Sunday, March 25, 2018

The Alter Ego Doctrine IRS ENFORCEMENT & YOU


The doctrine by which a court of law holds individual shareholders liable for a corporation’s debts if the corporation is deemed to be nothing more than an “alter ego” of the corporation’s owners.

"In a nutshell, the nominee and alter ego theory holds that when a taxpayer retains the benefit, use, or control of transferred assets, the IRS can legally seize those assets – and quite literally, put the financial boots to you!” says David Selig of Selig and Associates.


FYI Fraud is not a necessary element for the application of the alter ego doctrine. Ragan v. Ragan v. Tri-County Excavating, Inc., 62 F.3d at 508 (Under Pennsylvania law, “no finding of fraud or illegality is required before the corporate veil may be pierced, but rather the corporate entity may be disregarded ‘whenever it is necessary to avoid injustice.’”) (citations omitted) (non-tax case); DeWitt Truck Brokers, Inc. v. W. Ray Flemming Fruit Co., 540 F.2d 681, 684 (4th Cir. 1976) (non-tax case) (“[P]roof of plain fraud is not a necessary element in a finding to disregard the corporate entity.”) (citing, among other cases, Anderson v. Abbott, 321 U.S. 349, 362 (1944); National Marine Service, Inc. v. C.J. Thibodeaux & Co., 501 F.2d 940, 942 (5th Cir. 1974)). The Eighth Circuit in Scherping, supra, also noted that “proof of strict common law fraud was not required” to apply the reverse piercing branch of the alter ego doctrine, and affirmed the district court’s holding that the trusts were “sham entities created on behalf of and used by the taxpayers to evade payment of their federal income tax liabilities.” 187 F.3d at 802 (citations omitted).

Courts that have been called upon to apply the alter ego doctrine in tax cases use objective factors in determining whether an alter ego relationship exists. See, e.g., Century Hotels v. United States, 952 F.2d 107, 110 n.5 (5th Cir. 1992) (listing numerous objective factors to be considered in alter ego case, including: (1) whether taxpayer expended personal funds for property titled in the name of the entity; (2) whether taxpayer enjoyed the benefit and use of the property; (3) whether a close family relationship existed between taxpayer and title holder of property; (4) whether taxpayer exercised dominion and control over the property; (5) whether the entity maintained its own books and records, including bank accounts; (6) whether funds are transferred between taxpayer and the entity showing commingling of assets; and (7) whether the entity has its own separate existence and identity); Horton Dairy, Inc. v. United States, 986 F.2d 286, 289 (8th Cir. 1993); Loving Saviour Church v. United States, 728 F.2d at 1086 (church was alter ego of taxpayers where taxpayers treated church assets as their own in that their residence, business and farmland comprised church property; insurance was in taxpayer’s name; taxpayer was the minister and trustee and was in control of the church; church funds used to pay personal expenses of taxpayer; close family relationship between church officers and taxpayer; taxpayers transferred property to church for little or no consideration; taxpayers supported by church funds); F.P.P. Enters. v. United States, 830 F.2d at 118 (listing objective factors); Zahra Spiritual Trust v. United States, 910 F.2d at 245; Lemaster v. United States, 891 F.2d 115, 117-119 (6th Cir. 1989); Grant Investment Fund v. IRS, 1993 WL 269617 (9th Cir. 1993); Towe Antique Ford Foundation v. IRS, 791 F. Supp. 1450, 1453 (D. Mont. 1992) (listing objective factors to be considered), aff’d, 999 F.2d 1387 (9th Cir. 1993).

The alter ego doctrine has been applied by numerous courts to a variety of relationships that exist between a taxpayer and a corporation, partnership, trust, proprietorship or individual. See, e.g., Ross Controls, Inc. v. United States, 164 B.R. 721 (successor corporations were alter egos of defunct corporate taxpayer); Today’s Child Learning Center, Inc. v. United States, 40 F. Supp.2d 268, 273-274 (E.D. Pa. 1998) (second corporation was alter ego of taxpayer); United States v. Scherping, 187 F.3d at 801-804 (trusts were alter egos for taxpayers); F.P.P. Enterprises v. United States, 830 F.2d 114, 116-117 (8th Cir. 1987) (trusts were alter egos of taxpayers where the residence was conveyed by the taxpayers to the trust and the taxpayers continued to treat the residence as their own by (1) continuing to live in the residence, and (2) paying the insurance, taxes and mortgage on the residence); United States v. Geissler, 1993 WL 625535 (D. Idaho 1993) (trust was nominee/alter ego of taxpayers where: (1) taxpayers, as trustees maintain an absolute position of trust; (2) taxpayers need not consult anyone else in making decisions for the trust; (3) there is no provision imposing a fiduciary responsibility on trustee; (4) there was no evidence of any consideration for transfer of property from taxpayers to trust; (5) and taxpayers continue to enjoy the benefits of the transferred property); United States v. Gerads, 1993 WL 114411 (D. Minn. 1993) (Trust was alter ego of taxpayers), aff’d, 999 F.2d 1255 (8th Cir. 1993), cert. denied, 510 U.S. 1193 (1994)); Loving Saviour Church v. the United States, 556 F. Supp. at 691-692 (D. S.D.), aff’d, 728 F.2d 1085 (8th Cir.) (unincorporated association, Church, was alter ego of taxpayers); Grant Investment Fund v. IRS, 1 F.3d 1246 (Table), 1993 WL 269617 (9th Cir. 1993) (partnership was an alter ego of taxpayer where: (1) taxpayer manages entity and has complete control over it; (2) taxpayer uses his own assets and partnership assets interchangeably to pay debts; (3) investors in partnership are related to or controlled by taxpayer; (4) partnership made loans to taxpayer, such loans were approved by taxpayer as manager of partnership and taxpayer did not repay the loans; and (5) taxpayer used partnership to discharge personal obligations and for personal gain); Lemaster v. United States, 891 F.2d 115, 117-119 (6th Cir. 1989) (son held to be the alter ego of the taxpayer-father where: taxpayer’s business ceased; a new business was started in the name of taxpayer’s son; new business acquired assets of defunct business; new business was conducted in son’s name, but taxpayer was given power of attorney and controlled the new business).

Furthermore, if the alter ego or a nominee relationship otherwise exists between a taxpayer and another party or entity, the timing of when the tax liabilities arose is legally irrelevant. Stated differently, the timing of the creation of the trust or entity that is found to be an alter ego or nominee has no legal significance. See G.M. Leasing Corp. v. The United States, 429 U.S. at 350-351 (property of taxpayer’s nominee or alter ego is subject to tax lien and levy); In re Richards, 231 B.R. at 578; United States v. Landsberger, 1997 WL 792506 at * 5 (D. Ariz. 1997) (timing of creation of trust has “no import” if it is being used to avoid creditors) (citing G.M. Leasing, supra; F.P.P. Enters. v. United States, 830 F.2d at 118), aff’d, 172 F.3d 60 (9th Cir. 1999); accord United States v. Williams, 581 F. Supp. 756 (N.D. Ga.) (taxpayer’s nominee (his mother) took a title in real property before tax liabilities arose; however because the taxpayer was the true owner of the property, tax lien (which arose after the property was purchased) attached and could be foreclosed on taxpayer’s interest therein); cf. Keefer v. Commissioner, 1993 WL 221066 (Tax Ct. 1993) (trust was a sham even though tax liabilities arose after the creation of trust).


Selig & Associates predicts the IRS will increase it’s enforcement operations by 67.3% in 2018. David Selig says the Trump Administration has directed the IRS to revoke passports and seize real property. Attorney Bradley Dorin says one of the most serious infractions is unpaid payroll taxes. Selig says most taxpayers can avoid criminal charges by retaining qualified legal representation. 

Saturday, March 24, 2018

New York State Tax Debts, the Grateful Dead and not a word about Marijuana



The New York State Offer in Compromise Program is designed to help financially distressed taxpayers who face overwhelming tax liabilities. This includes any liability administered by the Tax Department. Taxpayers accepted into the program may pay a reasonable amount as a compromise, satisfying the debt in full. While we carefully review and consider every offer in compromise, we do not accept all offers. While reviewing an offer, we may continue efforts to collect the debt.
If the amount owed is more than $100,000 (not including interest and penalties), a New York State Supreme Court justice must approve the offer in compromise.
Who is eligible?
·       Individuals and businesses discharged from bankruptcy
·       Individuals and businesses that are insolvent (liabilities, including tax liabilities, exceed the fair market value of assets)
·       Individuals (not businesses) for whom paying the debt in full would cause undue economic hardship
To participate, taxpayers must have filed all required New York State tax returns.  The amount taxpayers propose as a compromise must be an amount the State realistically expects it could collect within a reasonable period of time. It is based on the total value of assets and the amount they could expect to collect from anticipated future income. Otherwise, the amount proposed must be justified by information the taxpayer submits.
What is undue economic hardship?
Generally, undue economic hardship means that an individual taxpayer is unable to pay reasonable basic living expenses, which are those providing for the health, welfare, and production of income for their family. We use Internal Revenue Service (IRS) standards to help determine your allowable basic living expenses.
The State considers other factors, including:
·       Age, employment status, and employment history
·       Inability to earn income because of long-term illness, medical condition, or disability
·       Obligations to dependents
·       Extraordinary circumstances, such as special educational expenses, medical catastrophe, or natural disaster
·       Inability to borrow against or liquidate assets due to hardship
Undue economic hardship does not include an inability to maintain an affluent or luxurious lifestyle.
What forms do taxpayers need?
Form DTF-4.1, Offer in Compromise (For Fixed and Final Liability), or Form DTF-4, Offer in Compromise (For Liabilities Not Fixed and Final and Subject to Administrative Review)
Form DTF-5, Statement of Financial Condition and Other Information, including copies of:
• The last three federal income tax returns
• A credit report less than 30 days old
• The last 12 months of statements from a bank or financial institution
Successful Civil and Criminal Tax Representation We practice before the Internal Revenue Service (“IRS”) the New York State Department of Taxation and Finance (“NYSDTF”) the Department of Justice Tax Division (“DOJ”) and the Defense Office of Hearings and Appeals (“DOHA”). *To schedule a FREE legally privileged consultation with a licensed Federal Tax Practitioner and Attorney call Selig & Associates directly (212) 974-3435 #New York City's Most Trusted Tax Advisors, #Successful Tax Attorney, #Honest Tax Accountant, #Tax Problems Solved,  #New York City's Most Trusted Tax Advisors, #Successful Tax Attorney, #Honest Tax Accountant, #Tax Problems Solved 
Proven Results We successfully resolve IRS & NYS tax problems including: Tax Crimes; Tax Evasion; Failure to File a Tax Return and Criminal Non-Filing; Filing False Tax Returns; Installment Agreements; Partial Payment Agreements; IRS Audits; Sales Tax Audits; Sales Tax Controversies; Wage Garnishments; Bank Levies; Seizure of Real Property; Innocent Spouse Relief; Trust Fund Recovery Penalty; Payroll Taxes; Workers Compensation Insurance Audits ("Workers Comp"); Statute of Limitations; Offer in Compromise ("OIC"); Administrative Appeals; Collection Due Process Hearings ("CDP") and most other tax matters. *To schedule a FREE legally privileged consultation with a licensed Federal Tax Practitioner and Attorney call Selig & Associates directly (212) 974-3435 #New York City's Most Trusted Tax Advisors, #Successful Tax Attorney, #Honest Tax Accountant, #Tax Problems Solved,  #New York City's Most Trusted Tax Advisors, #Successful Tax Attorney, #Honest Tax Accountant, #Tax Problems Solved

Guaranteed Service We meet with our clients personally and we return telephone calls promptly. We answer emails and we provide our clients with regular updates and status reports. *To schedule a FREE legally privileged consultation with a licensed Federal Tax Practitioner and Attorney call Selig & Associates directly (212) 974-3435

Friday, March 23, 2018

Only Love Can Break Your Heart - Death & Tax Evasion



A paralegal specialist for the FBI pleaded guilty today to embezzling nearly $160,000 in government funds, announced Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division and Special Agent in Charge James K. Cheng of the Department of Justice Office of the Inspector General’s Field Division.
Lynn M. Morris, 51, pleaded guilty to one count of embezzlement of government property.  Morris will be sentenced on June 4 before U.S. District Court Judge Larry Alan Burns of the Southern District. 
According to admissions made in connection with her guilty plea, between July 2014 and November 2016, Morris embezzled approximately $159,821.90 that belonged to the United States and converted the funds for her own personal use.  The funds were held in an account owned by the FBI Division’s Asset Forfeiture Unit (AFU).  From 2014 to 2016, Morris was a paralegal specialist and the designated coordinator for the AFU.  Morris admitted that to convert government funds to her own use, she used her knowledge and position within the FBI to withdraw cash from the AFU’s account and deposited portions of the stolen proceeds into her personal checking account.
The Department of Justice Office of the Inspector General investigated the case.  Trial Attorneys Marco A. Palmieri and Jessica C. Harvey of the Criminal Division’s Public Integrity Section are prosecuting the case.

SELIG & ASSOCIATES 

Successful Civil and Criminal Tax Representation We practice before the Internal Revenue Service (“IRS”) the New York State Department of Taxation and Finance (“NYSDTF”) the Department of Justice Tax Division (“DOJ”) and the Defense Office of Hearings and Appeals (“DOHA”). *To schedule a FREE legally privileged consultation with a licensed Federal Tax Practitioner and Attorney call Selig & Associates directly (212) 974-3435 
#New_York_City's_Most_Trusted_Tax_Advisors, #Successful_Tax_Attorn#Honest_Tax_Accountant, #TaxProblemsSolved,  #NewYorkCity'sMostTrustedTaxA#SuccessfulTaxAtto#HonestTaxAccountant, 

Proven Results We successfully resolve IRS & NYS tax problems including: Tax Crimes; Tax Evasion; Failure to File a Tax Return and Criminal Non-Filing; Filing False Tax Returns; Installment Agreements; Partial Payment Agreements; IRS Audits; Sales Tax Audits; Sales Tax Controversies; Wage Garnishments; Bank Levies; Seizure of Real Property; Innocent Spouse Relief; Trust Fund Recovery Penalty; Payroll Taxes; Workers Compensation Insurance Audits ("Workers Comp"); Statute of Limitations; Offer in Compromise ("OIC"); Administrative Appeals; Collection Due Process Hearings ("CDP") and most other tax matters. *To schedule a FREE legally privileged consultation with a licensed Federal Tax Practitioner and Attorney call Selig & Associates directly (212) 974-3435 
#New_York_City's_Most_Trusted_Tax_Advisors, #Successful_Tax_Attorney, #Honest_Tax_Accountant, #TaxProblemsSolved,  #NewYorkCity'sMostTrustedTaxAdvisors, #SuccessfulTaxAttorney, #HonestTaxAccountant, 


Guaranteed Service We meet with our clients personally and we return telephone calls promptly. We answer emails and we provide our clients with regular updates and status reports. *To schedule a FREE legally privileged consultation with a licensed Federal Tax Practitioner and Attorney call Selig & Associates directly (212) 974-3435

Wednesday, March 21, 2018

Dentist Sentenced to Prison for Tax Evasion: He should have hired SELIG & Associates



Failed to Pay More than $528,000 in Personal Income and Employment Taxes Bought Exotic Cars and Home

Another toothsome Dentist was sentenced to 12 months in prison for evading payment of taxes, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney Michael Dunavant for the Western District of Tennessee. 

According to documents and information provided to the court, Andrea M. Henry, 45, owned The Henry Polk Dental Group D.P.C. and The Smile Spa LLC, dental practices.  Henry filed personal income tax returns for 2005, 2006, 2008, and 2010 to 2013, but did not pay $113,781 in income and self-employment taxes due to the Internal Revenue Service (IRS).  Henry also failed to pay over the employment taxes withheld from her employees’ paychecks for numerous quarters between 2006 and 2015.  The IRS assessed over $160,000 in trust fund recovery penalties against Henry, making her personally liable for the unpaid employment taxes. 

Instead of paying the taxes owed, Henry spent hundreds of thousands of dollars on personal expenses, including private school tuition, expensive housing, and luxury cars.  After the IRS assessed penalties against her, Henry stopped using personal bank accounts and instead began using business accounts to pay for personal expenses.  In early 2011, prior to her home being foreclosed on, Henry transferred $130,000 to a nominee buyer, entered a sham lease arrangement with the nominee to create a false explanation as to the source of the funds in the nominee’s bank account, and caused the nominee to repurchase the home for her.  Henry later used that same nominee and other nominees to purchase and lease exotic cars, including a Dodge Viper and a Porsche Panamera.  Henry admitted to causing a tax loss of $528,882.07.  

In addition to the term of prison imposed, U.S. District Court Judge John T. Fowlkes, Jr. ordered Henry to serve three years of supervised release and to pay $653,116.78 in restitution to the IRS.

Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Dunavant commended special agents of IRS Criminal Investigation, who conducted the investigation, and Trial Attorney Robert J. Boudreau of the Tax Division and Assistant U.S. Attorney Damon Griffin of the Western District of Tennessee, who prosecuted the case.


Successful Civil and Criminal Tax Representation We practice before the Internal Revenue Service (“IRS”) the New York State Department of Taxation and Finance (“NYSDTF”) the Department of Justice Tax Division (“DOJ”) and the Defense Office of Hearings and Appeals (“DOHA”). *To schedule a FREE legally privileged consultation with a licensed Federal Tax Practitioner and Attorney call Selig & Associates directly (212) 974-3435 #New York City's Most Trusted Tax Advisors, #Successful Tax Attorney, #Honest Tax Accountant, #Tax Problems Solved,  #New York City's Most Trusted Tax Advisors, #Successful Tax Attorney, #Honest Tax Accountant, #Tax Problems Solved 
Proven Results We successfully resolve IRS & NYS tax problems including: Tax Crimes; Tax Evasion; Failure to File a Tax Return and Criminal Non-Filing; Filing False Tax Returns; Installment Agreements; Partial Payment Agreements; IRS Audits; Sales Tax Audits; Sales Tax Controversies; Wage Garnishments; Bank Levies; Seizure of Real Property; Innocent Spouse Relief; Trust Fund Recovery Penalty; Payroll Taxes; Workers Compensation Insurance Audits ("Workers Comp"); Statute of Limitations; Offer in Compromise ("OIC"); Administrative Appeals; Collection Due Process Hearings ("CDP") and most other tax matters. *To schedule a FREE legally privileged consultation with a licensed Federal Tax Practitioner and Attorney call Selig & Associates directly (212) 974-3435 #New York City's Most Trusted Tax Advisors, #Successful Tax Attorney, #Honest Tax Accountant, #Tax Problems Solved,  #New York City's Most Trusted Tax Advisors, #Successful Tax Attorney, #Honest Tax Accountant, #Tax Problems Solved
Guaranteed Service We meet with our clients personally and we return telephone calls promptly. We answer emails and we provide our clients with regular updates and status reports. *To schedule a FREE legally privileged consultation with a licensed Federal Tax Practitioner and Attorney call Selig & Associates directly (212) 974-3435



Queens Business Owner Admits Stealing Sales Tax (Collected from Customers)

He Pocketed Nearly $251,000 in Sales Taxes (he should have hired SELIG & Associates ) The New York State Department of Taxa...