call us toll free:

888-8TAXAID
(888-882-9243)
Monday - Friday from 9:00 am to 5:00 pm

Blog

Foreign Investors Also Big Beneficiaries of TCJA, According to Recent CBO Estimates

According to Law360, Foreign investors stand to reap 43 percent of the economic benefits from the federal tax overhaul's effects on federal tax law during the next 11 years, according to a recent report from the Congressional Budget Office.

In a Wednesday letter responding to an inquiry from Sen. Chris Van Hollen, D-Md., the CBO said a new analysis of gross domestic product and gross national product projections show that from 2018 through 2028, foreign investors will obtain at least a 31 percent annual share of increases in the United States economy attributable to the Tax Cut and Jobs Act.

The share of foreign investors’ benefits from the TCJA jumps from 48 percent in 2026 to 60 percent in 2027 and peaks at 71 percent in 2028, the latest year the CBO projects the law’s impact on the economy. The CBO partly attributes the spike in the final two years of its analysis to higher individual tax rates that will take effect in 2026.

“In CBO’s estimates, the share is higher after 2025 in part because the lower tax rates on individual income expire and the subsequent effects on the supply of labor — and therefore on real GDP — are smaller, but the difference between the effects on GDP and on GNP changes little,” the letter said.

The CBO has estimated that the TCJA will reduce the amount of net foreign income earned by U.S. residents, meaning GNP, which includes income that residents earn abroad but excludes domestic income from nonresidents, will rise less than GDP.

The CBO used new calculations of the ratio of the federal overhaul's expected effects on both economic measuring sticks to determine the share of economic growth that will be realized by residents and foreign investors.

The letter said Van Hollen’s staff asked for more clarification on the TCJA’s effects on both GDP and GNP in real terms or after adjustments to remove the effects of inflation.

The senator sent the letter after the CBO released its first economic outlook of 2018, which estimated that recent legislative changes, including the new federal tax law, are projected to increase the budget deficit by $2.7 trillion more than previously thought.

A representative of Van Hollen’s office said the senator had no comment Friday, but shared a video of an exchange between Van Hollen and CBO Director Keith Hall at a Senate Budget Committee hearing on April 13.

At the hearing, Van Hollen asked if 80 cents of every dollar of increased economic activity from the tax law in 2028 “is not going into the pockets of hard-working Americans … it’s going into the pockets of foreigners, right?”

Hall responded that the calculation was correct but added, “I’m just not sure that’s exactly how I would look at the benefits or the impact of the tax act.”

The letter said the CBO revised that number to 71 percent after using “more precise estimates of the real effects on GDP and GNP, which CBO had not previously published.”

In a statement after the CBO’s release of its April 9 report, Van Hollen voiced his opposition to the TCJA’s effects on the economy, calling it a financial boon for special interests and the rich.

“Big corporations and foreign investors are lining their own pockets with record stock buybacks, while American families are facing higher health costs and still haven’t gotten the $4,000 pay raise they were promised,” he said.

The CBO report was the first analysis to take into account the effects of the TCJA, the Bipartisan Budget Act of 2018 and the Consolidated Appropriations Act. It predicted that the national debt will soar from $21.4 trillion at the end of 2018 to nearly $34 trillion at the end of 2028. The debt held by the public will be nearly the size of the U.S. economy at 96 percent of the GDP in 2028, according to the CBO.

Still, the CBO warned that there is a “good deal of uncertainty” behind its estimates, and said the effects of the new tax law depend on what policies state and foreign governments may enact in response, how businesses will rearrange their finances and how taxpayers will respond to changes in incentives to work, save and invest in the U.S.

We Can Advise on How These Tax Cuts Can Benefit You!
 
Contact the Tax Lawyers at 
Marini & Associates, P.A.  
 
 
for a FREE Tax Consultation contact us at:
Toll Free at 888-8TaxAid (888) 882-9243

 

Read more at: Tax Times blog

Owner of Debt Collection Company Did Not Pay His Tax Debt

According to DoJ Dorian Wills, 52, of Buffalo, NY, pleaded guilty to tax evasion before U.S. District Judge Elizabeth A. Wolford. The charge carries a maximum penalty of 5 years in prison and a $250,000 fine
 
According to court documents, between April 2010 and October 2013, the defendant operated a debt collection business under various names, including: 
  • Heritage Capital Services LLC;
  • Performance Payment Processing LLC;
  • Performance Payment Service LLC;
  • Pinnacle Payment Service LLC; and
  • Velocity Payment Solutions LLC.

Wills resided in the Western District of New York but spent significant time in Cleveland, Ohio, and Atlanta, Georgia, where the debt collection companies were located. From approximately November 2010 through approximately October 2013, the defendant operated a business called Freestar World LLC, through which he did work for the debt collection companies.

The debt collection companies engaged in illegal debt collection practices such as making threatening and harassing phone calls, and collecting on debt that did not exist or debt to which the debt collection companies did not have title.

To Avoid Detection by State and Federal Law Enforcement Authorities, Wills Solicited Two Individuals to Assist Him
with His Businesses. 
 

The defendant had these individuals incorporate several debt collection companies in Georgia and Ohio, open dozens of bank accounts in the names of the debt collection companies, and submit applications for merchant accounts in the names of the debt collection companies.

  • Between 2010 and 2013, none of the debt collection companies filed a tax return.  
  • In addition, Wills failed to file his 2011 and 2013 personal income tax returns, despite some of the debt collection companies earning approximately $4,000,000 in gross receipts. 

For the tax year 2012, the defendant filed a personal income tax return but the return did not include income information from any businesses, some of which earned nearly $5,000,000 in gross receipts in 2012, except for Freestar.

As a result of unreported income and the unpaid 2012 taxes, the defendant owes $1,209,537.88 in federal income taxes for tax years 2011 through 2013.

Previously, Wills and the debt collection companies were the subject of a civil investigation by the Federal Trade Commission, with the defendant and the FTC stipulating to a final order for permanent injunction on August 8, 2014.
         
U.S. District Judge Elizabeth A. Wolford scheduled sentencing for Aug. 23, 2018. Wills faces a statutory maximum sentence of 5 years in prison.  He also faces a period of supervised release, restitution and monetary penalties.

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


 

Read more at: Tax Times blog

This is No Way to Practice Accounting

 
According to the DoJ a federal grand jury sitting in Miami, Florida, returned an indictment on Tuesday, April 10 charging a Miami, Florida, certified public accountant with tax evasion, failing to file tax returns and failing to pay over payroll taxes to the Internal Revenue Service (IRS).
According to the indictment, Darryl Sharpton owned The Sharpton Group, a Miami-based public accounting firm that specialized in financial and management consulting, audit and attestation, and tax and wealth planning.  Sharpton allegedly filed personal income tax returns for the years 2004 through 2008 and 2010, but failed to pay the reported taxes.  Sharpton is further alleged to have failed to file personal income tax returns for years 2011 through 2016 despite his obligation to do so.
The indictment charges that after Sharpton failed to pay his taxes, the IRS audited and assessed additional taxes against him and issued levies and liens in further effort to collect the unpaid taxes.  Sharpton allegedly responded by removing himself from his company’s payroll, paying his personal expenses through the corporate bank accounts, and lying to an IRS collections official.
In addition, the indictment alleges that Sharpton failed to timely pay over to the IRS payroll taxes that
he withheld from the paychecks of The Sharpton Group’s employees.
If convicted, Sharpton faces a statutory maximum sentence of 5 years in prison for the tax evasion charge, five years in prison for each count of failing to pay over payroll taxes, and one year in prison for each count of failing to file tax returns.  He also faces a period of supervised release, restitution and monetary penalties.  An indictment merely alleges that a crime has been committed.  A defendant is presumed innocent until proven guilty beyond a reasonable doubt.
 Have a Criminal Tax Problem?
 
 
Contact the Tax Lawyers at
Marini & Associates, P.A. 
 
 for a FREE Tax Consultation Contact US at 
or Toll Free at 888-8TaxAid (888 882-9243). 


Read more at: Tax Times blog

The ABA Asks Congress To Adequately Fund the IRS

According to Law360  the chairwoman of the American Bar Association’s tax section on January 16, 2018 urged Congress to provide adequate funding for the IRS, cautioning that in light of the Tax Cuts and Jobs Act, P.L. 115-97, the agency will face difficulties effectively administering and collecting tax revenues without additional funds.
In a letter to the chairs and ranking members of the Senate and House subcommittees on financial services and general government, Karen Hawkins reiterated concerns that chronic Internal Revenue Service underfunding has caused taxpayers to lose trust in the nation’s tax authorities, reduced service quality, hampered recruitment and retention of experienced personnel, and stymied investment in modernizing taxpayer services.
“This erosion in confidence is reaching a point where it could become irreversible,” Hawkins warned. “In light of the daunting tasks of providing sufficient guidance and ensuring compliance with the new and complex tax legislation, we believe that the case for providing increased and adequate funding to enable the service to meet these challenges is compelling.”

While it is unclear whether Congress will act to increase IRS funding, Treasury Secretary Steven Mnuchin assured attendees at an Economic Club of Washington, D.C., event on Jan. 12 that more IRS personnel would be hired to deal with implementation of tax reform.

“This touches every single aspect of the IRS,”

Mnuchin said of the bill's implementation.
“We are speaking with Congress about getting Additional Funding for the implementation so we would expect that we would Hire a Significant Number of People
to Help With the Implementation.”
 
The personnel issue is further exacerbated by the positions of commissioner and chief counsel being filled by acting personnel, Hawkins noted, asking Congress to work with the Trump administration to nominate and confirm individuals to those positions.

According to a National Taxpayer Advocate report published Jan. 10, the IRS has estimated it will need $495 million over the next two years to implement the new legislation, but it has lost more than $1 billion to budget cuts since 2010. A Republican-controlled Congress fuming over controversies surrounding the agency's treatment of conservative social-welfare groups has been unwilling to give the IRS the funding it says it needs to adequately serve taxpayers and guard the nation’s coffers.

The tide may be changing, however, in light of the advocate’s report. The chairman of the House Ways and Means Committee, Rep. Kevin Brady, R-Texas, told reporters last week that while the IRS still has to prove why it needs more money, lawmakers should be open now to the idea of granting the agency’s requests for additional funding to implement the new law.

Hawkins made clear she was aware of the “budgetary challenges facing Congress,” and that “increased spending on the service may not be popular.” Nevertheless, she pointedly explained that without appropriate funding for the IRS, the government’s ability to function effectively is diminished.

“The Service has been required to operate for Too Long without adequate funding; its mission will be
Irreparably Compromised if this is Allowed to Continue,”
the letter concluded.
The letter was addressed to Sen. Shelley Capito, R-W.Va., chairwoman of the Senate Subcommittee on Financial Services and General Government, and ranking member Christopher Coons, D-Del., as well as Chairman Tom Graves, R-Ga., and ranking member Mike Quigley, D-Ill., of the House Subcommittee on Financial Services and General Government.
 
Have a Tax Problem?
 


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


 
 
 

Read more at: Tax Times blog