It May Be Legal, But It Ain't Always Right

Tax avoidance is legal and tax evasion is not. Simple distinction, but not always relevant, at least not in politics. Consider the recent burst of outrage over corporate tax avoidance generally and General Electric's tax bill in particular. In some years, GE's tax schemes might have escaped public...

Confusion in the Court of Appeals About the Indirect Method of Proof

In both criminal and civil cases, the Government sometimes uses what is called an indirect method of proof to show that a taxpayer owes additional tax. A direct method, for example, uses the return as filed and proves omitted income or improperly claimed deductions or credits. The indirect methods essentially...

Tax Protestors Alive and Well and Living in Canada

The tax protestor movement is alive and well in Canada and getting some publicity just in time to serve as a warning to Canadian taxpayers readying their annual returns.* I read with interest the recent case of Russell Porisky and his wife Elaine Gould , who ran a tax evasion counseling scheme out of...

Second Circuit Reverses and Vacates Convictions for Wire Fraud and Tax Evasion

In United States v. Litwok, ___ F.3d ___, 2012 U.S. App. LEXIS 8727 (2d Cir. 2012), here , the Second Circuit upset convictions for wire fraud and tax evasion, applying seeming settled principles. I address first the tax evasion convictions, although the Court addressed first the wire fraud conviction...

Second Circuit Reverses and Vacates Convictions for Wire Fraud and Tax Evasion

In United States v. Litwok, ___ F.3d ___, 2012 U.S. App. LEXIS 8727 (2d Cir. 2012), here , the Second Circuit upset convictions for wire fraud and tax evasion, applying seeming settled principles. I address first the tax evasion convictions, although the Court addressed first the wire fraud conviction...

Pastor Going to Trial for Tax Charges Predicted Jesus Would Come On May 27

I have previously blogged on Ronald Weinland. See Controversial Pastor, Self Proclaimed Prophet, Indicted re Income from Church Offerings and Offshore Accounts (11/21/11), here . My impression from afar is that he is just a charlatan (see here ) in the guise of a religious person. Just in case he has...

Tax Mitigation-Avoidance-Evasion

"Tax avoidance involves arrangement of a transaction in order to obtain a tax advantage, benefit, or reduction in a manner unintended by the tax law. It is an unacceptable manipulation of the law which is unlike legitimate tax mitigation. Mitigation involves use of the tax law to achieve anticipated...

New Indictment of U.S. Tax Return Preparers & Enablers re Offshore Bank & Related Activity

In a First Superseding Indictment, here , filed June 14, 2012 in CD CA, three principals of a tax return preparation service, United Revenue Service ("URS") were indicted. The DOJ Tax Press Release is here, Three Tax Return Preparers Charged With Helping Clients Evade Taxes By Hiding Millions...

OECD Praises Itself Through G20 For Progress on Tax Evasion - But Is It Praiseworthy?

In a recent post on its website, the OECD says that the G20 has reported that "steady progress is being made towards tackling tax evasion more effectively." In an article I wrote in 2010, I called the G20 a syndicator of OECD tax views , since the G20 lacks an independent infrastructure in...

FATCA (Foreign Account Tax Compliance Act) Proposed Regulations

The most recent proposed Foreign Account Tax Compliance Act (FATCA) regulations are designed to lighten the due diligence and compliance burden on foreign financial institutions and U.S. withholding agents, especially with respect to high value accounts. The Foreign Account Tax Compliance Act (FATCA...

Tax Court Finds IRS Compliance Officer Liable for Civil Fraud Penalty

Readers interested in the risks of being audited with respect to income tax noncompliance arising from foreign assets (particularly financial accounts) often ask what it takes for the IRS to prove fraud. I am aware of no standard litmus test of civil tax fraud that will identify, particularly for laymen...

Defendant Waives Attorney-Client Privilege by Asserting Reliance on FBAR Advice Defense

In United States v. Kerr, 2012 U.S. Dist. LEXIS 98836 (D AZ 2012) , a case with two U.S. taxpayers and their lawyer as defendants, the court held that the indicted U.S. taxpayers' claims of reliance constituted a waiver of their attorney-client privilege with respect to communications with their...

Tax Court Finds Fraud Based, in Part, On Negative Inference from Fifth Amendment Assertion

In Loren-Maltese v. Commissioner, T.C. Memo. 2012-214 , the Tax Court introduces the legal issues as follows: It's the facts that make this case interesting, but there are three issues of law that color its background: the general rules of tax fraud, the proper tax treatment of money taken by...

Taxation & Morality: Odd Bedfellows

There is a public opinion poll for just about everything these days. I recently stumbled across a U.K. poll on corporate taxes and morality. Here we have two subjects that don't necessarily seem connected ... or are they? In the survey 66% of respondents said tax avoidance was immoral. The poll was...

The U.S. - Swiss Spat: On Leaver Lists and the Like

I have made only passing reference to so-called "leaver lists" in the U.S. - Swiss offshore account spat. Because of recent developments, I thought I would pass on what I know about those lists. I hope that readers with more nuanced information with add to, clarify or correct this blog by making...

Restraining Taxpayers for Tax Debts

Collateral consequences often attend tax crimes investigations and prosecutions and even in circumstances that raise the risk of criminal investigation and prosecution. One collateral consequence is that the IRS wants to collect the tax dollars that the taxpayer owes, along with penalties and interest...

Court of Appeals Rejects Arguments that Instructions on Willfulness and Good Faith Were Reversible Error

In United States v. Basile , 2014 U.S. App. 12388 (3d Cir. 2014), here , the defendants, husband and wife, chiropractors, engaged an asset protection firm who put them into offshore entities and bank accounts to avoid tax. The defendants took other actions to obscure their income and avoid tax. The defendants...