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.

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

California Declares Amnesty Program a Success

Posted by Wetenkamp on November 18, 2011 with 0 Comment

The federal government and many of the states have offered limited tax relief and the promise of escaping criminal prosecution to those who voluntarily come forward and confess the tax sins of their past. California’s second voluntary compliance initiative (aka, VCI 2) was expected to bring in $270 million, and preliminary numbers suggest that it has done much better than that.

VCI 2 gave taxpayers who stashed money offshore or who engaged in abusive tax avoidance transactions an opportunity to amend their tax returns without penalties. The California tax relief program raised $350 million from over 1000 taxpayers.

The Franchise Tax Board’s warning to those who did not participate:

Taxpayers who were eligible for VCI 2 because of their involvement with abusive tax avoidance transactions but did not to participate are subject to audit for 12 years with large penalties such as the 40 percent Noneconomic Substance Transaction penalty and a 50 or 100 percent interest-based penalty.

www.mwattorneys.com

Swiss Banks Still Rank Highest Among Tax Havens

Posted by Wetenkamp on October 4, 2011 with 0 Comment

No, the best place to hide cash as a way to evade taxes is not under your mattress, it’s probably in an offshore bank. And according to a report by Tax Justice Network, the best banks for this unlawful practice are in Switzerland.

Switzerland is the world leader in financial opacity, only grudgingly conforming with disclosure agreements among developed countries while courting tax evaders in developing nations.

~ TJN Report

No big surprise, right? Maybe not, but what about the 10 UK territories that made the list? And what about the United States coming up 5th on their list?

U.S. tax evaders rob the Treasury and force average taxpayers and small businesses to pick up the tab . . . the U.S. loses about $100 billion a year in taxes lost to assets held in offshore jurisdictions.

~ Nicole Tichon, executive director of the Tax Justice Network

Read full story here.

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.

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.

Tag: offshore account

2009 Amnesty Program

2011 Amnesty Program