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Marini & Associates, PA Traces its Roots Back to AA&Co

On 10/26/2017 I had the opportunity to go back to my roots at Arthur Andersen & Co. (AA&Co), which I get to do every other year, by being a sponsor of and attending AA&Co's South Florida's Semi-Annual Alumni Reunion.

For those of you who don't know what I did before opening up our International & Tax Litigation Boutique 25 years ago (1993-Present); I was with AA&Co. for 11 years prior to that, in their Miami, Florida office (1982-1992).    


While there I had the wonderful opportunity of learning my vocation from some of the best in the business like Ivan Fagan, the firm's Real Estate Syndication Expert and Larry Levine, the Miami Offices resident Tax Genius, not to mention my long-term mentor and colleague Bill Pruitt, who was Office Managing Partner during the years that I worked at AA&Co.

Since most of my clients where large multinationals, I had the opportunity over 11 years to learn some of the most advanced international planning techniques and then I had the opportunity to defend many of them before the IRS; which resulted in me being listed as 1 of 15 International Tax Specialist in AA&Co.’s Worldwide Directory and it also allowed me to teach annually at the firm's US Taxation of Multinational Activities in St. Charles, Illinois, along size such International Tax Giants as Andre Fogarasi, Richard Gordon, Diane Renfroe, and many, many, others Top International Tax Attorneys.   

One day in the mid-1980s, while I was looking out our Miami office"s windows on the 21st floor, it became readily apparent that Miami was rapidly becoming the International Cruise Capital of the world and as a man in his late 20s, I was determined to get a piece of it. So we start targeting and obtained numerous international cruise lines, as clients of the firm. As a result of defending numerous international cruise lines clients, during the IRS Cruise Industry Tax Audits in the late 1980s, I also became 1 of 5International Shipping Specialist for AA&Co in the US.

During my time with AA&Co, Arthur Andersen’s South Florida practice held a dominant position over that of the other international accounting firms. 

Its three practice units, Tax - Audit & Consulting, were consistently among the most profitable within the firm (based on profit per professional). 

The South Florida Practice had the Largest Share of Publicly-Held Clients and, because of its High Quality Service, it rarely lost a Client. A few of the long-time clients of the South Florida practice that remained clients until they were sold, or Andersen ceased business, included: Blockbuster Entertainment, AutoNation, IVAX Corporation, The Wackenhut Corporation, Southeast Toyota, KOS Pharmaceuticals, Republic Services, Sunglass Hut International, Steifel Laboratories, Watsco Corporation. Not to mention the numerous large closely held corporations, rivaling in size and sales, the above-mentioned publicly traded companies.             

I left AA&Co on December 31, 1992 and 10 years later in June 2002, Andersen was found guilty of obstruction of justice for shredding documents relating to the audits of Enron Corporation.  Andersen was forced to surrender its licenses to practice and in June 2002 the South Florida practice was effectively ended.   

In May 2005, the Supreme Court of the United States unanimously reversed the conviction, however, it was too late for what had once been the most successful professional services firm in the world with 85,000 personnel and over $10 billion in revenue. 

While at Andersen, we professionals were constantly challenged to improved our skills. The network of Andersen alumni in South Florida is still strong even though the firm ceased business in 2002. Many alumni are among the business elite in their local communities.


Me & Kevin Lockwood of AA&Co, on my Client Sea Escape's Vessel.


30 Years Latter - 2018

Me (Marini & Associates, PA),
Kevin Lockwood (Forshee & Lockwood PA (CPA's)) &
David W. Appel (Cherry Bekaert, (CPA's))

We 3 work in the same 10 person cubicle workspace at AA&Co in the 1980's.


 Remember When You Have an International
IRS Tax Problem  

and Need Experience Tax Representation...
Robert Blumenfeld, Esq.,Ronald Marini, Esq. & Anita Friedlander, Esq.

 Contact the Tax Lawyers at 

Marini & Associates, P.A. 

for a FREE Tax Consultation

Toll Free at 888-8TaxAid (888) 882-9243


Read more at: Tax Times blog

HSBC Faces $1.5B In Fines From Swiss Tax Evasion Probes

According to Law360, HSBC Holdings PLC could be hit with fines exceeding $1.5 billion from investigations around the world into allegations of tax evasion and money laundering at its Swiss private-banking subsidiary and other operations, according to the bank's annual report published Tuesday.

Tax agencies, regulators and law enforcement authorities in the U.S., Belgium, Argentina, India and Spain are investigating or reviewing HSBC Private Bank (Suisse) SA and other HSBC companies, the bank revealed. It warned investors that other jurisdictions could launch their own probes.

Allegations the bank is facing include tax evasion or tax fraud, money laundering and soliciting of unlawful cross-border banking, much of it centered on its Swiss private-banking unit.

"Management’s estimate of the possible aggregate penalties that might arise as a result of the matters in respect of which it is practicable to form estimates is up to or exceeding $1.5 billion," the annual report said. "Due to uncertainties and limitations of these estimates the ultimate penalties could differ significantly from this amount."

The International Consortium of Investigative Journalists and media partners around the world reported in 2015 on documents provided by a former bank employee that purportedly show HSBC’s Swiss arm helped clients get around tax authorities in their home countries and instructed them how to evade a European Union tax on bank deposits.

HSBC’s outgoing chief executive, Stuart Gulliver, said on Tuesday that the bank has worked hard to improve its compliance capabilities and has made preventing financial crime a priority for the group’s management.

We previously posted 146 Offshore Banks & Now Financial Advisors Are Turning Over Your Names To The IRS - What Are Your Waiting For?   where we discussed that the IRS keeps updating its list of foreign banks which are turning over the names of their US Account Holders, who are now subject to a 50% (rather than 27.5%) penalty in the IRS’s Offshore Voluntary Disclosure Program (OVDP). This penalty is based on the highest account balance measured over up to eight years. 
 Under the program, banks are required to:
  • Make a complete disclosure of their cross-border activities;
  • Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;
  • Cooperate in treaty requests for account information;
  • Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed;
  • Agree to close accounts of account holders who fail to come into compliance with U.S. reporting obligations; and
  • Pay appropriate penalties.
These Banks, Financial Instructions and Foreign Financial Advisors  have made substantial efforts to cooperate with the IRS investigation, including by:

  1. facilitating interviews that their Office with employees, including top level executives;
  2. voluntarily producing documents in response to the Office’s requests;
  3. providing, in response to a treaty request, unredacted client files for the U.S. taxpayer-clients who maintained accounts at their Banks or Financial Instruction; and
  4. committing to assist in responding to a treaty request that is expected to result in the production of un-redacted client files for U.S. taxpayer-clients who maintained accounts at these Banks and Financial Instructions and with these Foreign Financial Advisors. 
Undeclared Income from an HSBC Bank Account?
 Want to Know if the OVDP Program is Right for You?

Contact the Tax Lawyers at 
Marini& Associates, P.A. 
for a FREE Tax Consultation
Toll Free at 888-8TaxAid (888) 882-9243


Read more at: Tax Times blog

Are Offshore Accounts Quiet Disclosures Becoming More Risky?

According to Tax Blawg the IRS is getting closer to ferreting out “quiet disclosures” by taxpayers who chose that route to address the problem of previously unreported offshore accounts rather than by participating in the Service’s offshore voluntary disclosure program (OVDP)? 

That's the Conclusion of an Increasing Number of
Tax Professionals and If Taxpayers in This Predicament Weren't Already Worried, They Should Be!

A quiet disclosure involves the filing of new or amended tax returns that report offshore income, and FBARs (Report of Foreign Bank and Financial Accounts) that provide other account information regarding the taxpayer’s interest in foreign accounts.  It is a discreet disclosure intended to make a taxpayer compliant with his or her tax reporting responsibilities while avoiding penalties imposed under the IRS’s official voluntary disclosure program.

The IRS has made no secret of its distain for those who choose the quite disclosure route over participation in its voluntary disclosure program.  In its frequently asked questions and answers applicable to the most recent iteration of the OVDP, the Service has cautioned taxpayers that those who have already made quiet disclosures should “be aware of the risk of being examined and potentially criminally prosecuted for all applicable years.”  The IRS has encouraged such taxpayers to “take advantage” of the program before discovery.  The FAQs also note that detection of a quit disclosure also eliminates the possibility of reduced penalty exposure offered under the OVDP. (See FAQs 15 & 16.)

To some, the calculus about whether to participate in the OVDP, follow the quiet disclosure path, or do nothing has been viewed as another form of the audit lottery, albeit one with very high stakes in terms of potential monetary penalties and possibly criminal prosecution. 

As virtually everyone should know at this point, offshore account holders can no longer rely on bank secrecy to protect them, so the issue of detecting unreported accounts has become more a question of when, not if. Although a quiet disclosure addresses the unreported account problem, either currently or retroactively, that is not necessarily the end of the story . . . or the risk.

Earlier this year, the Government Accounting Office issued a report in which it noted a dramatic increase in the number of taxpayers reporting offshore accounts, concluding that the trend may reflect attempts to minimize or circumvent taxes, penalties and interest that would be owed if not corrected before detection or even upon participation in the OVDP. 

Among other things, the GAO recommended that the IRS explore methodologies to detect and pursue quiet disclosures.  Apparently, the IRS has taken the GAO’s recommendation to heart by working on new ways to identify them.  The effort, according to former Acting IRS Commissioner Steven Miller, was to include “analysis of Forms 8938, Statement of Specified Foreign Financial Assets, to identify specific characteristics of the filing population and to assess filing behaviors indicating potential compliance issues.”

In predicting the effectiveness of this undertaking, it is worth noting that the IRS has a wealth of experience in implementing computer algorithms on a much larger scale to ferret out trends warranting closer scrutiny.

One need look no further than the Services’ Discriminant Function System (DIF), which is used to flag tax returns for possible audit, among the hundreds of millions filed, to appreciate that improved detection of quiet disclosures is well within the IRS’s capabilities. 

Therefore, taxpayers who rely on a limited IRS resources justification to ignore the directional trend regarding quiet disclosures are likely to wish they had examined the issue relative to their own personal circumstances a lot more closely.

At the very least, given the prevailing wind on this issue, it would be prudent for those who have made quiet disclosures or are contemplating one to revisit the issue with their tax adviser.

Have Undeclared Income from an Offshore Bank Account?
 Want to Know if the OVDP Program is Right for You?

Contact the Tax Lawyers at 
Marini& Associates, P.A. 
for a FREE Tax Consultation
Toll Free at 888-8TaxAid (888) 882-9243


Read more at: Tax Times blog

325% Cost Where IRS Discovers Your Offshore Account! — Do You Feel Lucky?

There are both civil and criminal penalties for failure to file a Foreign Bank Account Report 90-22.1 (FBAR).  

Criminal Penalties:
FAQ  #6:  What are some of the criminal charges I might face if I don't come in under OVDP and the IRS examines me? 
Possible criminal charges related to tax returns include tax evasion (26 U.S.C. § 7201), filing a false return (26 U.S.C. § 7206(1)) and failure to file an income tax return (26 U.S.C. § 7203). Willfully failing to file an FBAR and willfully filing a false FBAR are both violations that are subject to criminal penalties under 31 U.S.C. § 5322. 

· A person convicted of tax evasion is subject to a prison term of up to five years and a fine of up to $250,000.
· Filing a false return subjects a person to a prison term of up to three years and a fine of up to $250,000.
· A person who fails to file a tax return is subject to a prison term of up to one year and a fine of up to $100,000.
· Failing to file an FBAR subjects a person to a prison term of up to ten years and criminal penalties of up to $500,000. 

Civil Penalties

FAQ  #5: What are some of the civil penalties that might apply if I don't come in under the OVPD and the IRS examines me? How do they work? 

Depending on a taxpayer’s particular facts and circumstances, the following penalties could apply:

· A penalty for failing to file the Form TD F 90-22.1 (Report of Foreign Bank and Financial Accounts, commonly known as an “FBAR”). United States citizens, residents and certain other persons must annually report their direct or indirect financial interest in, or signature authority (or other authority that is comparable to signature authority) over, a financial account that is maintained with a financial institution located in a foreign country if, for any calendar year, the aggregate value of all foreign accounts exceeded $10,000 at any time during the year. Generally, the civil penalty for willfully failing to file an FBAR can be as high as the greater of $100,000 or 50 percent of the total balance of the foreign account per violation. See 31 U.S.C. § 5321(a)(5). Non-willful violations that the IRS determines were not due to reasonable cause are subject to a $10,000 penalty per violation.
· Beginning with the 2011 tax year, a penalty for failing to file form 8938 reporting the taxpayer’s interest in certain foreign financial assets, including financial accounts, certain foreign securities and interests in foreign entities, as required by I.R.C. §6038D. The penalty for failing to file each one of these information returns is $10,000, with an additional $10,000 added for each month the failure continues beginning 90 days after the taxpayer is notified of the delinquency, up to a maximum of $50,000 per return.
· A penalty for failing to file Form 3520, Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts. Taxpayers must also report various transactions involving foreign trusts, including creation of a foreign trust by a United States person, transfers of property from a United States person to a foreign trust and receipt of distributions from foreign trusts under IRC § 6048.This return also reports the receipt of gifts from foreign entities under section 6039F.The penalty for failing to file each one of these information returns, or for filing an incomplete return, is the greater of $10,000 or 35 percent of the gross reportable amount, except for returns reporting gifts, where the penalty is five percent of the gift per month, up to a maximum penalty of 25 percent of the gift.
· A penalty for failing to file Form 3520-A, Information Return of Foreign Trust With a U.S. Owner. Taxpayers must also report ownership interests in foreign trusts, by United States persons with various interests in and powers over those trusts under IRC § 6048(b).The penalty for failing to file each one of these information returns or for filing an incomplete return, is the greater of $10,000 or 5 percent of the gross value of trust assets determined to be owned by the United States person.
· A penalty for failing to file Form 5471, Information Return of U.S. Persons with Respect to Certain Foreign Corporations. Certain United States persons who are officers, directors or shareholders in certain foreign corporations (including International Business Corporations) are required to report information under IRC §§ 6035, 6038 and 6046.The penalty for failing to file each one of these information returns is $10,000, with an additional $10,000 added for each month the failure continues beginning 90 days after the taxpayer is notified of the delinquency, up to a maximum of $50,000 per return.
· A penalty for failing to file Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business. Taxpayers may be required to report transactions between a 25 percent foreign-owned domestic corporation or a foreign corporation engaged in a trade or business in the United States and a related party as required by IRC §§ 6038A and 6038C. The penalty for failing to file each one of these information returns, or to keep certain records regarding reportable transactions, is $10,000, with an additional $10,000 added for each month the failure continues beginning 90 days after the taxpayer is notified of the delinquency.
· A penalty for failing to file Form 926, Return by a U.S. Transferor of Property to a Foreign Corporation. Taxpayers are required to report transfers of property to foreign corporations and other information under IRC § 6038B. The penalty for failing to file each one of these information returns is ten percent of the value of the property transferred, up to a maximum of $100,000 per return, with no limit if the failure to report the transfer was intentional.
· A penalty for failing to file Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships. United States persons with certain interests in foreign partnerships use this form to report interests in and transactions of the foreign partnerships, transfers of property to the foreign partnerships, and acquisitions, dispositions and changes in foreign partnership interests under IRC §§ 6038, 6038B, and 6046A. Penalties include $10,000 for failure to file each return, with an additional $10,000 added for each month the failure continues beginning 90 days after the taxpayer is notified of the delinquency, up to a maximum of $50,000 per return, and ten percent of the value of any transferred property that is not reported, subject to a $100,000 limit.
· Fraud penalties imposed under IRC §§ 6651(f) or 6663. Where an underpayment of tax, or a failure to file a tax return, is due to fraud, the taxpayer is liable for penalties that, although calculated differently, essentially amount to 75 percent of the unpaid tax.
· A penalty for failing to file a tax return imposed under IRC § 6651(a)(1). Generally, taxpayers are required to file income tax returns. If a taxpayer fails to do so, a penalty of 5 percent of the balance due, plus an additional 5 percent for each month or fraction thereof during which the failure continues may be imposed. The penalty shall not exceed 25 percent.
· A penalty for failing to pay the amount of tax shown on the return under IRC § 6651(a)(2). If a taxpayer fails to pay the amount of tax shown on the return, he or she may be liable for a penalty of .5 percent of the amount of tax shown on the return, plus an additional .5 percent for each additional month or fraction thereof that the amount remains unpaid, not exceeding 25 percent.
· An accuracy-related penalty on underpayments imposed under IRC § 6662. Depending upon which component of the accuracy-related penalty is applicable, a taxpayer may be liable for a 20 percent or 40 percent penalty.

FAQ  #8: Example of Application of Civil Penalties

It is assumed for purposes of the example that the $1,000,000 was in the account before 2003 and was not unreported income in 2003.

Amount on Deposit
Interest Income
Account Balance

(NOTE: This example does not provide for compounded interest, and assumes the taxpayer is in the 35-percent tax bracket, does not have an investment in a Passive Foreign Investment Company (PFIC), files a return but does not include the foreign account or the interest income on the return, and the maximum applicable penalties are imposed.) 
If the taxpayers didn’t come forward, when the IRS discovered their offshore activities, they would face up to $4,543,000 in tax, accuracy-related penalty, and FBAR penalty (325% of the Highest Balance in the Account!).
The Taxpayers Would Also be Liable for Interest and
Possibly Additional Penalties & an
Examination Could Lead to
Criminal Prosecution.
What about Reasonable Basis For Failure to Include Income & File an FBAR Report?

If the holder of an offshore account can successfully convince the IRS that the failure to file the FBAR was not willful then the penalties would be limited to $10,000 per violation. However, the IRS takes the position that a separate violation occurs for each bank account that is not listed on the FBAR. So for example if an offshore bank account holder has 6 separate accounts the penalty would be $60,000. As with the willful FBAR penalty this penalty, this penalty can be imposed for multiple years so that the total of these penalties can easily grow into the hundreds of thousands of dollars. 

It is only if the holder of an offshore account can convince the IRS that the failure to file an FBAR is due to "reasonable cause" that the FBAR penalty will be waived. 
Generally speaking the IRS has been intransigent on this topic, and it is the rare case where the IRS will agree that there is reasonable cause for failure to file an FBAR. In appropriate cases the only way to relief may be through litigation.

Undeclared Income from an Offshore Bank Account?
 Want to Know if the OVDP Program is Right for You?

Contact the Tax Lawyers at 
Marini& Associates, P.A. 
for a FREE Tax Consultation
Toll Free at 888-8TaxAid (888) 882-9243


Read more at: Tax Times blog