Tax Law Archives | Page 28 of 56

10Jan 2022 by Lynn Ching

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…

07Jan 2022 by Anthony Diosdi

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…

06Jan 2022 by Anthony Diosdi

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…

06Jan 2022 by Anthony Diosdi

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…

03Jan 2022 by Anthony Diosdi

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…

29Dec 2021 by Anthony Diosdi

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…

29Dec 2021 by Anthony Diosdi

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…

21Dec 2021 by Anthony Diosdi

When Foreigners Own U.S. Real Property: Planning for the Estate and Gift Tax Associated with U.S. Property Ownership with an Emphasis on Partnerships

Tax Law

By Anthony Diosdi In the individual foreign investor setting, inbound tax planning often requires a balancing of U.S. income tax considerations and U.S. federal gift and estate tax considerations. While U.S. federal income tax rates on the taxable income of an individual foreign investor are the same as those applicable to a U.S. citizen or resident, the federal estate and gift tax as applied to individual foreign investors can and often results in a dramatically higher burden on a taxable U.S. estate or donative transfer of a foreign investor than for a U.S. citizen or domiciliary. As a result, for many individual foreign investors, the most important U.S. tax consideration is the U.S. federal estate and gift taxation. The United States imposes estate and gift taxes on certain transfers of…

21Dec 2021 by Anthony Diosdi

One Potential Strategy Foreigner Investors Can Utilize to Transfer U.S. Real 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…

17Dec 2021 by Anthony Diosdi

An Overview of Type E Tax-Free Reorganizations

Tax Law

By Anthony Diosdi In the corporate tax context, the term “reorganization” is a statutory term of art. Rather than providing a general definition, the Internal Revenue Code attempts to provide precise definitions for the term “reorganization” in Section 368(a)(1) with an exclusive list of seven specific types of transactions that will be considered “reorganizations.” Subparagraphs (A) through (G) of Section 368(a)(1) each provide a description of a particular reorganization transaction. Unless a transaction fits into one of the seven categories stated in subparagraphs (A) through (G), it is not a corporate reorganization. A tax-free reorganization sometimes involves only a single corporation which is undergoing a readjustment to its capital structure. The most common form of a reorganization that involves recapitalization is a Type E reorganization. Internal Revenue Code Section 368(a)(1)(E)…