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Civil Asset Forfeiture  What To Do If Your Assets Have Been Seized by the U.S. Government

Civil Asset Forfeiture What To Do If Your Assets Have Been Seized by the U.S. Government

Tax Law
By Lynn K. Ching If your assets have been seized by the U.S. Government you must file a timely claim to contest the asset seizure in the United States District Court. A timely filed claim stops the administrative forfeiture proceeding, and the seizing agency forwards the timely claim to the U.S. Attorney’s Office for further proceedings Failure to file a claim by the deadline date may result in the property being forfeited to the United States. Where To File a Claim: A claim must be filed with the agency that gave notice of the seizure and intent to forfeit. To contest the forfeiture, the claim must be sent to the notifying agency's address which is identified within the notice. A claim may be filed online (subject to the online exclusion below) or…
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Cross-Border Debt Planning with the Portfolio Debt Rules With an Emphasis on Complying with the Bond Registration Rules

Cross-Border Debt Planning with the Portfolio Debt Rules With an Emphasis on Complying with the Bond Registration Rules

Tax Law
By Anthony Diosdi Most forms of U.S.-source income received by foreign persons that are not effectively connected with a U.S. trade or business will be subject to a flat tax of 30 percent on the gross amount received. Sections 871(a) (for nonresident aliens) and 881(a) (for foreign corporations) impose the 30-percent flat tax on interest income. This interest income is part of the regime often referred to as “FDAP income.” The collection of the 30-percent tax is affected primarily through the imposition of an obligation on the person or entity making the payment to the foreign person to withhold the tax and pay it over to the Internal Revenue Service (“IRS”). The tax collected is, therefore, often referred to as a “withholding tax.” Tax treaties generally provide for the reduction…
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Why Disclose Your Foreign Assets to the IRS in 2022?

Why Disclose Your Foreign Assets to the IRS in 2022?

Tax Law
By Lynn K. Ching Perhaps you had a foreign bank account or securities account from prior years of your youth, or maybe you inherited income-producing rental property located in a foreign country, or was the beneficiary of a gift from a foreign person - to name a few. If so, you may have an obligation to disclose your interest in foreign assets to the Internal Revenue Service (IRS) and The Financial Crimes Enforcement Network (FinCen). These disclosure forms include but are not limited to FBAR, Forms 3520 and 3520A, Form 8938 and Form 5471. Failure to do so may subject you to onerous civil penalties and/or criminal liability. Non-Willful Failure to File Disclosure Forms For those taxpayers who just did not know of their filing obligation or perhaps knew about it but…
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Some Common Defenses in Criminal Tax Cases

Some Common Defenses in Criminal Tax Cases

Sales Tax
By Anthony Diosdi In previous articles, we discussed various defenses to indirect method cases, such as prior accumulated funds, nontaxable sources of net worth increases, bank deposits, improper allocation of income between taxable years, and accounting defenses. This article will focus on defenses to specific item cases. In these cases, once the Internal Revenue Service (“IRS”) establishes by proof a specific understatement of a tax liability,  the question is will criminal liability follow and if so, does the taxpayer at issue have any viable defenses. The IRS has the burden of proof on this question. The IRS must tie the understatement of taxes to the defendant, demonstrating both his knowledge and intent. Translating this proposition into the language of investigative and administrative stages of a criminal tax case, the IRS…
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Specific Methods that the IRS may use to Establish Criminal Tax Liability and Potential Defenses to these Methods

Specific Methods that the IRS may use to Establish Criminal Tax Liability and Potential Defenses to these Methods

Tax Law
By Anthony Diosdi The specific item method of proving an underpayment of tax is a direct method of proving one or more tax laws were violated. Actually, the specific item method is nothing more than the ordinary method used by revenue agents in making routine civil audits. An Internal Revenue Service (“IRS”) civil revenue agent will review the taxpayer’s return, analyze the income sources, personal and business deductions and exemptions reported in the various schedules. He will then analyze the original, underlying records which purport to substantiate those figures. Finally, he will determine whether all the transactions reflected in the underlying records have been properly accounted, described and handled in the return and whether the deductions taken are valid under the law and/or fully substantiated by the taxpayer’s records. The…
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Indirect Methods that the IRS Uses to Establish Criminal Tax Evasion and Potential Defenses

Indirect Methods that the IRS Uses to Establish Criminal Tax Evasion and Potential Defenses

Tax Law
By Anthony Diosdi The most common forms of indirect methods of proving criminal tax evasion is the net worth plus non deductible expenditures method and the bank deposit method. These methods can be used in a single year; different methods can be used in different years in the same case; any of these methods can be combined with specific item proof or be made to stand on its own. To adequately prepare for an Internal Revenue Service (“IRS”) criminal tax evasion investigation, or to prepare properly for a criminal trial which will employ one of these methods, a criminal tax attorney must have a working knowledge of the varieties of circumstantial proof that can be gathered by an IRS special agent, the manner in which such evidence can be structured…
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The Importance of Digital Evidence and Digital Forensics in a Criminal Tax Case

The Importance of Digital Evidence and Digital Forensics in a Criminal Tax Case

Tax Law
By Anthony Diosdi Digital evidence permeates every aspect of the average person's life in today’s society. No matter what someone does these days, a digital footprint is likely being created that contains some type of digital evidence that is recoverable. Sending an email, drafting a document, or surfing the internet all creates digital evidence. The collection and analysis of this digital evidence could be extremely important in a criminal tax prosecution. Today, modern devices can serve as huge repositories of personal information yet be carried in a pocket and assessed with a single hand or even a voice command. In criminal tax cases, the Internal Revenue Service (“IRS”)  typically seizes evidence through a search warrant with no forewarning to the persons in possession of the evidence. In many cases, the…
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What are the Tax Deadlines for 2022?

What are the Tax Deadlines for 2022?

Tax Law
Tax day is one of the more stressful times for individual and corporate filers. By December 31, you have made all of the decisions that could impact your tax picture for 2021. Now, it is time to get to the actual work of filing your tax return. Tax day is not always April 15. When the day falls on a weekend, the IRS will give you additional time to file taxes because the deadline depends on when your tax return can be postmarked. This year, April 15 falls out on a Friday. Midnight ends up being on a Saturday, so the IRS will give you time to get to the post office to mail your return. The Tax Deadline Is a Little Later This Year This year, the first Monday…
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One Potential Strategy Foreigner Investors Can Utilize to Transfer U.S. Real Property out of their Estate to Avoid the Estate and Gift Tax

One Potential Strategy Foreigner Investors Can Utilize to Transfer U.S. Real Property out of their Estate to Avoid the Estate and Gift Tax

Tax Law
By Anthony Diosdi Individuals that are not domiciled in the United States are subject to an estate and gift tax on the transfers of real property physically located in the United States. U.S. estate and gift taxes are charged at high effective rates (up to 40%) in the case of nonresident aliens, because the unified credit provides an exemption amount equivalent to just $60,000, an amount that has not increased in decades. See IRC Section 2101. For U.S. federal estate and gift tax purposes, the term “residency” means “domicile.” While the U.S. federal income tax concept of residency relates only to physical presence in a place for more than a transitory period of time, domicile relates to a permanent place of abode. For U.S. federal estate tax purposes a person…
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Anything You Email Can and Will Likely be Used Against You in a Criminal Tax Case- Unless an Exception Applies to Exclude the Email

Anything You Email Can and Will Likely be Used Against You in a Criminal Tax Case- Unless an Exception Applies to Exclude the Email

Tax Law
By Anthony Diosdi When an individual is charged with murder, the focus of the investigation is directed immediately to a limited historical event. Questions of where the defendant was on the night in question, what his relationship was to the victim, whether he had any motive to kill the victim, can be pursued immediately by both the prosecution and the defense. Criminal tax cases are different. Most criminal tax investigations start with a defendant and seek to find crime. This is the case whether a tax crime was committed yesterday or five years ago. If the initial suspicion that precipitated the investigation proves worthless, it does not mean that the individual being investigated by the Internal Revenue Service (“IRS”) gets off “scot free.” There are other years and other transactions…
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