IRS Busts 83-Year-Old Florida Man for Tax Evasion

Posted by Wetenkamp on August 21, 2014 with 0 Comment

Bernard Kramer, an 83-year-old resident of Delray Beach, Florida, admitted to stashing $1.1 million in secret Swiss and Israeli bank accounts to avoid paying taxes. This news broke on Tuesday and since then I have seen quite a bit of internet chatter about how “fair” it is to target this poor guy, who is probably now going to be poor in every sense of the word. Most of the opposition and hostility has to do with a perceived leniency towards powerful corporations that can hold foreign assets freely and completely avoid paying taxes (so why go after this no-name retiree?). Others disapprove of the plea deal, which is reported to include payment of $588,000 in penalties, plus the underlying tax, plus up to eight years in prison. Doesn’t the IRS have bigger fish to fry?

$1.1 million is not a huge sum of money compared to what the IRS collects each year. However, what makes this crime particularly egregious is the fact that Kramer literally perpetuated the fraud for 25 years by filing false tax returns during the years 1987-2012. In trying to figure out possibly why the IRS picked Mr. Kramer to showcase as an example of bad behavior and an example of what happens to tax evaders, I think this long pattern of behavior is one clue. Also, if the IRS only prosecuted famous people, regular taxpayers might grow apathetic and lazy about paying taxes. Perhaps another reason insisting on a very severe punishment for Mr. Kramer is to demonstrate that the IRS will not be more lenient on the elderly. After all, old people have had more time to amass their fortune and they’ve been around long enough to know that taxes are unavoidable.

Are there ever situations where the IRS takes one’s age into account? Yes, age is something that factors into the acceptance or rejection of an Offer in Compromise. It is rarely ever the deciding factor, but it definitely comes into play. All other variables remaining equal, I think the IRS is more likely to accept the offer of an elderly retiree than the offer of someone who still has several years left in the work force. It all has to do with future income and the likelihood of future income from work. That being said, the IRS isn’t Denny’s. They aren’t too keen on senior discounts.

IRS Tax Tip for Federal Student Aid Applicants

Posted by Montgomery on May 17, 2012 with 0 Comment

With the federal deadline for online FAFSA applications coming up on June 30th, the IRS reminds the college-bound that the easiest way to verify tax return information is by using the “IRS Data Retrieval Tool.” Yes, I know, it’s nice when the IRS shows it is concerned about more than just collecting on your tax debt.

If you’ve already “been there, done that,” then the acronym FAFSA may bring back some bad memories. If you’re about to embark on your college journey and you’re not wealthy enough to pay cash for tuition, then you’re learning that this stands for “Free Application for Federal Student Aid.” As with many applications, the filling of empty fields is the easy part; it’s the documentation that must be produced (or even just found) to back up what you put on the app that makes the process so tedious. I know my own FAFSA spent a significant amount of time gathering dust on the top of the fridge after I filled out my name and address. But that was several years ago.

These days the FAFSA is completed online, . . . so no dust. But the deadlines are still critical, so anything that speeds up the application process is nice. The IRS Data Retrieval Tool allows students to access tax return information from the IRS website and securely dump it right onto their FAFSA form. All you need is a valid Social Security Number and a Federal Student Aid PIN (which can be obtained on the federal student aid website). Of course, if you have not filed last year’s tax return, then you will not qualify to use this tool because the information will not be available for you. And if you didn’t file, that’s a whole other problem — you may want to talk with an experienced tax relief attorney because you may be on the hook for back taxes, penalties, and interest.

DOJ’s New Tactic for Busting Secret Offshore Account Holders

Posted by Wetenkamp on December 28, 2011 with 0 Comment

When the IRS offers tax relief in any form, there should be no pause or hesitation. Some offshore bank account holders who did not come forward and disclose their holdings during one of the IRS voluntary disclosure initiatives are now receiving grand jury subpoenas requiring them to turn over their bank account information. If they don’t comply then they could be held in contempt of court which typically carries with it hefty fines and jail time. Of course, if they do comply, they may be turning over potentially damning evidence to federal prosecutors.

This is a relatively new backdoor tactic in the epic struggle between US prosecutors and foreign banks. Or perhaps this would more accurately be described as a front-door tactic because traditional investigative steps would involve the Justice Department working with the banks within the treaty process, not going directly to the bank patrons.

Anyone receiving a subpoena should immediately consult with an attorney. It is not usually something that can be dealt with alone.

www.mwattorneys.com

Dept. of Justice has Sights on 8 Foreign Banks

Posted by Wetenkamp on September 21, 2011 with 0 Comment

The IRS recently published some preliminary statistics concerning the 2011 offshore voluntary disclosure initiative. Approximately 12,000 individuals came forward and turned over some $500 million to the IRS. But the revenue the IRS collected, although important, may only be the tip of the iceberg.

Remember, one of the conditions taxpayers had to agree to under this special tax relief program was to divulge names of banks and bankers that may have aided them in hiding their money offshore. The information obtained from taxpayers who came forward under the 2011 amnesty program is likely even more valuable than the revenue that has been collected to date. This intelligence, and the publicity it will generate, is expected to change the way people think about offshore accounts. They are not as safe and secret as they once were.

Eight offshore banks now face federal grand jury investigations, but the US Department of Justice is not naming any names.

By strategically timing its voluntary disclosure programs in tandem with the Tax Division’s civil and criminal litigation efforts, the IRS has been able to obtain significant additional information about those who have helped to facilitate tax fraud — information that is extremely important to tax administration and is expected to lead to additional criminal investigations. ~ US Dept. of Justice

Some Results Available from IRS Amnesty Program

Posted by Wetenkamp on September 16, 2011 with 0 Comment

The opportunity to obtain tax relief and avoid criminal prosecution under the 2011 Offshore Voluntary Disclosure Initiative came to an end last week. The results released on Thursday 9/15 seem to suggest that the 2011 initiative was not as successful as the 2009 initiative, but it is too early to tell for sure.

2009 Amnesty Program

15,000 voluntary disclosures (and additional 3,000 filed late)
$2.2 billion collected
Amount collected is from 80 percent of cases now closed

2011 Amnesty Program

12,000 voluntary disclosures
$500 million collected*
Percentage of closed cases likely small

*Collection of penalties and installment payments will continue in the coming months and this figure may still surpass the $2.2 billion collected under the 2009 program.

OVDI Deadline Approaching

Posted by Wetenkamp on August 9, 2011 with 0 Comment

There is still time to obtain tax relief (and relief from criminal charges) for those with unreported foreign bank accounts.

The deadline for participating in the IRS’ Offshore Voluntary Disclosure Initiative (OVDI) is August 31, 2011. Under this program, the IRS is giving taxpayers an opportunity to report their foreign bank accounts without facing criminal sanctions. One thing we do know is that some people are simply too fearful and are not going to come forward because they are not willing to face the consequences. However, some tax professionals believe that the risks are multiplied for those that are not willing to participate in this initiative. The rationale is that the IRS must work even more aggressively to catch and prosecute the non-participants in order for the initiative to work. If not, then it will not seem that the participants received any benefit by disclosing their foreign bank accounts.

For information on obtaining an extension on submitting your FBAR filings, see Question 25.1 of the IRS’ Q&A page.

VCI-2: Amnesty for Californians

Posted by Wetenkamp on August 2, 2011 with 0 Comment

Voluntary Compliance Initiative 2 (VCI-2) is “an opportunity for taxpayers who underreported their California income tax liabilities, through the use of abusive tax avoidance transactions (ATAT) or offshore financial arrangements (OFA), to amend their returns for 2010 and prior tax years and obtain a waiver of most penalties.” The benefits of coming forward under this program are impressive: the Franchise Tax Board (FTB) waives penalties for most taxpayers and promises not to pursue them criminally. The complexities of VCI-2 are in the determination of what activities fall under the scope of “abusive tax avoidance transactions” and “offshore financial arrangements.” FTB does define each category, so this is certainly not a catch-all tax relief program.

In order to participate in this program, the applicable returns have to be amended and special forms 621/622 have to be filed by October 31, 2011. Also, the taxes and interest due on the amended returns must be paid by that same date. In some cases, the FTB will allow taxpayers to enter into an installment agreement, but only as long as the balances are paid in full by June 15, 2012. Finally, don’t think you’ll be able to walk away quietly. Under the terms of the program, the taxpayer or business agrees to cooperate in whatever investigation the FTB decides to conduct regarding the details of their illegal ATAT or OFA activities. The information collected from these inquiries will likely help FTB to track down future tax criminals.

IRS Announces Plans to Implement FATCA

Posted by Wetenkamp on July 15, 2011 with 0 Comment

It stands for “Foreign Account Tax Compliance Act,” – a new tax law on the books since March of last year. It was enacted as a means of curbing foreign non-compliance through offshore accounts. Today’s notice sets out a timeline for the steps that foreign financial institutions (FFIs) and the US government will need to take; steps related to withholding, documentation, and reporting. Some requirements will not take effect until 2013 or 2014. The FATCA requirements will be phased in as follows:

An FFI must enter an agreement with the IRS by June 30, 2013, to ensure that it will be identified as a participating FFI in sufficient time to allow withholding agents to refrain from withholding beginning on January 1, 2014.

Withholding on U.S. source dividends and interest paid to non-participating FFIs will begin on Jan. 1, 2014, and withholding on all withholdable payments (including on gross proceeds) will be fully phased in on Jan. 1, 2015.

Due diligence requirements for identifying new and pre-existing U.S. accounts (including certain high-risk accounts) will begin in 2013. Reporting requirements will begin in 2014.

For purposes of the Notice, high risk accounts include private banking accounts with a balance that is equal to or greater than $500,000.

See Notice 2011-53 for more information.

FBAR Deadline Approaching

Posted by Wetenkamp on June 24, 2011 with 0 Comment

If you have one or more foreign bank accounts or other financial accounts, you may be required to file a Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), which is due by June 30, 2011. The aggregate value of your accounts must be higher than $10,000 to trigger the filing requirement. The FBAR is required even if the accounts did not generate any interest or taxable income during the past year.

Penalties for willful non-compliance with FBAR reporting requirements are severe: $100,000 or more for civil penalties and $500,000 for criminal penalties, plus possible prison time.

If you failed to file FBAR reports for prior years, you should file them along with a statement explaining why they were filed late. However, if your account(s) generated any reportable income for the delinquent years, then you should follow the procedures under the IRS 2011 Offshore Voluntary Disclosure Initiative.

Tag: foreign account

2009 Amnesty Program

2011 Amnesty Program