Former Trump Organization Finance Chief Allen Weisselberg pled guilty last week to 15 felonies for what he admitted was a tax fraud scheme he committed while an executive for Trump’s company. Law360 covered the story and quoted Gray Reed Partner Tony Box multiple times. Tony is a former Assistant US Attorney and tax coordinator responsible
Politically-Motivated Criminal Cases Based on Perjured Testimony Really DO Happen! Even if You Work for the IRS
Today’s news media is full of stories about supposed malicious allegations, unfounded criminal investigations and indictments based on perjury.
Regardless of our political leanings, all of us should hope that such things are actually exceedingly rare. However, a case decided recently by the Sixth Circuit Court of Appeals shows that such things really do happen. Mynatt v. United States, — F.4th —-, 2022 WL 3335690 (August 12, 2022).
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Protecting Client Information When Using Accountants in Legal Matters
It is well-established that attorneys and their clients are entitled to private and protected communications. But what level of protections are available when an accountant is used in an engagement to provide an area of expertise not possessed by the attorney?
This is a significant question because accountants are frequently relied upon as indispensable members of legal teams because they have the ability to properly interpret complex technical accounting concepts and explain them to lawyers, judges and juries. When utilizing accountants in legal matters, the level of protections afforded will often depend on the agreement entered into between the parties.
As an initial matter, parties involved in legal disputes should understand that the accountant-client privilege generally does not provide the same level of protections as the attorney-client privilege. Relying solely on the accountant-client privilege presents substantial risks for the client. Rather, the parties should recognize and consider the benefits of entering into a Kovel Agreement to protect their communications.
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IRS-Criminal Investigations Counts Down the Top 10 Cases of 2021
“The investigative work of 2021 has all the makings of a made for TV movie – embezzlement of funds from a nonprofit, a family fraud ring that stole millions in COVID-relief funds and a $1 billion Ponzi scheme used to buy sports teams and luxury vehicles. But this is real life and I’m grateful to our IRS-CI agents for pursuing these leads and ensuring that the perpetrators were prosecuted for their crimes,” said IRS-CI Chief Jim Lee.
The top 10 IRS-CI cases of 2021, as decided by the IRS-CI, include:
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Statute of Limitations in Tax Cases – The Basics
What is the Statute of Limitations?
The Internal Revenue Code limits the time in which the government may assess tax. There are two civil statutes of limitations. The first is the period during which the IRS can assess an additional tax liability (including penalties and interest). The second is the period during which the IRS can collect a tax that has been assessed. The criminal statute of limitations is the period during which the IRS can criminally prosecute. Generally, as to tax crimes, the criminal statute of limitations is six years. (Section 6531)
The application of the statute of limitations can be very confusing and individual facts may determine how the statute of limitations is computed. Also, certain actions suspend the statute of limitations.
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Field Examinations with the IRS
Field examinations involve returns with more complex issues, thereby requiring examination by someone more knowledgeable in the field of accounting and the Internal Revenue laws. Field examinations are conducted by Revenue Agents and are normally performed at the taxpayer’s place of business where the Revenue Agent can examine the taxpayer’s books and records and decide on the taxpayer’s correct taxable income and correct tax liability. The Revenue Agent is supposed to make an appointment with the taxpayer at a time and place that will be convenient for the taxpayer. The arrangement of the time and place can be done by telephone; however, the telephone contact cannot be used to verify items appearing on the income tax return.
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How to Select a Tax Attorney
Understanding the IRS and the tax laws is very difficult and confusing. When a taxpayer has a tax controversy matter with the IRS, selecting a tax attorney may be just as confusing and complicated. Not all attorneys are created equal when it comes to the tax laws and representing clients before the IRS. Dealing with the IRS can be risky and confusing for someone, including an attorney, if that person is not familiar with IRS procedure. Clients seeking a tax attorney when they are having problems with the IRS must be careful to select someone who understands this unique area of the law. Challenging the IRS requires an attorney with special expertise and experience.
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The IRS is Hunting for Cryptocurrency Investors with John Doe Summonses
The IRS has several tools in its arsenal to encourage compliance and audit and enforce those it believes are failing to comply. One of the most powerful tools is the John Doe summons. A regular IRS summons seeks information on a specific taxpayer. However, a John Doe summons, as the name implies, involves a group of taxpayers that the IRS cannot identify by name – yet. Judicial approval is required, but the approval is ex parte (i.e. opposing parties are not notified or can respond before the court rules). The IRS has used this tool to find tax shelter participants by summonsing the promoters, and most famously foreign banks like UBS, for foreign bank account holders. The next target, cryptocurrency investors.
The IRS already successfully received thousands of names of account holders from the Coinbase cryptocurrency exchange. Many taxpayers, who received letters from Coinbase about the disclosure, came forward and disclosed assets in their accounts.
The IRS has now secured permission to issue a John Doe summons for cryptocurrency records on payments using a technology company called Circle and another popular cryptocurrency exchange – Kraken. This is all part of what the IRS has called, in public speeches, a “treasure hunt” for unreported cryptocurrency. If you have unreported cryptocurrency transactions, here’s what you should know.
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Going to Appeals – Preparing the Protest
Overview of the Appeals Process
The goal of the Appeals Office is to settle as many cases as possible within the broad guidelines of its Mission Statement:
The Appeals mission is to resolve tax controversies, without litigation, on a basis which is fair and impartial to both the Government and the taxpayer and in a manner that will enhance voluntary compliance and public confidence in the integrity and efficiency of the Service.
Even though much of the work of Appeals comes from examinations, its jurisdiction has expanded over the last few years. In examination cases, the taxpayer receives the 30-day letter. This letter is accompanied by the Revenue Agent Report and gives the taxpayer 30 days to request an Appeals conference. In most cases, the taxpayer is required to file a protest describing the taxpayer’s position. If the taxpayer does not request an Appeals conference, then the IRS will send the taxpayer a notice of deficiency. If the taxpayer files a petition with the Tax Court, and has not had an Appeals conference, the IRS will send the case to Appeals to investigate a possible settlement. In other types of cases, the IRS will send the taxpayer a letter advising the taxpayer of his right to an Appeals and giving the taxpayer a time limit in which to request an Appeals conference. You file the protest as stated in the letter from the IRS and within the 30-day period.
Love Don’t Cost a Thing? Drawing the Line Between Wages and Gifts
A good friend called me recently with a question for one of his clients. The client, an elderly client with health problems, wanted to know if the payments she has been making to her caregivers could be treated as non-taxable gifts, or if she has to report the payments to the IRS as wages?
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