Archive for Tax Controversy

German Church Tax Causes Controversy

There is currently a controversy in Germany in regard to the application of capital gains to the “church” tax that is levied on individuals who profess membership in certain churches in Germany.

The Bill of Rights was added to the United States Constitution in order to provide greater constitutional protection to certain individual liberties. These liberties include freedom of religion, a free press, the right to peaceful assembly, the right to bear arms, protection against unreasonable search and seizure, the right to avoid self-incrimination (taking the fifth), due process, protection against double jeopardy, the right to a jury trial, the right to counsel, and protection against cruel and unusual punishment. We have seen how some of these rights have been eroded over the years through changing attitudes, judicial Read More

Written by | Posted in Capital Gains • Europe, Middle East • Income Tax • Tax Controversy

United States Taxation of Foreign Electronic Commerce

Introduction

United State taxation of electronic commerce from offshore is to be approached from two perspectives, the United States tax regime from an international perspective and bi-lateral treaties. This writing addresses the first consideration, the tax regime. As stated in a previous segment, international sourced based taxation poses particularly difficult legal risks. (1)

One risk is the electronic commerce and taxation implications. Those issues grapple with electronic commerce and taxation implications when melded with the notion of jurisdiction. Cross-border taxation issues of the authority of a source and resident country Read More

Written by | Posted in International • Tax Controversy

Got’cha! Delinquent Taxes Owed to IRS, Now Owed Indefinitely? What About Tax Non-Compliant Expatriates?

It was recently reported in the press that the Social Security Administration was collecting old debts of many deceased persons by intercepting the tax refunds of their children. After much unwanted publicity, the Social Security Administration announced it would stop doing this with regard to debts that were over ten years old. What implications does this case raise for tax noncompliant expatriates?

The case of the Social Security Administration is quite alarming and raises serious concerns for persons with unpaid US tax liabilities. It is widely reported and recognized that there has been a vast increase in expatriations. I suspect that some expatriations will involve taxpayers who were not fully tax compliant and I foresee that this area is ripe for IRS audit and controversy. Read More

Written by | Posted in Audit • Expatriate • Income Tax • IRS • Tax Controversy

Alphabet Soup For Offers In Compromise (“OIC”)

I. Concept and Goals

a. Taxpayers who have few assets and little prospect of generating sufficient income to pay a tax liability in full may be allowed to strike a settlement for less than the full amount due to settle their case.

b. The IRS’s acceptance of an offer in compromise conclusively settles the liability, absent fraud or mistake.

c. What is the policy goal? To achieve collection of what is potentially collectible at the earliest possible time and at the least cost to the government while providing taxpayers with a fresh start toward future voluntary compliance. Read More

Written by | Posted in IRS • Tax Controversy

Has Uncle Sam Gone Mad? FATCA, BRS, AEOI And Other Strange Words Pouring Into South Africa

In South Africa, the South African Revenue Service (SARS the local equivalent of the IRS) has just issued a draft public notice for comment and it refers to strange new terminology, not always correctly understood by the non-American resident.

Most US expats and failed SA expats returning from the USA with a green card in the back pocket, are all facing being caught red handed. Yes, for many years SARS was not the best of gossip queen in the OECD. The cam the Krok case and SARS received some interesting info from the ATO. Not only did SARS wake up to the word FOUNDATION they also saw the benefit of acting in “cohort” with another tax authority.

Suddenly the effort to make FATCA happen for FFI’s in South Africa, became an interesting Read More

Written by | Posted in Africa • FATCA • Federal • Income Tax • International • IRS • OVDP • Tax Controversy • Tax Fraud/Evasion/Crimes • Tax Risk Management

Timely Filed Petition? Miami Tax Court

Miami Tax Court Report Back

Judge Ronald L. Buch – timely filed petition?

IRS filed a motion to dismiss for lack of jurisdiction. The USPS click and ship process was used by a representative of the taxpayer. She printed the label with payment from the USPS site at 11:48 pm. Petition had to be timely filed by 12 – 12 minutes later. IRS averred that it was impossible for her to print, stick and deliver the petition to the USPS in Jupiter, FL within 12 minutes as the petitioner’s address was about 20 minutes from the USPS. What IRS did not know, as testified, was that the petitioner had moved, and lived 3 minutes from the USPS. This evidence was led in court. So it was possible to timely mail Read More

Written by | Posted in Tax Controversy • Tax Risk Management • Tax Tips • Treasury Regulations

Home Sweet Home for International Tax Collection

I received a panicked call from a client recently, being detained at a major metropolitan airport. The client, a nonresident United States taxpayer, owed money to the IRS. Upon investigation, I learned who was responsible for detaining him: none other than the IRS. Under what authority? A two-year-old program designed to target nonresident delinquent taxpayers who travel to and from the United States.

New York tax practitioners can soon expect to receive similar calls. Dubbed the “contact program,” it has a clear objective: to improve tax administration and compliance among nonresident U.S. taxpayers. In what ways?

(1) By collecting delinquent taxes; Read More

Written by | Posted in International • IRS • Tax Controversy

Israel/South Africa Expatriates Face Costly New Tax Rules

In terms of the Right of Aliyah doctrine (the right of every Jew to immigrate to Israel) every Jew going to or intending to go to Israel will be granted an Oleh’s visa. Oleh, for my colleagues not dealing with Israeli law (plural: olim) means a Jew immigrating into Israel. The Oleh Visa is granted by mere expression of the interest to “relocate” to Israel as a qualifying Jew (albeit born outside Israel after 1950).

A person shall not be registered as a Jew by ethnic affiliation or religion and will be denied Oleh Visa, despite being a Jew as defend, inter alia because of political status / activity (i.e. is engaged in an activity directed against the Jewish people or which is likely to endanger public health or the security of the state of Israel) or secondly, where a notification (issued under the Law of Return 5710-1950 as amended by Law of Return Read More

Written by | Posted in Africa • Europe, Middle East • Expatriate • Gift Tax • Individual • International • OECD • Specialty Tax Incentives • Tax Controversy • Tax Fraud/Evasion/Crimes • Tax Policy • Tax Provision/Tax Reporting

Australian Taxation Office Plans To Outsource “Tax Audits” To Big 4 Accounting Firms

The Australian Financial Review’s Fleur Anderson reported today on an internal ATO memo to staff. The memo said “We are currently exploring a new initiative for undertaking assurance work through the External Compliance Assurance Process (ECAP) project…This approach will look at how we might use the capabilities of accounting professionals, who are registered company auditors, to conduct certain assurance reviews on our behalf.”

This is an interesting development, but the report does not indicate whether the ATO would engage and pay the external auditor, or that corporate taxpayers would be expected to do so as part of their tax risk mitigation processes.

If the ATO was to engage the corporation’s existing auditor, that would raise ethical Read More

Written by | Posted in Australia/Oceania • Corporate • Federal • International • Tax Controversy • Tax Policy • Tax Provision/Tax Reporting

IRS Extends Fast-Track Settlement to Smaller Businesses Nationwide

Formerly available only to large and midsize businesses and in a geographically limited pilot program for smaller entities, the IRS’s Fast Track Settlement program is now available to smaller businesses nationwide, the IRS announced Wednesday, November 6.

Fast-track settlement allows the IRS and business or self-employed taxpayers under examination to use alternative dispute resolution procedures to resolve tax controversies more quickly, without a formal administrative appeal or litigation. The program began on a pilot basis in 2001 for businesses over which the IRS’s Large and Mid-Size Business Division (LMSB, now the Large Business and International Division) had jurisdiction—those with more than $10 million in assets. Read More

Written by | Posted in North America • Tax Controversy

Section 167 – The Australian Tax Office’s Weapon of Mass Reconstruction

TaxConnections Blogger The case of Mulherin v Commissioner of Taxation [2013] FCAFC 115 decided by the Full Federal Court last week confirms that section 167 of the Income Tax Assessment Act 1936 is a weapon of mass reconstruction in the hands of the Australian Taxation Office (“the ATO”).

Mr Mulherin was born in Australia but spent some years developing his professional activities overseas. Following his return to Australia early in the 1990s he caused a Leichtenstein Foundation to be established. He was effectively both the founder and principal beneficiary of this structure.

The ATO became aware of the existence of the Foundation and of Mr Mulherin via information provided to it by a former employee of LGT Bank in Leichtenstein (who had stolen client records of a subsidiary of the bank).

It transpired that the central management and control of the Foundation was at all relevant times in Australia. The ATO sought to treat the income of the Foundation as having been derived by Mr Mulherin as a resident of Australia. Read More

Written by | Posted in Australia/Oceania • Individual • International • Tax Controversy • Tax Risk Management

South African Emigre’s Offshore Tax Plan Falls Foul of Australian Tax Office’s Aggressive Audit Approach

TaxConnections Picture - South African MoneyThe Australian Tax Office (“ATO”) appears to be aggressively opposing a South African emigre’s appeal against his A$21 million income tax assessments. The case of Mark Krok v Commissioner of Taxation NSD572/2013 is listed for a Directions Hearing on 7 November in Australia’s Federal Court.

A report by Susannah Moran in today’s Australian newspaper – see http://www.theaustralian.com.au/business/ato-sets-sights-on-s-african-millions/story-e6frg8zx-1226750019299 – says that “The ATO has accused Mr. Krok of tax evasion and fraud, claiming he understated his income and failed to declare capital gains made on share sales during the six years he lived in Australia.”

It is suggested that in a 5-day hiatus between leaving South Africa and arriving in Australia, Mr Krok distributed all the assets of a trust established by his father and entered into an arrangement involving a BVI company owned by a Liechtenstein Foundation.

This case will be closely watched by international tax planners and their clients, particularly since the ATO apparently sought and received relevant from the South African Revenue Service in the course of their audit investigation.

Written by | Posted in Africa • Australia/Oceania • Caribbean • Individual • International • Tax Controversy • Tax Risk Management
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