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IRS CI Identifies Dozens of Cryptocurrency Tax Evaders at J5!

The IRS’s criminal division identified “dozens” of potential cryptocurrency tax evaders or cybercriminals after a meeting this week with tax authorities from four other countries.

Leaders of tax enforcement authorities from the U.S., Australia, Canada, the Netherlands and the United Kingdom, known as the J5, met this week to discuss ways to deal with tax crimes and tax evasion, particularly involving cryptocurrency and shared data, tools and tax enforcement strategies to find new leads in a quest to mitigate cross-border money-laundering and cybercrime.

“All of the participants from the J5 countries rolled up their sleeves and worked together using real data to identify real criminals. One thing was really clear this week and that’s the J5 countries are committed to identifying and holding accountable tax cheats and other criminals who attempt to use the dark web and cryptocurrency as an underground economy.”

All of this occurred while the IRS is preparing for a new wave of cryptocurrency audits. The agency sent letters to more than 10,000 people earlier this year, warning that they might be subject to penalties for skirting taxes on their virtual investments.

The IRS And Its Partners Are Using Data From Previous Enforcement Activities To Find New Criminals, Korner Said.
Using The Data From The Five Countries Gives Them A Broader View Of How Accounts, Money And People Are Connected.

The IRS released guidance last month telling virtual currency investors and their tax advisers how the agency expects them to report income from their holdings. The guidance is the first since 2014 and comes as tax auditors are increasingly focusing on examining individuals with cryptocurrency investments.
“Being able to come together and share expertise, which hasn’t been done before, we can develop new platforms that we can each take back to our respective countries, importing the data that we each have to be able to data map, utilizing these new tools and develop new leads that we previously would not have known about prior to this challenge,” said Brooke Tetzlaff, a supervisory special agent at the IRS Criminal Investigation division and a U.S. participant in the Challenge.
Have a Virtual Currency Tax Problem?
Value Your Freedom?
Contact the Tax Lawyers at
Marini & Associates, P.A. 
 for a FREE Tax Consultation Contact us at: or
or Toll Free at 888-8TaxAid (888 882-9243). 


Read more at: Tax Times blog

Form W-8's Being Audited By the IRS for Reliability – It is About Time

The IRS’s Large Business and International (LB&I) division has released a process unit on using a withholding agent’s electronic systems to evaluate the reliability of the information provided by foreign payees on Forms W-8.  
A withholding agent is a U.S. or foreign person that has control, receipt, custody, disposal, or payment of any item of income of a foreign person that is subject to withholding. (Code Sec. 1473(4)).  Generally, a payment is subject to withholding if it is U.S. source income that is fixed or determinable annual or periodic (FDAP) income. FDAP income is all income included in gross income, including interest (and original issue discount), dividends, rents, royalties, and compensation.
When a withholding agent determines that a payment is withholdable, the withholding agent  must obtain a Form W-8 from the payee to determine whether the payee is a foreign person subject to withholding. Generally, a withholding agent making a withholdable payment must withhold at the 30% rate unless the withholding agent can reliably associate the payment with a Form W-8 or a withholding exemption.

 A withholding agent can reliably associate a payment with a Form W-8 if the withholding agent: 1. holds a valid Form W-8 that contains the required information, 2. can reliably determine how much of the payment relates to that Form W-8, and 3. can rely on the Form W-8, unless the withholding agent has actual knowledge or reason to know that the information on the Form W-8 is unreliable or incorrect.  

As part of an audit of a withholding agent, an examiner selects payments made by a withholding agent to foreign payees for evaluation against the withholding agent’s filed Forms 1042-S. The examiner performs this evaluation by reviewing foreign payees’ Forms W-8, Certificate of Foreign Status, on file with the withholding agent.
Many withholding agents collect and store Forms W-8 in electronic format. Therefore, an examiner must determine whether the withholding agent has systems and procedures for creating, collecting, and storing Forms W-8 that are reliable.

The Process Unit Outlines The Steps An Examiner Should Follow To Obtain Electronic Data Needed To Determine The Reliability Of Information Provided On Forms W-8.


According to the process unit, before the examination begins, an examiner should obtain and review any of the withholding agent’s data and records that are maintained by the IRS. This review should include any Forms 1042-S submitted by the withholding agent. An examiner should use Forms 1042-S to identify foreign persons receiving large amounts of U.S. source income with small amounts of withholding tax or any administrative inconsistencies, such as reporting and residence address mismatches.  
If the withholding agent uses a system for payees to electronically furnish Form W-8, the examiner should ask the withholding agent whether the system properly authenticates and verifies users and, if yes, how that authentication and verification is accomplished. The should also explain how incorrect and/or incomplete Forms W-8 are handled. 

The process unit also discusses how an examiner should review Forms W-8 the withholding agent received from a third party on behalf of a payee. In a case where the withholding agent has an agreement to use a shared electronic system for furnishing and authenticating Forms W-8, the process unit notes that all Forms W-8 and authenticating documents collected by the shared electronic system should be readily available to the withholding agent and consequently should be available for inspection by an examiner. 

After Each Step In The Audit Process,

An Examiner Should Determine If The Withholding Agent
Is Performing All Tasks Necessary
To Ensure Collection of Reliable Forms W-8.

An examiner should select and analyze a test sample of Forms W-8 to determine whether the information they contain is reliable. If the examiner is satisfied that the information collected resulted in properly prepared Forms W-8, then no further investigation is necessary. However, if material errors appear in the sample, further investigation will be required. 

Have an IRS Audit Problem?


Contact the Tax Lawyers of
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

BVI Issues its Economic Substance Rules – What You Need to Know?

According to Trident Trust Company the BVI’s Economic Substance Rules, which govern the practical application of the Economic Substance (Companies and Limited Partnerships) Act, 2018, have now been finalized.

The Rules were published by the BVI International Tax Authority (ITA) at the beginning of October 2019 and will come into force at the same time as the latest amendments to the BVI's Beneficial Ownership Secure Search System Act, 2017. 

The amendments to the Act were gazetted on 31 October and are expected to take effect soon.
Trident's Latest Briefing Materials

  • The full text of the Rules can be accessed here.  
  • Trident's memo on the Rules summarizes the changes made to them prior to them being finalized.
  • For more comprehensive information on economic substance in the BVI, please read our new Guide to Economic Substance in the BVI, which provides a detailed overview of the jurisdiction's substance rules.
Need to Structure An Entity or Trust in the BVI?
Contact the Tax Lawyers of
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

The Netherlands a Tax Haven, but Please Don’t Call us That

According to Foreign Affairs, Dutch officials really don’t like it when someone calls their country a tax haven.

In 2009, the Obama administration did just that, naming the Netherlands as one of a number of countries where scores of major American firms had established subsidiaries in order to avoid paying U.S. taxes. In a press briefing, the White House also noted that, taken together with Bermuda and Ireland, the Netherlands claimed nearly a third of all foreign profits reported in 2003 by U.S. corporations.

These statements provoked outrage in the Netherlands and a protest from the Dutch ambassador in Washington. “We’re not happy,” said Jan Kees de Jager, the Netherlands’ finance secretary.

“I Expect There’ll Be A Clarification and We’ll Not End Up On Lists Like This In Future,
Between Bermuda And Ireland.”

After all, the Dutch response seemed to suggest, everyone knows that those places and others, such as the Cayman Islands and Switzerland are tax havens, and to lump the Netherlands in with them was apparently a profound insult.

Shortly afterward, de Jager claimed that the Americans had agreed to stop describing the Netherlands in those terms. Doing so might have been justified by a desire to placate an aggrieved U.S. ally. But the truth is that the Netherlands absolutely belonged on a list of major tax havens—and still does, today.

In 2017, foreign direct investment in the Netherlands totaled $5.2 trillion. But the vast majority of that money wasn’t invested at all: only $836 billion actually entered the Dutch economy.

The Other $4.3 Trillion Went Into Shell Companies or Subsidiaries Set Up To Avoid Paying Taxes Elsewhere.

As such numbers should indicate, this isn’t the work of a few shady players trying to hide their illicit gains: some of the biggest players in the global economy are in on the game.

Google and IBM are among the many U.S. companies that have established operations in the Netherlands in order to reduce their tax bills back home. Most people consider Fiat Chrysler an Italian-American multinational; technically, however, it is a Dutch company, having decided for tax purposes to establish its official headquarters in Amsterdam in 2014.

In 2016, the Netherlands, with a population of barely 17 million, accounted for 16 percent of all foreign profits claimed by U.S. companies. Needless to say, that is not because American firms just happen to sell an extraordinary amount of goods and services to the Dutch.

Rather, it’s because the Netherlands lets those companies park the money they make elsewhere in Dutch subsidiaries or shell companies, or move those profits through “letterbox” entities in the Netherlands, from which it can be sent on to other tax havens.  

For Example, In 2017, Google Took $22.7 Billion In Profits It Made Outside The United States

And Transferred It Via The Netherlands To Bermuda,

Where The Money Avoided Being Taxed Altogether.

The Dutch government has always contended that things weren’t meant to work out this way. All those shell companies and all that money, officials have claimed, are just the accidental byproducts of innovative tax politics that intend merely to give Dutch companies a leg up in a hypercompetitive global economy.

Despite these protestations, the truth is that for decades the Netherlands has deliberately established itself as a tax haven at the direct expense of its European neighbors, the United States, and developing countries. And until recently, the Dutch have gotten away with it. But in the last few years, more and more journalists and researchers have started to sound the alarm.  

Want to Use The Netherlands in Your Tax Planning?

Contact the Tax Lawyers of
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