Friday, May 30, 2008
He is expected to provide the government with the names of his U.S. clients.
"UBS frequently teamed up with bankers in the tiny neighboring tax haven of Liechtenstein to help wealthy Americans hide assets from the Internal Revenue Service," the Wall Street Journal said.
The Journal said Newell sold accounts receivable at a discount beginning in 2001 to a newly created overseas company funded by Rabobank, a Dutch bank. Newell took a tax deduction for the discount.
"As long as Newell didn't control the overseas company, any cash left over after paying Rabobank wasn't taxed in the U.S. Newell says Rabobank controlled the entity," according to the Journal.
A former Rabobank executive reported the tax fraud to the IRS last year and may be eligible for a reward under the new tax fraud whistleblower law if the IRS recovers any funds.
Wednesday, May 28, 2008
"The new taxes are included in legislation providing tax benefits for soldiers and military veterans and will apply only to those who renounce their citizenship after President Bush signs the bill into law, as he is widely expected to do," the Wall Street Journal reported.
The new law applies only to those whose assets are worth more than $2 million.
The column notes that "smaller firms, independent CPAs, lawyers and insurance salesmen continue to flog new—and old—shelter mutations to business owners and the successfully self-employed."
“After all the enforcement, I’m surprised at the level of tax shelter activity that’s still out there,” says Ian Comisky, a partner at Blank Rome in Philadelphia who defends taxpayers in civil and criminal cases.
Monday, May 26, 2008
"In a ruling last December that sent tremors through the not-for-profit world, the Minnesota Supreme Court said a small nonprofit day care agency here had to pay property taxes because, in essence, it gave nothing away," the Times reported.
This also has repercussions for hospitals as far as providing charity care and universities regarding whether they provide enough financial aid.
Wednesday, May 21, 2008
Lawyers advising tax dodgers are saying their clients are struggling to decide among several alternatives. They can confess and plead for mercy. They can quietly file amended tax returns, pay up, make other required disclosures and hope overworked government prosecutors won't follow up. Or they could choose to do nothing and pray their names won't turn up.
The recently adopted law that increases the reward for whistleblowers who provide specific information to the Internal Revenue Service about tax avoidance schemes is encouraging whistleblowers to come forward.
Friday, May 9, 2008
The tax court decision involved the so-called "Kersting tax shelter project," in which 1,300 taxpayers signed agreements to be bound the outcome of a test case regarding the tax shelter. However, the agency's attorneys made a secret settlement with the defendants, then tried the case anyway without informing the court or other participants in the agreement.
The defendants lost the trial, and the other tax violators were bound by the results. They didn't learn of the secret settlement until later, then argued that the less harsh settlement terms should apply to them, also. The tax court agreed.
"The fraud on the court committed by [IRS] attorneys in the test case proceedings constituted fraud on the court in every case bound by the outcome of the test cases and harmed the integrity of the judicial process, not only as the test case procedure was employed in the Kersting project cases, but also as it might be employed in the future," the tax court said.
The judge ordered the IRS to adjust the accounts of all the taxpayers in the Kersting project.
WebCPA.com opined, "While the government is determined to cut down on the abuse of tax shelters, it needs to be careful not to overreach by allowing its attorneys to cut secret side deals that benefit one set of defendants while punishing a much larger set."