California Tax Law Blog

Family Faces a Collective 123 Years In Prison For Cash Skimming

Family Faces a Collective 123 Years In Prison For Cash Skimming

| Jun 29 | Criminal Tax Representation, IRS | No Comments
LA tax attorney cash skimming IRS avoid prison

One of the major initiatives of the California Franchise Tax Board or FTB and Board of Equalization or BOE over the past few years has been lobbying the state policymakers to pass legislation that outlaws the ownership and operation of technology that is used to reduce the amount of taxable income recorded and reported to tax agencies. But it isn’t just businesses in California that are susceptible to being investigated for criminal tax conduct related to such illegal practices. A family from Wisconsin is experiencing the income tax enforcement power of the IRS first hand and will need the help of an experienced tax attorney in a hurry. If you own a small to medium sized business that is being investigated for using skimming, zappers, or similar technology, it may be in your best interest to seek the help of a tax attorney as soon as possible.

Paul Bouraxis (age 65), his wife Freida Bouraxis (age 60), their son, Andreas Bouraxis (age 38), and son-in-law, Reiad “Ray” Awadallah (age 44), all of the Franklin area of Wisconsin were charged last week on multiple counts that stem from the operation of several family restaurants located throughout the state. According to a Department of Justice press release, the family members were charged with a laundry list of crimes including tax evasion for intentionally cash skimming or taking some of the cash received from patrons of the Omega Burger in Franklin, El Beso in Greenfield, and El Fuego in Milwaukee.

Tax Evasion Through “The Cash Skimming Process”

Cash skimming is the process by which cash-based business owners reduce the amount of cash received on their books and reports sent to the IRS and state tax agencies in an effort to pay less income tax. Skimming has been going on for years but only recently has technology played a large part in the effort to defraud the government. Point of service systems can be implemented that automatically reduce the amount of cash received for record-keeping purposes. This will allow a business owner to effortlessly generate fraudulent tax documents. Further, the technology is often in the form of software installed on the computers of the business, allowing the process to work clandestinely without the knowledge of the front-line employee collecting the cash from the customer.

As we mentioned previously, the California legislature saw skimming and the technology behind it as major threat to the integrity of the income tax system in the state and enacted a law that criminalized the possession or use of skimming devices, known as zappers. But it isn’t just the California Franchise Tax Board or Board of Equalization that are on the lookout for the use of zapping technology. In the case featured in this posting, the IRS was the agency that audited and investigated the actions of the defendants and referred the case to the Department of Justice for prosecution.

The investigation uncovered that between 2007 and 2011, Bouraxis and his family had not only skimmed a significant amount of money off of the records of their several restaurants, but some family members who were in charge of the individual establishments were paying employees in cash and not withholding or paying employment taxes. In addition to the tax evasion charges, Paul Bouraxis was also charged with crimes related to banking fraud with respect to loans taken out at a local bank. He could face a total of up to 85 years in prison and fines of up to $3.75 million. His relatives that were charged in the case face a combined 38 years behind bars, as well.

Cash-Based Businesses: You Could Be the Next IRS Target

If you are a small to medium sized business that deals with a substantial amount of cash, the government has its eyes on you. Revenue agents from both California and the IRS have specific methods of investigating and auditing cash-based businesses in order to uncover any improprieties. In fact, the IRS has its own audit manual for agents to use when dealing with cash-intensive businesses. Investigators at the state and federal level also have various methods of determining whether a businesses owner has been skimming. For instance, investigators frequently go undercover to observe the cash intake of a business. The investigator will determine roughly what percentage of the business’s sales are cash and will then compare that ratio to the ratio of reported 1099-K credit card sales to total sales to ensure that there are not large deviations

Contact an Experienced IRS Tax Attorney

In any event, if one agency opens an investigation, you can bet that others will follow suit. If you are a cash-intensive business and are under audit or investigation for potentially skimming or using a zapper, the best thing that you can do for yourself and your business is contact an experienced tax attorney. The Tax Law Offices of David W. Klasing have represented taxpayers who have been under investigation for potentially using a zapper as well as a myriad of other tax crimes. Our understanding of the investigative methodology of the IRS Criminal Investigations Division and the California tax agencies will be of great help when we zealously advocate for your physical and financial freedom.  We invite you to call 800-805-9718 or contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.

 

 

 

New IRS FBAR Guidelines Could Have Stemmed From Constitutional Concerns

New IRS FBAR Guidelines Could Have Stemmed From Constitutional Concerns

| Jun 25 | FBAR Compliance and Disclosure, IRS | No Comments
IRS FBAR guidelines LA tax attorney

Earlier this month, we brought you a first-look at a new set of Foreign Bank Account Reporting guidelines that were created in an attempt to bring consistency to the FBAR penalty system. In short, the new procedures set out caps for both willful and non-willful penalties and include guidance that includes the same caps when the illegal conduct spanned over many tax years.

Brief Overview of the New IRS FBAR Guidelines

For a taxpayer who is determined to have willfully failed to disclose a foreign bank account that has a balance of $10,000 or more, the IRS may, according to the guidelines, assess a penalty that is spread out among the years of noncompliance but must not exceed 50% of the highest balance of the account. For those taxpayers who violated the FBAR laws without their conduct rising to level of “willful”, the penalty for each year may not exceed $10,000 and if the IRS agent evaluating the case recommends, the taxpayer may be assessed only a single fine that is not in excess of $10,000 that encompasses activity of several tax years of noncompliance.

High Possibility of Excessive Penalties

Before the new guidelines were published, it was technically possible for a taxpayer to be assessed penalties that greatly exceeded the total value of the overseas bank account that went undisclosed. According to the law as it is written, a taxpayer may be assessed a penalty of up to 50% of the high-balance of the overseas account for each year that the account goes willfully undisclosed. Therefore, if a taxpayer’s account went undeclared for three years, it was possible for a penalty of 150% (50% times three years) to be assessed.

The Constitutional Argument

It was initially unclear what may have motivated the IRS to release the published guidance on the assessment of FBAR penalties but it now appears that the goal of the guidelines has been identified.

Taxpayer Carl R. Zwerner held a foreign bank account that went undisclosed during the 2004, 2005, 2006, and 2007 tax years. After a lengthy legal battle, a federal jury found that his noncompliance was willful for tax years 2004, 2005, and 2006. Furthermore, the jury determined that a 150% penalty (like the hypothetical above) was appropriate. It was after the jury decision was handed down that the IRS and Department of Justice became concerned with one of Zwerner’s defenses: that the FBAR penalty and its possibilities violate the 8th Amendment to the United States Constitution. The 8th Amendment prevents the government from levying any excessive fines and Zwerner’s legal team certainly believed that 150% of the balance of an account was excessive, considering that Zwerner’s only fault was not notifying the IRS of its existence.

Before an appellate forum heard the case, Zwerner and the government settled for less than half of what the IRS was originally seeking. This action evidences the government’s want derail any attempt to classify their actions as unconstitutional, a label that would taint nearly all of their current enforcement actions for FBAR-related offenses.

How the New Guidelines Effect the OVDP and Criminal Prosecutions

With the news of the new procedure circulating, many taxpayers that haven’t yet disclosed their foreign accounts may question whether the Offshore Voluntary Disclosure Program or OVDP is right for them. With the new self-imposed cap on penalties, is it really worth coming forward voluntarily as opposed to taking a chance with the revised penalties? The answer to that question is not as simple as it may sound. First, there are several factors that must be considered before a taxpayer can confidently enter the OVDP. The program is not for everyone and only an experienced OVDP tax attorney can walk a taxpayer through the process with ease and certainty.

Furthermore, if a taxpayer chooses not to participate in the OVDP or drop out of it if already participating, they run the risk of going to prison. Although the proposed guidelines help ensure that draconian penalties are not levied against a taxpayer for several years of offenses, there is nothing stopping the Department of Justice from seeking the maximum prison sentences for FBAR violators. The OVDP is the only way that a taxpayer can ensure that they will not be criminally prosecuted. but only an experienced tax attorney can give an unsure taxpayer the assurance that they are making the right move for themselves and their family by entering the OVDP.

Contact an Experienced Tax Attorney Today

The tax and accounting professionals at the Tax Law Offices of David W. Klasing have years of experience assisting taxpayers come into compliance with FBAR laws while minimizing or eliminating civil and criminal consequences. When the IRS comes to court to pursue potentially huge penalties and frightening criminal charges against you, they will have experienced attorneys in their corner; let us be the zealous advocate in your corners. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.

Tax Compliance for Expats in Saudi Arabia

Tax Compliance for Expats in Saudi Arabia

| Jun 24 | Expatriate Tax Issues | No Comments
US epxatriates in Saudi Arabia

Saudi Arabia is one of the chief oil producers in the world. While Saudi Arabia has the second-largest proven oil reserves in the world, even this fact fails to capture the whole picture regarding the opportunities presented by the Saudi oil industry. This is because much of the oil in Saudi Arabia is close to the surface and under ample pressure to bring it to the surface easily. This makes productions costs much lower in Saudi Arabia than they are elsewhere in the world. This has created enormous opportunities for expatriates seeking work in the oil extraction industry, commodity trading, and engineering fields related to the processing of petrochemicals.

As of 2008, Saudi Arabia’s workforce was largely foreign-born. Two-thirds of all workers and 90 percent of private sector workers are foreigners. While the Kingdom has made efforts to increase the number of Saudis working in the economy, Saudi Arabia still presents numerous work and investment opportunities for American expatriates.

However, American expatriates living and working in Saudi Arabia still must remain compliant with their numerous tax and foreign account disclosure obligations. The Tax Law Firm of David W. Klasing works with expats in Saudi Arabia and around the world to help them remain compliant with all of their tax obligations. Furthermore, if you fear you have made a minor or serious error, our tax professionals can work to mitigate the potential consequences.

American Expatriates Must Disclose Foreign Accounts if Their Accounts Exceed Certain Balances

For decades in the post-World War II world, the concept of a secret offshore account represented something of a gray area for American taxpayers. That is, it seemed that everyone was leveraging these accounts and the risk of detection and civil or criminal consequences was extremely low. However, over the course of, roughly, the past decade the old banking regime that accepted or at least turned blind eye to secret offshore accounts was swept away by new U.S. laws that require the disclosure of certain offshore account and assets.

First, a strengthened FBAR reporting obligation that includes penalties for even non-willful violations moved the world towards a system of disclosure. Then, a renewed focus on enforcing both willful and non-willful FBAR violations – the failure to disclose the account or accounts via FinCEN Form 114 when the balance or aggregate foreign balance exceeds $10,000 at any time – further encouraged compliance. A fine of up to $10,000 can, upon conviction, punish a non-willful FBAR violation. Penalties for violations where  there was a voluntary or intentional disregard of the known duty to file FBAR can be punished by a fine of $100,000 or 50 percent of the account balance.

Foreign Account and Tax Compliance Act (FATCA) is sometimes characterized as the United States’ global account disclosure law. The law is characterized as such because it not only requires U.S. taxpayers to disclose foreign accounts and assets when their value is in excess of reporting thresholds, but it also requires foreign financial institutions (FFIs) to provide information about U.S. linked accounts to either their domestic taxing authority or directly to the IRS.

OVDP Can Limit Tax Consequences You Face

If you have failed to make required disclosures under FBAR, FATCA, or both and have yet to receive a letter from the IRS, time is of the essence to mitigate the consequences you could face. This is because the Offshore Voluntary Disclosure Program (OVDP) allows taxpayers to voluntarily disclose their compliance failures in exchange for reduced penalties, but the program is unavailable if you are already under investigation. Taxpayers who come under investigation for undisclosed foreign accounts are likely to face, at least, civil charges. If badges of fraud or other noncompliant tax acts were committed, the likelihood of facing criminal charges is significantly increased.

Concerns about your taxes may make you worry about what will happen when you return to the U.S. or you may avoid coming back to the States. However, you don’t have to live with this ever-present fear and anxiety in your life. Many taxpayers have made errors on their taxes, but those who work proactively to correct them typically face lesser penalties and consequences. If you have offshore tax concerns, it has never been more important to speak with a tax professional. If you are a US expat in Saudi Arabia or throughout the world we invite you to schedule a reduced-rate consultation with the tax professionals of the Tax Law Office of David W. Klasing, call 800-805-9718 or contact us online.

 

 

Avoid the Tax Trap of the Sale of a Closely Held Family Business

Avoid the Tax Trap of the Sale of a Closely Held Family Business

| Jun 22 | Business Transaction Taxation | No Comments
closely held business transaction

For years, decades, or generations your family has operated a business that has provided high-quality goods or services or for your neighbors, friends and other clients. But, times change and nothing can last forever. Perhaps an unexpected illness or injury made keeping up with day-to-day operations impossible. Or perhaps you simply reached the limits of the business’ potential growth under your stewardship. You believe that a management firm with greater resources can bring the company to the next level.

Whatever your exact reasons for considering selling the family business, you undoubtedly want what is best for your company and its employees. You may also realize that you can sell the company to one or more of your children to protect the business’ mission and keep the company in the family. However, the short-term needs and goals of the selling parent and purchasing child are not necessarily aligned. Without careful consideration of the tax implications of the sale of a closely held family business and particularly when the selling parent dies before he sale can be completed, a tax trap that can affect the purchasing child, the estate, and all who benefit can be created.

Recognizing When it May be Time to Prepare for the Future

Incompetency and death are extremely difficult to predict. However, death represents the triggering event that will show whether preparations for this eventuality were sufficient. While some business owners may consider their eventual death, that does not mean that they necessarily take appropriate action or meet with an attorney who can address these end of life concerns.

To illustrate this point, let us consider a hypothetical estate plan. In the plan, the family business is to be transferred through an installment sale over the course of many years to one of the children. However, before the sale can be completed, the parent who owns the business passes away. In the will, there was a provision that stated, in the event of the parent’s death prior to the completion of the sale, the remaining debt will be forgiven. The parent probably thought that he or she was doing their child a favor by including this provision, but in reality such action can cause wide-ranging tax problems for the estate and for the child purchasing the business.

The Problems Created by Family Business Transfers

Let’s say that the installment sale was to be completed over the course of 20 years. Let us assume that the parent who owns the company decides to sell the business to his or her daughter. But, the parent dies eight years into the installment payments for the company. When the remaining 11 years of installment payments are forgiven per the terms contained in the will, the forgiven amount is considered income in respect of a decedent (IRD). Income in respect of a decedent is taxable income and represents a tax burden for the estate. If the will fails to state that this tax liability will reduce the purchasing child’s share of the estate, this will create a secondary tax problem for the child individually and a potential problem of fundamental fairness in the division of the estate..

Solutions to the Potential Problems Created by the Sale of a Family Business

To be clear, these problems occur chiefly when the selling parent dies before the sale can be completed. Insufficient estate planning can create or compound the issues already discussed. But, one of the most simple and straightforward ways to correct at least the inequitable distribution problem is to provide language in the will that specifies how taxes will be apportioned among the beneficiaries. This type of provision can provide that the taxes due to loan forgiveness will be deducted from the benefitting individual’s share of the estate. When there are multiple beneficiaries, this can ensure a more equitable distribution of the estate.

Another option that a selling parent and purchasing child can pursue are a self-canceling installment note or a private annuity. The self-canceling note is intended to be rendered null at the selling parent’s death. Because the debt is canceled at death, this type of note typically will carry a higher interest rate or other concessions to offset this fact. However, the valuation of a self-canceling installment note can be difficult. A valuation that differs significantly from the IRS’ expectations, can raise suspicion and result in a tax audit or a tax investigation. While other options to address this tax trap are available, business owners should not take action without first consulting with a tax professional.

Rely on our Tax & Estate Planning Experience

The attorneys and CPAs of Tax Law Offices of David W. Klasing are experienced in both tax matters and in estate planning concerns. If you are contemplating the sale of a closely held family business to a child or another party, it is prudent to discuss the potential tax problems this sale can create prior to taking any action. To schedule a reduced-rate consultation, call us at 800-805-9718 today or contact us online.

 

What Should You Do If you Are Contacted by the IRS in LA for Audit?

What Should You Do If you Are Contacted by the IRS in LA for Audit?

| Jun 19 | Audit Representation | No Comments
LA IRS tax audit attorney

If you are a Los Angeles area resident and you have received a letter or have been contacted by the IRS in LA for audit there are a few things you need to immediately know:

  1. You cannot get on the “good side” of an IRS auditor, and no amount of an effort to be transparent or to fully comply with their requests will improve your odds for a successful outcome. In fact, it will in all likelihood increase your exposure and the amount you will pay when the audit is concluded.
  2. The IRS has already established a strategy for your audit. The IRS isn’t simply curious about a number or two. There is something in your return(s) that has triggered an audit flag, and the opening request for information is just the beginning. This is not going to be fast or easy.
  3. You should never communicate with the IRS directly. The IRS is trained to get you to provide information that you are not required to disclose, in an effort to expand the scope of the audit. They can and will use this information against you to increase the amount you owe.
  4. The IRS can subpoena any and all records and communications between you, your CPA and your tax preparer. It is important to learn about the attorney-client privilege and how the very conversations you need to have with your CPA or tax preparer can actually provide the evidence the IRS will use against you to increase your tax liability.

My name is David Klasing, and as an experienced LA tax attorney I can provide sound advice, counsel and insight into your situation, and protect valuable information through the attorney-client privilege.  As a CPA and experienced auditor, I am able to quickly get to the root of the issue, identify the IRS’ strategy and ensure that we keep them focused to specific questions and protect you from disclosures that can cause financial harm.  Our accounting services compliment our CPA and seasoned tax attorneys to provide a single source Los Angeles IRS audit defense.

If you received a letter or have been notified by the IRS in LA for audit or any other reason I invite you to contact my office, or call (800) 805-9718 to open a conversation about your risks and exposure in an IRS audit, and the steps you can take to protect yourself and ensure the best possible outcome.

Georgia Sisters Sentenced to Federal Prison in Tax Preparation Scheme

Georgia Sisters Sentenced to Federal Prison in Tax Preparation Scheme

| Jun 19 | Criminal Tax Representation | No Comments
criminal tax los angeles attorney

Whether it’s tax time or not, when Americans approach tax professionals for advice, they are relying on the fact that the tax expert is exactly that: an expert. From tax advisors, preparers, or even lawyers, the public is under the impression that they will not be mislead or put in jeopardy by their chosen advocate. But as the subjects of today’s story will demonstrate: not every tax preparer out there is honest. Furthermore, it is crucial that American taxpayers become aware of their liability in the event that a tax preparer leads you astray.

Two sisters-in-law in Georgia were sentenced to hard time in federal prison and ordered to pay hefty restitution last week after pleading guilty to various charges earlier this year relating to a tax preparation scheme. Angela Miller, 48, of Milledgeville, Georgia, and Lee Lynwood, 47, of Eatonton, Georgia were each sentenced to serve just over one year in a federal prison for operating a tax preparation service that fraudulently procured refunds from the IRS by illegally manipulating their clients’ tax returns. In addition to the prison sentences, the sisters were ordered to pay restitution to the IRS in the amount of $44,214

According to a Department of Justice press release, Miller and Lynwood operated A&L Tax Services in Georgia and helped taxpayers receive refunds that they weren’t entitled by inflating expenses and credits, such as the first-time homebuyer’s credit. In May of 2008, the IRS caught on to the sisters and revoked their eFIN, the ability to electronically file tax returns on behalf of clients. In response, Miller and Lynwood directed a friend to apply for, and receive a different eFIN. Further, the sisters established another tax preparation entity called B&F Tax Services and opened up a bank account in the name of their friend who had acquired the eFIN so their fraudulent tax preparation could continue.

In The End, Accuracy Is The Taxpayer’s Responsibility

It is vital that taxpayers understand what happens when their tax preparer makes a mistake on their taxes. Whether the actions by the preparer are an accident, or willful like the situation here, the taxpayer is nonetheless responsible for the underlying tax. The reason for this treatment is simple: taxpayers shouldn’t be able to turn a blind eye to potential tax fraud and reap the rewards of it at the same time. Although the clients of Miller and Lynwood may not have known that their taxes were not in honest hands, they were able to benefit from it.

All of this is not to say that there are no remedies for taxpayers that have been duped. In a lawsuit for malpractice, a taxpayer can recover for penalties and interest that came about because of the failure to accurately file a tax return.  Furthermore, tax professionals who frequently prepare returns ought to know that there are various methods to protect yourself when taking an uncertain tax position. Tax preparation fraud is not something to balk at, as the IRS will stop at nothing to make sure that those entrusted with preparing the taxes of the millions are not themselves committing tax crimes.

Contact an Experienced Tax Attorney Today

When reviewing the information above, one thing is clear: whether you are a taxpayer who relies on professional advice or you are a tax preparer who gives it, if the IRS begins to question the validity of either you or your client’s tax returns, the advice of an experienced tax attorney should be sought immediately. A simple audit of a tax return has the ability of quickly transforming into a criminal investigation, a scenario that is both scary and expensive.

The tax and accounting professionals at the Tax Law Offices of David W. Klasing have years of experience representing both taxpayers and tax preparers who are under examination or investigation by the IRS. Our experienced attorneys have also represented clients in civil and potential criminal tax litigation. If the IRS comes knocking, don’t answer the door without the zealous representation by a group of competent and highly experienced tax professionals. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.

American Expats: The June 15 FATCA & Foreign Tax Filing Deadline Has Passed, June 30 FBAR Deadline is Approaching

American Expats: The June 15 FATCA & Foreign Tax Filing Deadline Has Passed, June 30 FBAR Deadline is Approaching

| Jun 17 | FBAR Compliance and Disclosure | No Comments
us expats tax attorney los angeles

As most Americans are aware the standard tax filing deadline for citizens, legal permanent residents, and others living in the United States and with sufficient connections must file and pay their taxes by April 15 each year. However for American expatriates and other U.S. taxpayers living abroad, your filing deadline was not for another two months – June 15, 2015, to be precise. Furthermore, the June 30 FBAR deadline for filing is quickly approaching. If you have already filed taxes making sure to disclose all sources of income and all foreign accounts where a FATCA or FBAR disclosure was necessary, you should be compliant. But, if you have failed to file taxes or you suspect that you may have made incomplete disclosures, you may face a tax audit and a civil or criminal tax investigation.

U.S. Taxpayers living Abroad Must File by June 15 or Request an Extension

U.S. taxpayers who are living outside of the U.S. and Puerto Rico and with a “main place of business or post of duty” outside of these areas or those serving active military duty are automatically qualified for an automatic extension of the their tax filing deadline. While the new deadline was June 15, that date has also passed. Taxpayers who were cognizant of this date were eligible to file IRS Form 4868 for an additional four month extension to October 2015, but this extension is no longer available. Furthermore, even if one filed for the four month extension of time to file, such an extension does not extend the time to pay.

Both the failure to file taxes and the failure to pay taxes can be punished separately. Furthermore, because even a single day in a month is considered to be a full month by the IRS, fines and penalties can accrue rapidly. If your failure to file also includes a FATCA account disclosure failure, your tax situation can become fraught with significantly more danger.

Under the terms of FATCA and the more than 110 international agreements intended to encourage compliance, American taxpayers must disclose the existence of foreign assets and foreign accounts if the balance or aggregate account balances exceeds certain reporting thresholds. The thresholds are computed on the basis of the taxpayer’s filing status and whether they live within the U.S. or in a foreign nation. In general, married taxpayers filing jointly from a foreign country can hold the most income or assets before they must disclose it. By contrast, taxpayers filing individually and living within the United States may hold the least amount of assets before they must disclose. An experienced tax professional can help you identify applicable reporting thresholds, value your foreign assets, and maintain reporting compliance.

FBAR Reporting Deadline is Approaching

FBAR or Report of Foreign Bank & Financial Accounts is a yearly filing obligation for all U.S. taxpayers. Unlike FATCA which considers the taxpayer’s status in computing disclosure thresholds, FBAR imposes a $10,000 reporting threshold for all taxpayers. That is, if you hold covered foreign accounts or foreign assets where the balance or aggregate balance of these accounts exceeds $10,000 you must file FBAR. FBAR can only be filed online via FinCEN Form 114. For each tax year where there is an obligation to file, the FBAR must be filed by June 30. The failure to file by this deadline can open the taxpayer up to the possibility of severe tax consequences. If the IRS agent believes that the failure to file was merely an accident or an oversight, a $10,000 penalty can be imposed for each year where the account went unreported. If the agent believes the failure to disclosure was intentional or voluntary, however, the penalty becomes significantly more severe. Penalties for a willful FBAR violation includes the greater of a fine of $100,000 or 50% of the original account balance. Because penalties can be imposed for multiple tax years, the fine can quickly exceed the original account balance.

Rely on Our Tax Experience for Expats

Meet the June 30 FBAR deadline, and reduce your exposure to penalties, interest and even criminal tax evasion risk.  The Tax Law Offices of David W. Klasing is comprised of experienced attorneys and CPAs. Our tax professionals are dedicated to working to mitigate the consequences of tax mistakes, tax filing errors, and FBAR and FATCA disclosure issues that taxpayers can experience. To schedule a reduced-rate tax consultation for expat tax issues, call us at 800-805-9718 today or contact us online.

LA FBAR and IRS Tax Attorney Provides Straight Answers on Foreign Bank Account and FATCA Developments

LA FBAR and IRS Tax Attorney Provides Straight Answers on Foreign Bank Account and FATCA Developments

| Jun 16 | FBAR Compliance and Disclosure | No Comments
best attorney for US expatriates FBAR

With the 2014 tax year FBAR reporting deadline of June 30 quickly approaching, it is important to contemplate the rapid developments of recent months relating to US taxpayers with offshore bank accounts and investments.  Swiss banks have disclosed volumes of detailed records about “secret” numbered accounts of US and Los Angeles taxpayers to the IRS.   Offshore banks and sovereign tax authorities in almost 100 foreign nations including Russia, China and the Swiss have agreed to comply with the US Foreign Account Tax Compliance Act (FATCA).  What does this mean for LA area residents who have offshore bank accounts, investments and assets?

The harshest news is simply this: There are a lot fewer secrets in the world, and the IRS knows more about you financially than you ever thought possible.

You have probably received a letter from your offshore bank requesting US taxpayer identification and information, which will be provided directly to the IRS along with all of your account information and investment activities.  Errors, omissions and attempts to secret offshore money and income from IRS tax reporting and associated Foreign Bank Account Reports (FBARs) can now be challenged directly by the IRS, and they will not need help from you in order to prove the pattern of behavior.  The risks for LA FBAR taxpayers associated with hiding offshore money and assets include draconian fines and penalties as well as criminal tax evasion prosecution resulting in a jail term.

What Should an LA Resident with Offshore Bank Accounts or Assets Do?

Contact our office to schedule an appointment, or call (800) 805-9718 to begin a conversation about your risks, exposure, as well as your present and future strategies.  My name is David Klasing, and as a seasoned tax attorney and Certified Public Accountant with over 20 years of professional tax, auditing, accounting and business consulting experience, I am uniquely experienced and positioned to provide accurate insight into your circumstances.  My office provides a single source where you can obtain legal protection, expert tax advice, and the accounting services necessary to come into FBAR compliance.  Reduce your financial and legal exposure.  We provide direct and substantive answers to the questions that keep you awake at night.

 

 

Former Pennsylvania Executive Sentenced To Over Two Years In Prison For Fraud, Tax Evasion

Former Pennsylvania Executive Sentenced To Over Two Years In Prison For Fraud, Tax Evasion

| Jun 15 | Criminal Tax Representation | No Comments
LA criminal tax lawyer

Pennsylvania-based Thayer Power and Communications has historically provided services that ranged from planning, engineering, and implementing power and communication lines but it is unlikely that the corporation’s top brass could have ever imagined that one of their very own would engineer a plan of his own to steal money from the company.

Former Thayer Power and Communications CFO Brian M. Quimby was sentenced last week to serve over two years in a federal prison. The sentence came after Quimby pled guilty in 2014 to charges that involved fraud while working for Thayer as well as his failing to file a 2007 tax return and subsequently lying to the IRS about it. The fraudulent activity conducted by Mr. Quimby involved check kiting, a practice that involves writing one or a series of checks that are drawn on an account that has insufficient funds in order to inflate the value of another checking account. Kiting takes advantage of the “float”, a term used to describe the time between a check being issued and the money actually being transferred out of the account on which the check was drawn upon. If executed as the practice has been engineered, an accountholder is able to temporarily duplicate money in the banking system. According the court documents, Quimby not only defrauded Thayer, but his activity also siphoned money from Key Bank.

In addition to the check kiting activity, Quimby also pled guilty to tax evasion charges that related to his intentional failure to file income taxes for the 2007 tax year. In addition to not filing his taxes, he was alleged to have lied to the IRS during their investigation, stating that he had filed his tax returns and that they must have been lost in transit or processing.

Geography Can’t Save You From the IRS

Even though Mr. Quimby moved to Florida after the alleged activity, the relocation didn’t slow down the criminal investigation and eventual charges that he would eventually face. Senior United States District Judge Maurice B. Cohill handed down Quimby’s sentence last Thursday and said that the defendant’s false statements that were made to the IRS during their investigation particularly troubled him. Quimby will serve 27 months in federal prison and will also be required to pay restitution to Key Bank and Thayer Power and Communications in the amount of $202,789 and to the IRS in the amount of $87,840.

Even though Quimby probably doesn’t feel like his 27-month sentence is a gift, the potential sentence could have been much worse. Even though Quimby was only charged with two counts, the possible sentence that could be imposed by law was 35 years in a federal prison. The reality of harsh sentences for tax and other financial crimes evidences a great need for taxpayers to retain an experienced tax attorney at the first sign of trouble with the IRS or any other governmental agency that investigates tax or financial crimes.

The Importance of an Experienced Tax Attorney

IRS auditors and investigators are like trained bloodhounds and will pounce whenever they have the slightest inkling that something doesn’t seem right. Although taxpayers often feel that they can talk their way out of an audit or an investigation, one wrong statement can change the entire dynamic of an investigation and may even prompt the attention of the IRS Criminal Investigation Division or the Department of Justice the become involved.

The tax and accounting professionals at the Tax Law Offices of David W. Klasing are committed to maintaining your physical and financial freedom. We have years of comprehensive experience representing taxpayers who are facing an audit, investigation, and even civil or criminal litigation. Don’t go into a battle with the federal government alone. Let the Tax Law Offices of David W. Klasing zealously advocate for your interests. Contact the Tax Law Offices of David W. Klasing today or call (800) 805-9718 for a reduced-rate consultation.

LA Taxpayers with Foreign Bank Accounts and Investments Face Steep Penalties

LA Taxpayers with Foreign Bank Accounts and Investments Face Steep Penalties

| Jun 15 | FBAR Compliance and Disclosure | No Comments

The US Foreign Account Tax Compliance Act (FATCA) has brought substantial risk and criminal tax exposure to LA taxpayers with foreign bank accounts, investments or assets.  Most account holders have received letters from their offshore banks asking for detailed tax identification, and in some cases recommending participation in the IRS Offshore Voluntary Disclosure Program (OVDP) or even the streamlined program option.

There are two clear messages for US taxpayers with foreign accounts, investments and assets:

  • You should not take tax or legal advice from an offshore bank, and
  • The threat of FBAR related penalties, interest and criminal tax evasion charges is genuine and powerful

 

The US Department of Justice (DOJ) and the IRS have established the perfect cross-reporting strategy pitting US taxpayers against the very offshore institutions that have helped to shelter their money and income for the past several years.  US taxpayers in Los Angeles are required to complete the Foreign Bank Account Report or FBAR (FinCEN Report 114) by June 30, presenting the IRS with detailed information on their accounts abroad.  The DOJ can use this information against the offshore financial institution to force them to agree to resolution under the Department’s Swiss Bank Program or FATCA initiatives.

Foreign banks, financial institutions and sovereign tax authorities in almost 100 nations have agreed to provide the IRS with detailed information on specific individual US taxpayers, detailing their accounts, balances, activities and other information that the IRS can use to pursue those taxpayers for FBAR violations and in many cases criminal tax evasion.

If you live in the Los Angeles metropolitan area we invite you to contact our office or call (800) 805-9718 to discuss your unique circumstances with an experienced, seasoned LA FBAR and Tax attorney. Learn about the actions you are required to take, the genuine risks you face, and the strategies that will protect your interests from this point forward.  Ask about the protections of the “attorney-client privilege” and how this legal defense can help to further protect your information from the IRS.

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