Thursday, March 28, 2019

Bank Leumi Admits to Assisting U.S. Taxpayers in Hiding Assets in Offshore Bank Accounts - better call SELIG & Associates



Israeli Bank Discloses more than 1,500 U.S. Account Holders and Enters into Deferred Prosecution Agreement with Justice Department A major Israeli international bank admitted that it conspired to aid and assist U.S. taxpayers to prepare and present false tax returns to the Internal Revenue Service (IRS) by hiding income and assets in offshore bank accounts in Israel and elsewhere around the world.  A deferred prosecution agreement between the Bank Leumi Group and the Department of Justice was filed today in the Central District of California that defers prosecution on a criminal information charging the bank with conspiracy to aid and assist in the preparation and presentation of false tax returns and other documents to the Internal Revenue Service.  This unprecedented agreement marks the first time an Israeli bank has admitted to such criminal conduct which spanned over a 10 year period and included an array of services and products designed to keep U.S. taxpayer accounts concealed at Bank Leumi Group’s locations in Israel, Switzerland, Luxembourg and the United States.The Bank Leumi Group’s parent company is Bank Leumi le-Israel, B.M.  Bank Leumi le-Israel is one of Israel’s largest banks, with subsidiaries in seven countries and more than 13,000 employees.  Other subsidiary banks entering into this deferred prosecution agreement include The Bank Leumi le-Israel Trust Company Ltd., the oldest and largest of all bank trust companies in Israel; Leumi Private Bank S.A., a Switzerland-based subsidiary; Bank Leumi (Luxembourg) S.A., a Luxembourg-based subsidiary; and Bank Leumi USA, a FDIC-insured, full-service commercial bank with offices in California, Florida, Illinois and New York. According to documents filed in the case, to account for their criminal conduct, Bank Leumi Group will pay the United States a total of $270 million. Of this total payment, $157 million represents a penalty for U.S. taxpayer accounts held at Leumi Private Bank in Switzerland.  This $157 million penalty is consistent with the department’s Swiss Bank Program, which permits certain Swiss Banks to avoid prosecution by making a full and complete disclosure of their U.S. taxpayer-held accounts and paying substantial penalties.  The agreement further provides that Bank Leumi Luxembourg and Leumi Private Bank will cease to provide banking and investment services for all accounts held or beneficially owned by U.S. taxpayers. “The Bank Leumi Group recognized that the writing is on the wall for offshore banking, and cooperating with the government’s investigation was the only way to proceed,” said Deputy Attorney General James M. Cole.  “This deferred prosecution agreement demonstrates both that the Justice Department will hold financial institutions accountable for their crimes, and that we will be fair in recognizing extraordinary cooperation.” According to the filed statement of facts, from at least 2000 until early 2011, the Bank Leumi Group took affirmative and extensive steps to assist U.S. clients in concealing their assets offshore, including:
  • surreptitiously sending private bankers from Israel and elsewhere around the world to the United States to meet secretly with U.S. clients at hotels, parks and coffee shops to discuss their offshore account activity;
  • assisting U.S. clients in using nominee corporate entities created in Belize and other foreign jurisdictions to hide their undeclared accounts by concealing the U.S. client as the true beneficial owner of the account;
  • using the Bank Leumi le-Israel Trust Company as a nominee account holder for U.S. clients with accounts in Israel to conceal the U.S. client as the true beneficial owner of the account;
  • maintaining U.S. clients’ undeclared offshore accounts under assumed names or numbered accounts to conceal the U.S. client as the true beneficial owner of the account;
  • providing hold mail services so that correspondence and other account information would not go directly to the U.S. client to make it more difficult to connect the client to the secret offshore account;
  • extending loans to U.S. clients from Bank Leumi USA that were collateralized by the assets in those clients’ offshore accounts, so that the clients could leverage their offshore assets to obtain and use capital in the United States while keeping their foreign accounts secret and undetected from the U.S. government; and
  • after the department’s investigation into UBS and other Swiss banks’ criminal conduct in aiding U.S. taxpayers to evade their taxes became public, the Bank Leumi Group opened and maintained accounts for U.S. taxpayers who left UBS and other Swiss banks due to the investigation in an effort to continue to avoid detection by the U.S. government.
“The Bank Leumi Group’s admission of guilt to knowingly conspiring to assist U.S. taxpayers in filing false income tax returns and other documents with the Internal Revenue Service (IRS) represents the Department of Justice’s next step in its worldwide efforts to hold banks and other financial institutions responsible for their criminal conduct,” said the Tax Division’s Acting Deputy Assistant Attorney General Larry J. Wszalek.  “Those institutions that have engaged, or continue to engage, in conduct similar to that of Bank Leumi Group are well advised that the Tax Division will continue to extend its global reach in enforcing this nation’s criminal tax laws.”
According to documents filed in the case, as part of its agreement with the department, the Bank Leumi Group provided the names of more than 1,500 of its U.S. account holders.  As part of the agreement, the Bank Leumi Group will continue to disclose information to the government regarding its cross-border business and provide testimony and information regarding other investigations. 
“There are many provisions of federal law that can benefit taxpayers, but maintaining secret offshore accounts to conceal assets is not a legal method of lowering one’s tax liability,” said Acting U.S. Attorney Stephanie Yonekura for the Central District of California.  “Any financial institution – no matter where it operates – will be held accountable if it helps U.S. residents dodge their tax responsibilities.  This agreement with Leumi Bank is the latest notice to American taxpayers who might flout the law that we can and will uncover your hidden assets.”
“Today’s deferred prosecution announcement against Leumi Bank is yet another historical event in the international tax arena,” said Commissioner John Koskinen of the IRS.  “IRS will not tolerate the use of offshore accounts to illegally escape paying taxes and we will continue to focus on this priority area.”
“This case shows that banks who promote the use of offshore tax schemes against the United States will be held accountable and face substantial fines and penalties,” said Chief Richard Weber of IRS-Criminal Investigation.  “This investigation involved untangling a complex web of financial transactions where Bank Leumi assisted U.S. taxpayers in concealing undeclared bank accounts.  As the premier financial investigators in the world, and the only law enforcement agency to investigate tax cases, our special agents will continue to investigate banks and individuals who violate the U.S. tax laws no matter where they reside.”
This case was prosecuted by Trial Attorneys Christopher S. Strauss, Ellen M. Quattrucci and Dennis R. Kihm for the Tax Division.  The Tax Division expressed gratitude to Assistant U.S. Attorney Sandra R. Brown and the U.S. Attorney’s Office for the Central District of California for their invaluable assistance in the investigation and prosecution of this case.  The case was investigated by IRS-Criminal Investigation.

Free Consultation 

We Solve Tax Problems. Call (212) 974-3435 or contact us online. Meet with an experienced Federal Tax Practitioner and Attorney in our conveniently located New York City office. 

Restaurants 

We Specialize in Unpaid Sales Taxes, installment agreements, audit representation and all Department of Labor issues. *Ask us about Debt Restructuring, including settling judgments, renegotiating bank loans and merchant cash advances. For immediate assistance call (212) 974-3435 or contact us online. 

Contractors 

We Specialize in Payroll and Withholding Taxes, installment agreements, audit representation and Workers Compensation insurance audits. To schedule a free consultation call (212) 974-3435 or contact us online. 

Businesses 

We Settle and Restructure Business Debts, including judgments and most insurance claims. To meet with us personally call (212) 974-3435 or contact us online. 

 Count On Us. Guaranteed. 
    Same day and emergency appointments available.
    We negotiate excellent re-payment plans with IRS and State.
    Missing tax returns prepared and filed in 48 hours, guaranteed. 

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Wednesday, March 27, 2019

Michael Avenatti and the IRS


Q. Are you in trouble with the IRS? 

A. You'd better call Selig & Associates today: (212) 974-3435
          

         *We can determine if you are in proper legal filing compliance by contacting the Internal Revenue Service and the New York State Department of Taxation and Finance directly. If you are not in filing compliance we will obtain Wage and Income transcripts from the IRS. With this information missing or corrected tax returns may be prepared. 

         *Please be advised that under federal law failure to file a tax return is a misdemeanor pursuant IRC §7203 and in more egregious cases willful failure may be elevated to a felony, IRC §7201. Additionally, under New York State Tax Law §1801(a)(1) willful failure to file a tax return may now be prosecuted as a felony. 


Michael Avenatti allegedly made this tax slip-up. How to avoid it

  • Avenatti, formerly a lawyer for adult film star Stormy Daniels, is facing federal wire fraud and bank fraud charges.
  • The attorney allegedly didn’t file tax returns for 2011, 2012 and 2013, and failed to make estimated tax payments in 2012 and 2013, the U.S. Attorney’s Office in Los Angeles said.
  • Taxpayers who fail to file an income tax return face a penalty of 5 percent of taxes owed for each month the return is late.

Tuesday, March 26, 2019

Mental Health Executive Sentenced to Prison for Failure to Pay Employment Taxes (don’t let this happen to you, call SELIG & Associates today)


A highly educated man was sentenced to 30 months in prison for failing to report and pay employment taxes, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney Robert J. Higdon Jr., for the Eastern District. According to court documents, from 2010 to 2013, Sainte Deon Robinson failed to pay over federal income, Social Security, and Medicare taxes withheld from the wages paid to employees of his business, the mental health service provider OneCare Inc.  Robinson served in various positions at OneCare Inc., including President, and was obligated to pay over to the Internal Revenue Service (IRS) such employment taxes on behalf of the company.  He failed to report and pay over almost $1.7 million in employment taxes to the IRS.  In addition to prison, Robinson was ordered to pay restitution to the IRS in the amount of $1,686,360, and to serve three years of supervised release after the completion of his sentence.

Distributions of Stock and Securities of a Controlled Corporation (Understanding IRC Section 355)


26 CFR 1.355-3: Active Conduct of a Trade or Business.
Rev. Rul. 2019-09
This revenue ruling suspends Rev. Rul. 57-464, 1957-2 C.B. 244, and Rev. Rul. 57-492, 1957-2 C.B. 247, pending the completion of a study by the Department of the Treasury (Treasury Department) and the Internal Revenue Service (Service) regarding the active trade or business (ATB) requirement under sections 355(a)(1)(C) and (b) of the Internal Revenue Code. 

REVENUE RULINGS

In Rev. Rul. 57-464, the Service considered the section 355 qualification of a corporation’s separation of a manufacturing business from a group of real estate assets consisting of an old factory building used for storage and four other buildings: a duplex apartment building rented to employees of the corporation, a small office building rented to a single tenant, and two houses, one of which was occupied by a sister-in-law of the president of the corporation. The use of the old factory building for storage “was not in itself the active operation of a business as defined in the regulations.” The rental activities “produced only a nominal rental” and “negligible” net income, and the properties “were acquired either as an investment or as a convenience to employees of the manufacturing business.” The Service held that the separation did not satisfy the ATB requirement. 

In Rev. Rul. 57-492, a corporation engaged in refining, transporting, and marketing petroleum products began a separate operation to explore for and produce oil. The exploration and production operation incurred substantial expenditures but “did not include any income producing activity or any source of income” until less than five years preceding its separation from the primary refining, transportation, and marketing operation. The Service held that the exploration and production operation failed to qualify as an ATB because, “[b]efore oil was discovered in commercial quantities ..., the venture ... did not include any income producing activity or any source of income.” 

LAW

Section 355(a)(1) provides that, if certain requirements are met, a corporation may distribute stock and securities of a controlled corporation to its shareholders and security holders without recognition of gain or loss or income to the recipient shareholders or security holders. Among those requirements, both the distributing corporation and the controlled corporation must be engaged in an ATB immediately after the distribution. Sections 355(a)(1)(C) and (b), and §1.355-3(a)(1)(i). Each trade or business must have been actively conducted throughout the five-year period ending on the date of the distribution. Section 355(b)(2)(B) and §1.355-3(b)(3). 

Section 1.355-3(b)(2)(ii) describes a “trade or business” as “a specific group of activities [that] are being carried on by the corporation for the purpose of earning income or profit, and the activities included in such group include every operation that forms a part of, or a step in, the process of earning income or profit.” In particular, “[s]uch group of activities ordinarily must include the collection of income and the payment of expenses.” Section 1.355-3(b)(2)(ii). 

ANALYSIS

The Treasury Department and the Service are conducting a study to determine, for purposes of section 355, “whether a business can qualify as an ATB if entrepreneurial activities, as opposed to investment or other non-business activities, take place with the purpose of earning income in the future, but no income has yet been collected.” See IRS statement regarding the active trade or business requirement for section 355 distributions, dated September 25, 2018, available at http://www.irs.gov/newsroom/statements-from-office-of-the-chief-counsel. The ATB analysis underlying the holdings in Rev. Rul. 57-464 and Rev. Rul. 57-492 focuses, in significant part, on the lack of income generated by the activities under consideration. Consequently, these rulings could be interpreted as requiring income generation for a business to qualify as an ATB. 

Accordingly, Rev. Rul. 57-464 and Rev. Rul. 57-492 are suspended pending completion of the study. See IRM 32.2.2.8.1, para. 9 (Aug. 11, 2004) (providing that a revenue ruling can be suspended “only in rare situations to show that previously published guidance will not be applied pending some future action, such as ... the outcome of a Service study”).

EFFECT ON OTHER REVENUE RULINGS

Rev. Rul. 57-464 and Rev. Rul. 57-492 are suspended.

Free Consultation 

We Solve Tax Problems. Call (212) 974-3435 or contact us online. Meet with an experienced Federal Tax Practitioner and Attorney in our conveniently located New York City office. 

Restaurants 

We Specialize in Unpaid Sales Taxes, installment agreements, audit representation and all Department of Labor issues. *Ask us about Debt Restructuring, including settling judgments, renegotiating bank loans and merchant cash advances. For immediate assistance call (212) 974-3435 or contact us online. 

Contractors 

We Specialize in Payroll and Withholding Taxes, installment agreements, audit representation and Workers Compensation insurance audits. To schedule a free consultation call (212) 974-3435 or contact us online. 

Businesses 

We Settle and Restructure Business Debts, including judgments and most insurance claims. To meet with us personally call (212) 974-3435 or contact us online. 

 Count On Us. Guaranteed. 
    Same day and emergency appointments available.
    We negotiate excellent re-payment plans with IRS and State.
    Missing tax returns prepared and filed in 48 hours, guaranteed. 

Monday, March 25, 2019

Tax Preparer Sentenced To 2 Years In Prison For Fraudulent Scheme To Steal Over $1 Million From His Clients

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that TOM SHIN was sentenced to two years in prison for aiding the preparation of a false tax return and wire fraud.  SHIN pled guilty on November 29, 2018, before U.S. District Court Judge Valerie E. Caproni, who imposed today’s sentence.
U.S. Attorney Geoffrey S. Berman said:  “Instead of honestly performing the tax services he was hired to do, Tom Shin used his expert knowledge in a scheme to defraud his clients of more than $1.3 million that was intended to pay taxes owed to the federal and state governments.  Today, Shin has been held accountable for breaching his clients’ trust.”
According to the allegations in the Complaint and Indictment to which SHIN pled guilty:
SHIN was hired to prepare joint federal and state tax returns for two individuals (the “Clients”) for tax year 2017.  SHIN showed the Clients completed tax return forms indicating that the Clients owed approximately $1.3 million in taxes.  However, SHIN actually filed false returns on behalf of the Clients without their knowledge, which concealed the Clients’ tax liability.  SHIN then, in connection with applications for extensions of time to file his personal tax returns, directed tax authorities to withdraw approximately $1.3 million from the Clients’ bank account, and then filed personal tax returns seeking an approximately $1.3 million refund.  The net result of the alleged scheme would have been a transfer of approximately $1.3 million from the Clients’ bank account to SHIN.

Free Consultation 

We Solve Tax Problems. Call (212) 974-3435 or contact us online. Meet with an experienced Federal Tax Practitioner and Attorney in our conveniently located New York City office. 

Restaurants 

We Specialize in Unpaid Sales Taxes, installment agreements, audit representation and all Department of Labor issues. *Ask us about Debt Restructuring, including settling judgments, renegotiating bank loans and merchant cash advances. For immediate assistance call (212) 974-3435 or contact us online. 

Contractors 

We Specialize in Payroll and Withholding Taxes, installment agreements, audit representation and Workers Compensation insurance audits. To schedule a free consultation call (212) 974-3435 or contact us online. 

Businesses 

We Settle and Restructure Business Debts, including judgments and most insurance claims. To meet with us personally call (212) 974-3435 or contact us online. 

 Count On Us. Guaranteed. 
    Same day and emergency appointments available.
    We negotiate excellent re-payment plans with IRS and State.
    Missing tax returns prepared and filed in 48 hours, guaranteed. 
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Guilty as Sin - Chiropractor Sentenced For Tax Evasion

Donald Gibson  was sentenced to 33 months in prison for tax evasion and for presenting a fake financial instrument to the U.S. Departmen...