Freeman Law | TaxConnections

06 Apr 2021

Taxes and Bankruptcy: Taxes In Bankruptcy Case

In re Minor; 127 AFTR 2d 2021-XXXX (DC CA); Case No. 2:20-cv-03626 (DC, C.D. CA)

This case involves taxes in a bankruptcy case that were priority taxes under the Bankruptcy Code.

The Debtor in this case filed for Chapter 7 bankruptcy in May, 2013 and received a discharge in May, 2015. In March, 2018, the IRS filed an amended proof of claim in the bankruptcy case for almost $26 million for unpaid federal income taxes owed by Minor for tax years 2007, 2008, 2009, and 2011 (the “IRS Claim”). The IRS Claim consisted of a secured claim of $24,857,210.48, a priority claim of $997,869.07, and an unsecured claim of $61,398.90.

The California Franchise Tax Board (“FTB”) also filed its own proof of claim, the details of which were not relevant for purposes of this case. What was relevant was that the bankruptcy trustee did not have enough funds to pay both the IRS and the FTB claims in full. Therefore, the bankruptcy trustee (“Trustee”), the IRS, and the FTB entered into a stipulation regarding the division of available funds (the “Stipulation”).

Written by Gregory Mitchell | Posted in Freeman Law • Taxes And Bankruptcy

06 Apr 2021

Tax Treaties: United States And Portugal

Quick Summary. Portugal is located on the Iberian Peninsula in southwestern Europe, bordering the Atlantic ocean and Spain. Portugal is a democratic republic. Its Constitution provides for a president, a unicameral Assembly of the Republic, and judicial system headed by the Constitutional Tribunal.

Portugal provides for three tier of government below the national level, including parishes (freesias), municipalities (concertos), and districts. Portugal is comprised of 18 districts and two autonomous regions with a capital at Lison.

Portugals tax laws primarily derives from the Portuguese Constitution, EU Regulations and Directives, codes regarding the taxes , the General Tax Law and other tax legislation.

Portugal is a member of the North Atlantic Treaty Organization (NATO) and the European Union (EU).

Treaty

Written by Jason Freeman | Posted in Tax Treaties: United States And Portugal

30 Mar 2021

Tax Treaties: United States And Slovenia

Quick Summary. Nestled in Central Europe along the Adriatic Sea and strategically located between the Balkans and Western Europe, the Republic of Slovenia is a mountainous country with deep cultural roots.

Part of the Austro-Hungarian Empire until the end of World War I, the Slovene lands subsequently comprised Yugoslavia in 1929. The Slovenes established independence in 1991 and began a post-communist transition.

Slovenia is a member of both NATO and the EU, as well as the OECD and World Trade Organization.

Slovenia has three levels of regulatory authority: supra-national, national, and sub-national (municipalities).

Written by Jason Freeman | Posted in Tax Treaties: United States And Slovenia

30 Mar 2021

Tax Treaties: United States And Denmark

Quick Summary. The Kingdom of Denmark is a Nordic country located in Northern Europe. A Scandinavian country with an archipelago of 443 islands, Denmark consists of five main regions with its capital at Copenhagen.

Denmark is a constitutional monarchy with a parliamentary democracy. Denmark’s parliament is a unicameral body known as the Folketing, which is vested with legislative power.

Denmark has a civil law system that has been influenced by Germanic law and that is largely based upon customary law. Denmark’s constitution provides for independence of the judicial power from the government and Parliament.

Written by Jason Freeman | Posted in Tax Treaties: United States And Denmark • TaxConnections

23 Mar 2021

Tax Treaties: United States And Ukraine

Quick Summary. Ukraine imposes an income tax on worldwide profits earned by Ukrainian entities. Non-resident entities are subject to Ukrainian income tax on Ukrainian-sourced income. Resident individuals are subject to tax upon their worldwide income. Non-resident individuals are subject to tax on their Ukrainian-sourced income.

The Ukrainian Parliament (the Verkhovna Rada of Ukraine) has enacted tax legislation providing for a number of significant changes in 2020, including transfer pricing; tax depreciation; withholding taxes; permanent establishments and 0ther taxes. In addition, beginning in 2021, legislation implements changes with respect to controlled foreign companies and thin capitalization rules.

Written by Jason Freeman | Posted in Tax Treaties: United States And Ukraine • TaxConnections

19 Mar 2021

Tax Treaties: United States And Belarus

Quick Summary. The Republic of Belarus is an Eastern European country bordering Russia, the Ukraine, Poland, Lithuania and Latvia. Following the fall of the USSR, Belarus attained the status of an independent country in 1991. It is comprised of six provinces, with its capital in Minsk.

In 2019, Belarus implemented comprehensive tax reform, including changes with respect to “business purpose” taxation standards, as well as transfer-pricing and thin-capitalization rules. Current transfer-pricing rules bring Belarusian framework closer to the OECD’s framework.

Belarus imposes a profits tax on corporations. Resident companies are subject to tax on their worldwide income. Non-resident companies are subject to tax on Belarus-sourced income that is derived through a permanent establishment. Certain other non-resident company income is subject to withholding tax.

Recent tax reform measures specifically combat “resident of nowhere” status individuals. Belarus taxes residents on worldwide income; non-residents are subject to tax on Belarus-sourced income.

Belarus is a member of the United Nations (UN) and the Commonwealth of Independent States (CIS), as well as the Eurasian Economic Union (EAEU).

Written by Jason Freeman | Posted in Tax Treaties: United States And Belarus

17 Mar 2021

Is Section 7345 Constitutional? Jones v. Mnuchin

There have been numerous constitutional challenges of U.S. tax laws since the Sixteenth Amendment was passed in 1913. As the Internal Revenue Code has grown over the years so have the court battles. A recent challenge involves Section 7345. According to that code provision, taxpayers who have “seriously delinquent tax debt” may have their U.S. passports denied, revoked, or limited. In a recent decision issued by a U.S. district court, the court found that Section 7345 was (and is), in fact, constitutional.

Section 7345, Generally

On December 4, 2015, former President Obama signed the Fixing America’s Surface Transportation Act (the “FAST Act”).[1] In an effort to promote tax compliance, Section 7345 was enacted by Section 32101 of the FAST Act.[2]According to Section 7345, if the Secretary of Treasury receives certification by the Commissioner of the Internal Revenue Service that an individual taxpayer has a seriously delinquent tax debt, the Secretary of Treasury shall transmit such certification to the Secretary of State for action with respect to the denial, revocation, or limitation of the individual’s passport.[3]

Written by Zachary Montgomery | Posted in Section 7345

11 Mar 2021

Freeman Law: The Tax Court In Brief

Freeman Law’s “The Tax Court in Brief” covers every substantive Tax Court opinion, providing a weekly brief of its decisions in clear, concise prose.

The Week of March 1 – March 5, 2021

Brian D. Beland and Denae A. Beland | March 1, 2021 | Greaves | Dkt. No. 30241-15

Opinion

Short Summary: The Tax Court granted the taxpayers’ motion for partial summary judgment, on a finding that the IRS failed to secure timely written supervisory approval under section 6751(b)(1) of a civil fraud penalty under section 6663(a).

The taxpayer’s joint return was examined by the IRS following which the revenue agent had sent them a summons requiring their attendance at an in-person closing conference. The revenue agent provided the taxpayers with a completed, signed Form 4549, Income Tax Examination Changes, reflecting a Code Sec. 6663(a) civil fraud penalty. However, the taxpayers declined to consent to the assessment of the civil fraud penalty or sign Form 872, Consent to Extend the Time to Assess Tax, to extend the limitations period. Thereafter, the revenue agent obtained written approval from her immediate supervisor for the civil fraud penalty and sent the taxpayers a notice of deficiency determining the same.

Key Issue: Whether petitioners civil fraud penalty was timely approved by the revenue agent’s supervisor?

Written by Jason Freeman | Posted in Freeman Law • The Tax Court In Brief

04 Mar 2021

IRS Announces Tax Relief To Texans Due To Severe Winter Weather

One of the most devastating major winter storms in the history of the State of Texas has finally passed. Recognizing the significant emotional and financial toll the storm has taken on Texans, the IRS recently released an announcement indicating that residents and businesses in all 254 Texas counties may qualify for tax relief. See TX-2021-02 (Feb. 22, 2021). This Insight summarizes some of the more noteworthy relief provisions.

Postponement of Certain Tax Deadlines.

Both the Internal Revenue Code and the governing regulations provide authority for the IRS to provide relief to those affected by a federally declared disaster. Exercising this authority, the IRS has declared that certain taxpayers “that reside or have a business in all 254 Texas counties qualify for tax relief.” These taxpayers include:

Written by Matthew Roberts | Posted in Freeman Law • Texas • Texas Tax Relief

02 Mar 2021

Freeman Law: The Tax Court In Brief

The Week of February 22 – February 26, 2021

Llanos v. Commissioner | February 22, 2021 | Kerrigan, K. | Dkt. No. 8424-19L

Opinion

Short Summary: IRS assessed § 6702 penalties against petitioner for filing frivolous returns. Eventually the IRS issued a Final Notice of Intent to Levy, to which the taxpayer timely request a CDP hearing. At the CDP hearing, the petitioner indicated that he had not received the required notices of deficiency for the civil penalties. Petitioner did not request any collection alternatives. The settlement officer upheld the levy action, and petitioner filed in tax court. Tax court held for the IRS.

Key Issue: Whether petitioner made a “meaningful” challenge to the penalties so as to trigger a de novo review, and whether the levy action was appropriate.

Written by Jason Freeman | Posted in Freeman Law • Offer In Compromise • Tax Court In Brief • Texas

26 Feb 2021

Tax Treaties: United States And Poland

Quick Summary. Situated in Central Europe, Poland is bordered by Germany, Ukraine, Russia, Belarus, the Czech Republic, Slovakia and Lithuania. Poland is a republic with a bicameral parliament comprised of the Sejm and Senate. Poland is comprised of 16 provinces.

The Constitution of Poland, which was adopted in 1997, serves as the supreme law and the legal system is governed by a code of civil law. Poland’s judiciary serves as an independent branch of government and incorporates a four-tier court system headed by the Supreme Court.

Article 26(2e) of the Corporate Income Tax Act provides for new withholding rules and exclusions/restrictions that became effective in 2020.

In addition, in 2019, Poland introduced an “IP Box” tax relief program whereby income derived from “eligible intellectual property rights” is subject to a preferential tax rate.

Poland is a member of the European Union (EU), the North Atlantic Treaty Organization (NATO), the World Trade Organization (WTO), and the Organisation for Economic Co-operation and Development (OECD).

Written by Jason Freeman | Posted in Tax Treaties: United States And Poland

24 Feb 2021

Tax Treaties: United States And South Africa

Quick Summary. South Africa is a parliamentary democracy with three branches sharing Constitutional authority: the executive, judiciary, and parliament branches. Its blended legal system combines Roman-Dutch civil law, English common law, and customary law. Under South African law, there are three levels of governmental authority: National; Provincial; and Local government.

Beginning in 2001, South Africa moved from a source-based income tax system to a residence-based income tax system. Residents are taxed on their worldwide income. Non-residents are taxed on their South African sourced income. The same rates apply to both residents and non-residents.

Written by Jason Freeman | Posted in Tax Treaties: United States And South Africa