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Archive for Jason Freeman

Tax Court Denies Award In Recent Whistleblower Tax Case

Tax Court Denies Award In Recent Whistleblower Tax Case

Kennedy v. Comm’r, T.C. Memo. 2021-3 | January 12, 2021 | Copeland, E. | Dkt. No. 5687-17W

Short Summary:  Petitioner appealed, pursuant to § 7623(b)(4), three determinations of the Whistleblower Office (WBO) of the Internal Revenue Service (IRS) that declined to make awards to him.  Petitioner filed a single whistleblower claim, but the WBO split it into three distinct claims. Petitioner’s whistleblower claim alleged that three taxpayers and related subsidiaries owed $150,103,245 in unpaid excise taxes, penalties, and interest. The IRS processed the claims, and it took no action against two of the taxpayers, and no change resulted from the examination of the third taxpayer.  Petitioner challenged the WBO’s determinations. The Tax Court held that the WBO did not abuse its discretion in declining any awards to Petitioner.

Key Issue:  Whether the WBO abused its discretion in declining to award the Petitioner any amount under his whistleblower claims when it took no action against two taxpayers and issued no changes after the examination of the third taxpayer.

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The Tax Court in Brief: Tax Court Opinions And Decisions

The Tax Court in Brief: Tax Court Opinions And Decisions

The Week of January 11 – January 15, 2021

Kenneedy v. Comm’r, T.C. Memo. 2021-3 | January 12, 2021 | Copeland, E. | Dkt. No. 5687-17W

Short Summary:  Petitioner appealed, pursuant to § 7623(b)(4), three determinations of the Whistleblower Office (WBO) of the Internal Revenue Service (IRS) that declined to make awards to him.  Petitioner filed a single whistleblower claim, but the WBO split it into three distinct claims. Petitioner’s whistleblower claim alleged that three taxpayers and related subsidiaries owed $150,103,245 in unpaid excise taxes, penalties, and interest. The IRS processed the claims, and it took no action against two of the taxpayers, and no change resulted from the examination of the third taxpayer.  Petitioner challenged the WBO’s determinations. The Tax Court held that the WBO did not abuse its discretion in declining any awards to Petitioner.

Key Issue:  Whether the WBO abused its discretion in declining to award the Petitioner any amount under his whistleblower claims when it took no action against two taxpayers and issued no changes after the examination of the third taxpayer.

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Tax Treaties: United States And Greece

Tax Treaties: United States And Greece

Quick Summary. Greece (Ελλάδα, Hellada or Hellas)sits on the Mediterranean Sea in Southeastern Europe.   Officially the Hellenic Republic (Ελληνική Δημοκρατία, Elliniki Dimokratia), Greece’s government is a parliamentary republic.  Its structure is set forth in the Constitution of Greece, its fundamental charter, which was adopted by the Fifth Revisional Assembly in 1975 and last amended by the Greek Parliament in 2008.

In 2019, Greece implemented several amendments to its Income Tax Code, including a corporate income tax rate reduction, reduced dividend withholding tax rates, and a participation exemption for certain capital gains.  The amendments also reduced bracketed rates for individuals and certain exemptions for non-residents from income, inheritance, and gift taxes.
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Tax Treaties: United States And Netherlands

Tax Treaties: United States And Netherlands

Quick Summary:  The Netherlands is comprised of 12 provinces with a capital at Amsterdam.  Following the dissolution of The Netherlands Antilles in 2010, the Caribbean Netherlands officially became part of The Netherlands. The Netherlands is a member of the North Atlantic Treaty Organization (NATO) and the European Union (EU).

Its corporate tax system provides for a full participation exemption on certain participations and several preferential tax regimes, including with respect to certain income derived from intellectual property.  The Netherlands introduced a special tax regime to encourage research and development, known as an innovation box, providing corporate income tax credits for certain profits derived from preferential innovations.

The Netherlands has a general anti-abuse rule (GAAR) under its longstanding fraus legis doctrine.  In 2019, the European Union Anti-Tax Avoidance Directive (EU ATAD 1) entered into effect in The Netherlands.  As part of its implementation, The Netherlands adopted a controlled foreign corporation (CFC) regime, as well as earnings stripping rules.  Effective in 2020, the Netherlands also adopted EU directive ‘ATAD II’, providing for hybrid mismatch rules. Read more

IRS Cryptocurrency Memorandum: Surprise, Surprise, It’s Still Taxable

IRS Cryptocurrency Memorandum: Surprise, Surprise, It’s Still Taxable

As tax time approaches for many, taxpayers and tax professionals alike are engaging in the annual ritual of gathering their cryptocurrency transactions and seeking out the latest and greatest guidance from the IRS on the subject.  As luck would have it, the IRS recently released an internal memorandum fleshing out its stance on the taxation of virtual currency received in exchange for providing services.  The memorandum describes the taxation of virtual currency received in the “crowdsourcing labor market”—for example, for performing microtasks or other projects—but its principles are applicable much more broadly.

The IRS memorandum was quietly made public on August 28.  It is a reminder that the IRS continues to receive requests for additional cryptocurrency tax guidance.  In the memorandum, the IRS lays out its view that convertible virtual currency is “property” for federal tax purposes, and that its receipt in exchange for performing services gives rise to gross income.  But let’s look a little deeper at the IRS’s reasoning.  For starters, the IRS memorandum poses the following question:

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Tax Treaties: United States And Italy

Tax Treaties: United States And Italy

Quick Summary.  Located on Southern Europe and bordering the Mediterranean Sea, Italy is a parliamentary republic with 20 administrative regions and a capital at Rome.

In 2020, Italy introduced a new digital service tax.  In addition, other recent measures include replacement of its hyper and super tax depreciation regimes with a tax credit regime, a corporate equity deduction, and certain step-up provisions for business assets.

Italian corporations are subject to a corporate income tax (imposta sul reddito sulle società) and a regional production tax (mposta regionale sulle attività produttive).  Individuals are subject to income tax (mposta sui redditi delle personne fisiche).

Italy is a member of the European Economic Community (EEC) and North Atlantic Treaty Organization (NATO), the United Nations (UN), World Trade Organization (WTO), and Organisation for Economic Co-operation and Development (OECD).

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Tax Treaties: United States And Switzerland

Tax Treaties: United States And Switzerland

Quick Summary.  Situated between the Alps and the Jura mountains in Central Europe, Switzerland is a federation comprised of 26 sovereign cantons. Income tax is imposed at both the federal and cantonal levels. In addition, Switzerland’s 2,600 municipalities are generally empowered to levy their own taxes. The federation’s ability to impose taxes is limited by the Federal Constitution.

A federal republic, Switzerland has a bicameral legislature (the Federal Assembly) with two chambers: the National Council and the Council of States.  Executive power is vested in the Federal Council, and the Federal Supreme Court of Switzerland oversees the judicial branch.

Sources of tax law include the following: Direct Federal Tax Law (DBG), Tax Harmonization Law (StHG), Withholding Tax Law (VStG), Stamp Tax Law (StG), and VAT Law (MWSTG).

Switzerland is a signatory to the OECD’s Multilateral Competent Authority Agreement on the Exchange of Country-by-country Reports, as well as the OECD’s Multilateral Instrument (MLI).

Effective in 2020, Switzerland enacted the Federal Act on Tax Reform and AHV Financing (TRAF).  The TRAF provides for several notable tax reforms, including a patent box, expansion of research and development (R&D) deductions, capital contribution reserve restrictions, and the removal of certain tax privileges.

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Tax Treaties: United States And France

Tax Treaties: United States And France

Quick Summary.  Located in Western Europe, France borders Belgium, Luxembourg, Germany, Switzerland, Monaco, Italy, Andorra and Spain.  France has a unitary semi-presidential republic and is comprised of 18 integral regions with a capital at Paris.

The Constitution of the Fifth Republic, approved in 1958, provides for a bicameral legislature comprised of the National Assembly (Assemblée nationale) and a Senate.  The executive branch is lead by a president, who is head of state, and an appointed prime minster.

France is characterized by a civil legal system based primarily upon written, codified statutes.

Effective 2019, France provides for a tax on certain digital services.

Also effective in 2019, France has moved towards a withholding tax regime based on a pay-as-you-earn (PAYE) system.  The Finance Act Bill for 2019 also moves the taxation of non-residents towards the taxation of residents by eliminating certain withholding provision and implementing the PAYE system.

France is a member of the European Union (EU), the G7, G20, Organisation for Economic Co-operation and Development (OECD), and the World Trade Organization (WTO).

Treaty.

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Tax Treaties: United States And Iceland

Tax Treaties: United States And Iceland

Quick Summary.  Iceland is an independent parliamentary republic governed by a president and parliament.  Its national parliament, the Althingi, is the oldest national assembly in the world–giving Iceland claim to the world’s oldest assembly democracy.

Resident corporation are taxed on worldwide income.  Corporate income tax rates vary depending on whether the entity is a limited liability company, limited partnership company, or other legal entity.

Recent amendments to the Icelandic Income Tax Act no. 90/2003 provide for thin capitalization rules.

Resident individuals are taxed on worldwide income, while non-resident individuals are taxed on certain Icelandic-sourced income.

Treaty.

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Tax Treaties: United States And Russia

Tax Treaties: United States And Russia

Quick Summary.  Geographically the largest country in the world and spanning across Eastern Europe and Northern Asia, Russia is a semi-presidential republic with a civil law system.  Russia’s Tax Code imposes three levels of taxation: federal, regional, and local.

Russia’s constitution was adopted in 1993 and provide for eighty five federal subjects, including oblasts, krays, republics, autonomous okrugs and oblasts, and federal cities of Moscow and Saint Petersburg.

Russia has a bicameral Federal Assembly or Federalnoye Sobraniye comprises of the Federation Council or Sovet Federatsii.  Its judicial system is comprised of the Supreme Court of the Russian Federation; Constitutional Court, and subordinate courts including the Higher Arbitration Court; regional (kray) and provincial (oblast) courts; Moscow and St. Petersburg city courts; autonomous province and district courts.

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Tax Treaties: United States And Japan

Tax Treaties: United States And Japan

Quick Summary.  An island country comprised of an archipelago of nearly 7,000 islands comprising the Pacific Ring of Fire, Japan is located in the northwest Pacific Ocean off of East Asia.

Japan is a constitutional monarchy.  Its 1947 Constitution provides for a Prime Minister and a bicameral legislative organ (the National Diet) consisting of a House of Representatives and House of Councillors.  The Japanese legal system is historically influenced by Chinese law, although since the late 19th century, its judicial system has been largely based upon civil law precepts.  The primary body of statutory law is known as the Six Codes.

Japan is comprised of 47 prefectures and eight regions.  Each prefecture is overseen by a governor.

Japan is a member of the United Nations (UN), OECD, and G7.

Treaty.

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Settling Conservation Easement Penalties: The IRS And Some New Insights

Settling Conservation Easement Penalties: The IRS And Some New Insights

The Internal Revenue Service has yet again publicly reiterated its commitment to challenge syndicated conservation easement transactions—transactions that it has, in recent years, labeled as “listed” transactions, tax-speak for “buyer beware.”  In a recent press release, the IRS warned yet again that it believes that these easement deductions are “abusive transactions” and hinted that taxpayers can expect to face “new arguments” from its arsenal of legal theories.  To add insult to injury, the IRS further cautioned that its newly-established “Office of Fraud Enforcement and the National Fraud Counsel are coordinating . . . to canvas cases for additional fraud considerations,” including civil fraud penalties and referrals to criminal investigation.  The stakes, in other words, remain high for participants in syndicated conservation easement transactions.

What are Conservation Easement Transactions? 

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