Chicago Police Lieutenant Pleads to Felony False Tax Return Charge
Here is a story you don’t see much, corrupt cop guilty of tax evasion. But that’s the big story on Second City Cop, a well read Chicago P.D. blog. According to records obtained from the United States District Court in Chicago, veteran Chicago Police Department Lieutenant Erroll Davis is pleading guilty to a single felony count of filing a false income tax return. (Second City Cop reported the guilty plea; court records were last updated on 12/5/13 indicate a signed plea agreement by Davis.)
The government says that Davis helped facilitate a fraudulent real estate transaction. Read more
Commentators and practitioners often refer to the United States controlled foreign corporation statute (“CFC”) as extremely complex and Byzantine in their construction and application. I would agree with this assessment to a point; if someone is simply trying to learn the pure mechanics of the statute then, yes, it is very difficult to fathom. However, when one looks at the rules after understanding the underlying policy for their implementation and overall effect, the statutory scheme becomes easier to comprehend. So, let’s begin with an explanation of why the United States (and other developed, OECD countries) put these types of rules into place.
To begin we will need to know a few definitions from section 7701. A domestic corporation is Read more
Last week I read that the Taxpayer Advocate Service’s (TAS) case load has been growing substantially and this once great department inside the Internal Revenue Service does not have the resources to continue to handle its current inventory levels without adversely impacting its ability to provide effective service.
As a result, Internal Revenue Service memorandum TAS-13-0913-009 was produced to reissue guidance to TAS’s case-acceptance criteria for certain categories of Systemic Burden cases.
So I tried to get a case file opened yesterday and was basically told that unless you are unemployed and destined for homelessness as a result you will essentially NOT meet the Read more
Every year there are tax rules that change for federal purposes and sometimes Minnesota adopts those changes; sometimes they don’t. This year there is a longer than usual list of items that Minnesota does not conform to for individual taxpayers. Often these items are small and obscure and don’t have a huge dollar amount attached to them. This year, one item in particular is going to be a rude realization for some Minnesota taxpayers.
On your federal return you can exclude debt forgiveness income related to your personal residence. In the past you could also exclude that on your Minnesota return, but not this year. Minnesota has not adopted the federal provisions that allow taxpayers to exclude principal residence debt forgiveness. Read more
As you go about making your shopping list for all the good & naughty little angels in your life, don’t forget to look at your finances as well. You might have re-assessed your withholdings and even explored tax-loss harvesting. Going into 2014, there are deductions that will not be extended and there will be steps you need to take to make the best use of them for the 2013 tax year.
Sales Tax Deduction on “Big Ticket Items”: If you are going to elect to claim the sales tax deduction vs the state tax deduction on your Schedule A or if you live in a state that doesn’t have taxes, this is the year to accelerate your “big ticket” purchase, this election will not be available after 2013. Read more
It all seemed so easy. Get a blank W-2 form, fill in some made up numbers and ask the IRS for a multimillion dollar refund. For a very short period of time, the scam appeared to work…. until an alert bank employee called the feds.
Earlier this week, Margaret Monone Greenaway was sentenced to prison for 54 months on charges that she claimed false income tax refunds totaling $5,271,794. Once her sentence is complete, Greenaway will be on supervised release for an additional 3 years.
On the eve of trial, Greenaway pleaded guilty to the two-count indictment. She admitted to filing income tax returns under her name from a prior marriage. She claimed refunds on those returns based on withholdings from a company where she had never worked. Read more
The Internal Revenue Service (nor any other taxing authority) does not like intra-company transfers. This is a prime reason for section 482 of the US tax code, which reads:
In any case of two or more organizations, trades, or businesses (whether or not incorporated, whether or not organized in the United States, and whether or not affiliated) owned or controlled directly or indirectly by the same interests, the Secretary may distribute, apportion, or allocate gross income, deductions, credits, or allowances between or among such organizations, trades, or businesses, if he determines that such distribution, apportionment, or allocation is necessary in order to prevent evasion of taxes or clearly to reflect the income of any of such organizations, trades, or businesses. In the case of any transfer (or license) of intangible property (within the meaning of section 936(h)(3)(B)), the Read more
New Reports Suggest Offshore Tax Violators Receive Shorter Prison Sentences
Do taxpayers with criminal tax cases involving unreported accounts get treated better than other criminal tax defendants? The answer is yes!
A recent article in the Journal of Accountancy says that the average sentence for a person whose crimes involve offshore accounts was fifteen months. The average sentence for those convicted of crimes involving bogus tax shelters was three years. Although the “average” sentence is fifteen months, roughly half of those convicted go to jail while the other half receive home confinement or probation sentences. Read more
Tax Managers Do Not Know Everything
THE HEADING IS not stated lightly. It is also not meant to be an insult, but the fact is, tax managers need to get all the help they can muster in managing the tax risk of the business. This ranges from the business owner, the CEO through the BO/CFO to outside specialists, and in the case of small businesses, the tax-Radar program. This chapter gives direction on certain issues that are not known by many tax managers.
What the Big Boys Say
ONE OF THE larger accounting firms in the USA have given the following advice to Read more
Taxpayers with offshore financial assets exceeding $10,000 at any point in the year must annually disclose those assets to the Internal Revenue Service. Even if the money in the account isn’t yours, you must still report if you have signature authority over a reportable account. Reporting is done on Schedule B of the Individual Income Tax return. The account must also be declared on a separate FBAR form. FBAR is short for Report of Foreign Bank and Financial Accounts. That form is a Treasury form, Form 114 (formerly TD F 90-22.1). Depending on the value of those accounts, a Form 8938 (FATCA form) must also be filed.
If that sounds confusing, it is. The IRS and Financial Crimes Enforcement Network have different filing thresholds and definitions of qualifying accounts. For example, an offshore Read more
On Tuesday, December 3, the American Bar Association, Section of Taxation: United States Activities of Foreigners & Tax Treaties Committee (“Committee”) submitted to Congress various “Options” offering proposals for simplification and clarification of various international tax provisions of the Internal Revenue Code. The Committee made some excellent suggestions and one can only hope Congress will take heed. The Committee noted that a remedy is needed to remove many “traps for the unwary” and to ease compliance burdens that cannot reasonably be met.
Tax professionals can learn a great deal about the current law in the areas discussed by reading this proposal. Tax traps are carefully pointed out and the proposal should be required reading for practitioners involved with international tax issues. Read more
The Internal Revenue Service issued the 2014 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, medical, charitable or moving purposes.
Beginning on January 1, 2014, the standard mileage rates for the use of a car (also pickups, vans, or panel trucks) will be:
• 56 cents per mile for business miles driven
• 23.5 cents per mile driven for medical or moving purposes Read more