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Category Archives: From Live Blog

IRS States No New Guidance On Repatriation Tax

According to Law360, the Internal Revenue Service isn't planning to issue additional guidance on the 2017 tax overhaul's deemed repatriation despite a recent announcement that the agency was considering relief for some companies in this area, a top official said January 31, 2020.

The agency learned of "few sympathetic cases" in which companies were excessively taxed under the Tax Cuts and Jobs Act's transition levy on overseas income, said Peter Blessing, the IRS associate chief counsel, international, at the American Bar Association

 

Read more at: Tax Times blog

J5 Undertake Unprecedented Multi-Country Day of Action To Tackle International Tax Evasion

The IRS announced in IR-2020-18 that the J5 conducted a globally coordinated day of action to put a stop to the suspected facilitation of offshore tax evasion has been undertaken this week across the United Kingdom (UK), United States (US), Canada, Australia and the Netherlands. 

The action occurred as part of a series of investigations in multiple countries into an international financial institution located in Central America, whose products and services are believed to be facilitating money laundering and tax evasion for customers across the globe.

It is believed that through this institution a number of clients may be using a sophisticated system to conceal and transfer wealth anonymously to evade their tax obligations and launder the proceeds of crime.

The coordinated day of action involved evidence, intelligence and information collection activities such as search warrants,
interviews and subpoenas.


Significant information was obtained as a result and investigations are ongoing. It is expected that further criminal, civil and regulatory action will arise from these actions in each country.

This is the first major operational activity for the Joint Chiefs of Global Tax Enforcement, known as the J5, formed in mid-2018 to lead the fight against international tax crime and money laundering. This group brings together leaders of tax enforcement authorities from Australia, Canada, the UK, US and the Netherlands.

“This is the first coordinated set of enforcement actions undertaken on a global scale by the J5 – the first of many,”
said Don Fort, US Chief, Internal Revenue Service Criminal Investigation.

 “Working with the J5 countries who all have the same goal, we are able to broaden our reach, speed up our investigations and have an exponentially larger impact on global tax administration. Tax cheats in the US and abroad should be on notice that their days of non-compliance are over,” Fort said.

Australian Tax Office (ATO) Deputy Commissioner and Australia’s J5 Chief, Will Day, said that this operation shows that the collaboration between the J5 countries is working. “Today’s action shows the power of our combined efforts in tackling global tax crime, fraud and evasion.”

“This multi-agency, multi-country activity should degrade the confidence of anyone who was considering an offshore location as a way to evade tax or launder the proceeds of crime.” 
The ATO has commenced investigations into Australian based clients of this institution who are suspected to have undeclared income. The Australian Criminal Intelligence Commission (ACIC) is playing a supportive intelligence role, and investigations into more clients may follow.

“Never before have criminals been at such risk of being detected as they are now.
 
Our increased collaboration, data analytics and intelligence sharing mean there is no place worldwide you can hide your money to avoid contributing your obligations,” Day said.

Hans van der Vlist, Chief and General Director Fiscal Information and Investigation Service (FIOD), the Netherlands, said, “This is the first outcome of an operational collaboration between five countries on tackling professional enablers that facilitate offshore tax crime.

The international investigation started on information obtained by the Netherlands. By sharing this information and working together an international impact is created. Together as the J5 we will try to close the net on tax criminals.” 
Canada Revenue Agency (CRA) Chief Eric Ferron said, “I am very pleased with the role the CRA is playing in what will be the first of many major operational activities for the J5. This coordinated operation shows that the collaboration between J5 countries is working. Tax evaders beware; today’s action shows that through our combined efforts we are making it increasingly difficult for taxpayers to hide their money and avoid paying their fair share.”
Simon York, Chief and Director of Her Majesty’s Revenue and Customs (HMRC)’s Fraud Investigation Service said, “Tax evasion is a global problem that needs a global response and that is what the J5 provides. This kind of international action shows that we can, and we will take on the most collaboration underlines our commitment to tackling these harmful, sophisticated and complex crimes and that we are committed to levelling the playing field for honest businesses and taxpayers.
“International tax evasion robs our public services of vital funds, undermines economies and, left unchecked, can enrich the dishonest at the expense of the honest majority.
Working together, HMRC and our J5 partners are closing the net on tax criminals, wherever they are, to ensure nobody is beyond our reach. The message to them is clear – the J5 are closing in.”

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Read more at: Tax Times blog

Postmark Rule Did Not Apply to Late-Filed Tax Return Requesting a Refund

A district court has held that the postmark rule did not apply to a late-filed tax return that sought a refund of taxes paid. But the court noted that this is an issue of first impression for the 7th Circuit Court of Appeals which might have a different view.

A tax return is generally deemed to have been filed when the IRS receives the return. (Emmons, (1989) 92 TC 342). But, under the postmark rule, a tax return is deemed to have been filed on the date of mailing but only if the postmark date is before the due date for the return. (Code Sec. 7502(a)(2)).
Mr. and Ms. Harrison paid income taxes throughout 2012 via withholding from their wages. They were granted an extension to file their 2012 income tax return to October 13, 2013. They did not file a return then.
Approximately three years later, on October 11, 2016, the taxpayers mailed their 2012 tax return via certified mail seeking a refund of taxes withheld. The return was received by the IRS on October 17, 2016.
The court found, and the IRS did not object to, that the taxpayers' tax return was also an administrative claim for a refund.
The IRS denied the taxpayers' refund claim since no taxes were paid during the look-back period. The IRS deemed the filing date to be the day it received the return, October 17, 2016.
The look-back period then extended back only until April 17, 2013 (three years plus extension).
Since the taxpayers effectively paid their taxes on April 15, 2013 under Code Sec. 6513(b)(1), there were no taxes paid during the look-back period and, hence, no money to refund.

The taxpayers contended that the filing date for their claim was the mailing date, October 11, 2016. This would have extended the look-back period to April 11, 2013.
The district court held that, since the tax return was filed late, the postmark rule did not apply. Therefore, the filing date was the date the IRS received the return and there was no taxes to refund.
The court brought up an issue that it said was a question of first impression for the 7th Circuit Court of Appeals. The issue was that perhaps there are two different filing dates for the taxpayers' tax return and their refund claim (even though both were done with one document). The return was filed when it was received by the IRS, under  Emmons. But maybe the refund claim was filed when it was mailed.

While the district court said it could find no support for this theory (and, in fact, the IRS cited many cases that consistently treated the date that an untimely tax return was received as the filing date of the administrative claim), it said that the 7th Circuit might have a different view.

 
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Read more at: Tax Times blog

Former Large Business & International Senior Counsel for the Office of Chief Counsel, IRS, Joins Marini & Associates, PA.

Marini & Associates, PA  is pleased to announce that Sergio Garcia-Pages, Esq., former Senior Counsel for the LB&I Division of the Office of the Chief Counsel, IRS, South Florida, has become "Of Counsel" to our firm.    

Mr. Garcia-Pages has in-depth knowledge of the IRS and significant U.S. Tax Court experience. He is available to collaborate with tax accountants and tax attorneys regarding tax planning for their clients, and to assist, develop, and execute sound settlement and controversy strategies during IRS Audits, IRS Appeals proceedings, U.S. Tax Court proceedings, and IRS Collection efforts of assessed taxes.

Mr. Garcia-Pages is admitted to practice law in Florida, the U.S. Tax Court, and the Federal District Court for the Southern District of Florida.

He is able to transact business in English and he is also literate and fluent in Spanish.

Prior to joining Marini & Associates, P.A.

Mr. Garcia-Pages was a 42-year veteran of the Office of the Chief Counsel, IRS, where he spent the last ten years of his career, either alone or as part of a team of attorneys, advising revenue agents during the audits of taxpayers serviced by the Large Business & International Division (LB&I) of the IRS, such as high net worth individuals and publicly traded companies in various industries.

Sergio has valuable experience addressing factual and legal issues of different complexity involving Federal tax law, both domestic and international, including transfer pricing issues and the application of penalties. He has settled or tried civil fraud penalty cases. Sergio advised IRS agents over the years on multiple tax matters involving real estate acquisition, development and disposition, and is familiar with many of the underlying issues and tax planning techniques.

As Senior Counsel for LB&I, Sergio was known for his keen ability to value the contentious positions of the Government and taxpayers based on hazards of litigation, and for resolving cases on the merits without litigation. He was also well regarded for litigating complex-large-stake cases before the U.S. Tax Court.

Representative Cases 

Sergio's litigation experience runs the gamut of factual and technical issues involving domestic and international tax issues, as well as penalties, including the civil fraud penalty.
Significant cases which Sergio successfully litigated in the U.S. Tax Court during the past decade, as lead attorney or active member of the litigation team, include:
  • FPL Group, Inc. v. Comm'r, 115 T.C. 554 (2000) (electric utility's judicial request to expense $210.9 million denied as an unauthorized change in method of accounting) (summary judgment);
  • Salina Partnership, LP (FPL Group, Inc.) v. Comm'r, T.C. Memo. 2000-352 (disallowing a $344 million mismatch of partnership inside and outside basis used as a tax shelter technique) (trial);
  • G.D. Parker, Inc. v. Comm'r, T.C. Memo. 2012-327 (upholding 30% withholding taxes on constructive dividends made by a Florida corporation through two tiers of foreign corporations up to nonresident alien shareholder, and applying the step transaction doctrine to reallocate a loss reported by the domestic corporate taxpayer from the sale of the stock of a foreign affiliate to that entity's foreign corporate shareholder) (trial);
  • Kardash v. Comm'r, T.C. Memo. 2015-51, aff'd, 866 F.2d 1249 (11th Cir. 2017) (upholding transferee liability of minority shareholders under Florida Uniform Fraudulent Transfer Act who received dividends from corporate transferor that attempted to evade $120 million in federal income taxes) (trial);
  • Smith v. Comm'r, 151 T.C. No. 5 (Sept. 18, 2018) (upholding IRS determinations that a U.S. citizen received a distribution of untaxed Subpart F E&Ps from a Hong Kong CFC taxable as ordinary income rather than a "qualified dividend" taxable at a preferential rate, that residency certificates issued by the Cyprus Ministry of Finance should not be accorded dispositive effect under the "act of state" doctrine for purposes of determining residency under the LOB provisions of the income tax treaty between the United States and the Republic of Cyprus, and that the cancellation of an account receivable was a constructive dividend from the Cypriot CFC to the U.S. taxpayer taxable at ordinary income tax rates) (cross motions for summary judgment);
  • Coal Holding Property, LLC v. Comm'r, 153 T.C. No. 7 (Oct. 28, 2019) (disallowing a charitable contribution deduction of $155.5 million for a conservation easement donation to a Tennessee land conservancy) (summary judgment).

Education  

  • Brooklyn College, C.U.N.Y., BA 1975 (with distinction)
  • University of Pennsylvania School of Law, JD 1978
  • University of Miami School of Law, LLM Tax 1986
  • University of Miami School of Law, Graduate Program in Taxation, Adjunct Professor, Federal Income Tax Consequences of Property Transactions, 2017-2019. 
Need Experienced Representation in Tax Court?

Contact the Tax Lawyers at
Marini & Associates, P.A.

for a FREE Tax Consultation at:
or Toll Free at 888-8TaxAid (888 882-9243)

 

Read more at: Tax Times blog