year).

·         The tax issue is due to your spouse’s income or errors.

·         You didn’t know about the problem when you signed the return.

Why This Case Matters

Smith v. Commissioner is a reminder that the IRS and the courts recognize not every spouse is aware of everything that goes on with joint finances. Even if you prepare the tax return, you’re not automatically responsible for your spouse’s hidden income, unless there’s evidence you actually knew about it.

If you’re going through a divorce or have concerns about your spouse’s financial transparency, this case shows that you have options. Innocent spouse relief is there to protect people who truly had no idea about their partner’s tax missteps.

Final Thoughts

Filing jointly has its benefits, but it also comes with risks, especially if you’re not in the loop on all sources of income. If you find yourself facing an unexpected tax bill because of your spouse or ex-spouse’s actions, don’t panic. The IRS’s innocent spouse relief provisions, as highlighted in the Smith case, may offer the protection you need.

 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

Sources:

1.       https://www.districtofcolumbiataxattorney.com/articles/innocent-spouse-relief-irc-6015-shtmltextunder internal revenue code ircentire amount of tax due/     

2.      https://www.taxpayeradvocate.irs.gov/wp-content/uploads/2020/08/ARC17_Volume1_MLI_10_ReliefLiability.pdf     

3.      https://www.law.cornell.edu/uscode/text/26/6015      

4.      https://freemanlaw.com/innocent-spouse-relief/    

5.       https://www.irs.gov/irm/part25/irm_25-015-003r     

6.      https://www.taxpayeradvocate.irs.gov/wp-content/uploads/2020/08/2013-ARC_VOL-1_S3_MLI-10.pdf      

Supreme Court Sides with IRS in Tax Collection Dispute: What Taxpayers Need to Know

The U.S. Supreme Court delivered a significant decision on June 12, 2025 in the world of tax law, siding with the IRS in a closely watched dispute over tax collection procedures. In an 8-1 ruling, the justices reversed a lower court’s decision and clarified when the U.S. Tax Court can, and cannot, hear taxpayer challenges in collection cases. Here’s what happened, why it matters, and what it means for taxpayers facing IRS collection actions.

The Story Behind Commissioner v. Zuch 

Jennifer Zuch, a New Jersey taxpayer, found herself on the hook for a $27,000 tax bill after the IRS credited joint estimated tax payments to her ex-husband instead of her. When the IRS threatened to seize her property (a process known as a “levy”), Zuch challenged the action in the U.S. Tax Court, arguing the debt wasn’t really hers.

But while her case was pending, the IRS used her tax refunds to pay off the debt and stopped trying to collect. The IRS then asked the Tax Court to throw out the case, saying there was nothing left to fight about.

The Tax Court agreed, but the Third Circuit Court of Appeals reversed, saying the underlying dispute over who owed the tax was still alive—even if the IRS had already collected the money.

The Supreme Court’s Ruling: No Levy, No Case

The Supreme Court disagreed with the Third Circuit. Writing for the majority, Justice Amy Coney Barrett explained that the Tax Court’s power to hear collection cases depends on there being an active collection action—like a proposed levy. Once the IRS stopped trying to collect from Zuch, the Tax Court lost jurisdiction.

If The IRS Satisfies The Tax Debt (Even By
Taking Your Refund) And Drops The Collection Action,
The Tax Court Can’t Continue To Hear Your Challenge.

Why Does This Matter?

This ruling draws a clear line:

·         The Tax Court can only hear collection cases if the IRS is actively trying to collect.

·         If the IRS collects the debt during the case—say, by offsetting your refund—the court can’t rule on whether you actually owed the money.

For taxpayers, this means that if the IRS pays itself while you’re fighting a collection action, your only remaining option is to file a refund lawsuit in federal district court.

What Should Taxpayers Do?

If you’re in a similar situation, disputing a tax bill that the IRS collects anyway, don’t panic. But do know your options:

1.       File a Refund Claim: If the IRS has already taken your money, you can file a claim for a refund with the IRS. If they deny it, you can sue for a refund in federal district court.

2.      Act Quickly: The window to file refund claims is limited. Don’t wait!

3.      Get Professional Help: Tax law is complex, and collection actions can get tricky fast. Consider consulting a tax professional or attorney.

The Bottom Line

The Supreme Court’s decision in Commissioner v. Zuch is a big win for the IRS and sets a new boundary for Tax Court jurisdiction in collection cases. If the IRS satisfies your tax debt while you’re fighting them in court, your case may be dismissed as moot, meaning you’ll have to take your fight to district court instead.

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)

 

Sources: 

1.       https://www.currentfederaltaxdevelopments.com/blog/2025/4/23/supreme-court-weighs-tax-court-jurisdiction-in-levy-disputes-after-tax-payment      

2.      https://tax.thomsonreuters.com/news/oral-arguments-heard-in-dispute-over-mootness-of-tax-proceedings/       

3.      https://www.theracetothebottom.org/rttb/2025/4/23/supreme-court-to-decide-key-taxpayer-rights-case-in-irs-collection-dispute       

4.      https://www.supremecourt.gov/DocketPDF/24/24-416/352237/20250317130623150_Commissioner v. Zuch - Brief for Respondent FILE.pdf 

5. 

American Consultant in France Hit With $2 Million FBAR Penalty: A Cautionary Tale for U.S. Expats

If you’re an American living abroad with foreign bank accounts, this recent federal court decision is a must-read. The story of Ricky Don Debrick, an energy consultant residing in France, is a stark reminder of the risks of failing to comply with U.S. reporting requirements, even from overseas.

Ricky Don Debrick, was an American energy consultant residing in France and owner of International Oil & Gas Associates, was ordered by a D.C. federal court to pay more than $2 million in penalties. This was due to his willful failure to disclose multiple foreign bank accounts with balances exceeding $3 million, far surpassing the under $30,000 he initially reported on his 2010 FBAR (Report of Foreign Bank and Financial Accounts) filing. Debrick also failed to timely file an FBAR for 2011, despite having at least six accounts with balances totaling nearly $3 million in 2010 and $3.4 million in 2011. 

The U.S. government discovered the undisclosed accounts after Hyposwiss Private Bank, under a Swiss Bank Program nonprosecution agreement, revealed them. This program allows Swiss banks to avoid U.S. criminal charges by cooperating and sharing information about American clients suspected of hiding assets. 

How Did the Court Reach Its Decision? 

Debrick never responded to the U.S. Department of Justice’s 2024 complaint, which led the court to issue a default judgment affirming the government’s allegations and the penalties assessed in 2022. The court found Debrick’s actions, such as moving funds between banks and lying under penalty of perjury about his control of the accounts and related trusts, amounted to willful concealment.

Chief Judge James E. Boasberg wrote that “either willful blindness or reckless disregard satisfies the mental state required” for such FBAR violations. Debrick’s case is a cautionary tale for any American with assets abroad. The U.S. government is aggressive in pursuing offshore account violations, and international banks are increasingly likely to cooperate. If you have undisclosed foreign accounts, consult a tax professional immediately, before the IRS finds you first.

Why Did the Penalty Reach $2 Million?

For willful FBAR violations, the penalty can reach up to 50% of the highest account balance or $100,000, whichever is greater. With account balances in the millions, Debrick’s penalty quickly ballooned. Notably, the court pointed out that had Debrick come forward honestly through a voluntary disclosure program, he could have resolved the issue for a reduced penalty. Instead, he attempted to use a defunct IRS program and submitted false statements, which only made matters worse.

Key Takeaways for U.S. Expats

·         Full Disclosure Is Critical: U.S. citizens must report all foreign financial accounts if the aggregate balance exceeds $10,000 at any time during the year.

·         Willful Noncompliance Is Costly: The penalties for intentionally hiding accounts are severe and can amount to half of the undisclosed assets.

·         International Cooperation Is Increasing: Programs like the Swiss Bank Program mean that foreign banks are more likely than ever to report U.S. account holders.

·         Voluntary Disclosure Works—If Done Honestly: The IRS offers (or has offered) programs for voluntary disclosure, but they require full honesty and timely action.

Final Thoughts

 Debrick’s case is a cautionary tale for any American with assets abroad. The U.S. government is aggressive in pursuing offshore account violations, and international banks are increasingly likely to cooperate. If you have undisclosed foreign accounts, consult a tax professional immediately, before the IRS finds you first.

Do You Have Undeclared Income from
an Offshore Bank or Financial Advisors?

Is Your Name Being Handed Over to the IRS?

Want to Know if Voluntary Disclosure is Right for You?

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  

Sources:

1.       https://news.bloombergtax.com/daily-tax-report/us-gets-2-million-fbar-judgment-against-consultant-in-france    

2.       https://news.bloombergtax.com/daily-tax-report/us-gets-2-million-fbar-judgment-against-consultant-in-france    

3.      https://www.justice.gov/tax/swiss-bank-program 

4.      https://gordonlaw.com/learn/irs-voluntary-disclosure-program/ 

5. https://www.virginia-tax-lawyer.com/blog/2024-superior-guide-to-offshore-irs-voluntary-bank-disclosures/