Congress Readies New Round of Tax Increases
The False Claims Act: The Risks of Doing Business with the U.S. Government
The False Claims Act (FCA) was passed by Congress during the Civil War to punish defense contractors for fraud. Under the FCA, a government contractor who submits fraudulent invoices or induces the government to grant a contract through fraud may face substantial monetary damages.
The FCA poses a challenge for businesses that perform work or supply goods to the U.S. government. These government contractors must implement internal controls and conduct periodic investigations to identify potential fraudulent claims. This obligation, of course, increases both the cost and risk of acting as a government contractor.
Acts Prohibited by the False Claims…
Ninth Circuit Adopts Primary Purpose Test for Attorney-Client Privilege (9/14/21)
In In re Grand Jury, Nos. 21-55085 & 21-55145 (9th Cir. 9/13/21), CA 9 here, the Court held that the “because of” test imported from the work-product context did not apply to the attorney-client privilege and instead applied a predominant purpose test for dual-purpose communications. The opinion is short (14 pages) and the summary offered by the Court is good, so I just copy and paste the summary here.
Grand Jury Subpoenas
The panel affirmed the district court’s orders holding appellants, a company and a law firm, in contempt for failure to comply with grand jury subpoenas related to a…
Obtaining Information from the IRS
Accuracy-Related Penalties: The Burdens of Proof and Production
Accuracy-related penalties under section 6662 are among the most common penalties in the Tax Code. As a result, they are often at issue in tax litigation against the IRS. That raises the question: What are the burdens of proof and production when it comes to accuracy-related penalties?
Accuracy Related Penalties under Section 6662 of the Code
The Internal Revenue Code (I.R.C.) section 6662 addresses rules applicable to accuracy-related penalties for the underpayment of tax. Generally, I.R.C. § 6662 allows the IRS to impose an accuracy-related penalty of 20% of a portion of underpaid tax. See I.R.C. § 6662(a). This rule…
DOJ hands down fines for FCA, kickbacks, and failure to stop kickbacks.
In July of 2021, the Department of Justice announced that it entered into a settlement agreement with two Texas companies, Alliance Parent, Inc. (“Alliance”) and Anchor Holdings LP d/b/a Anchor Capital Partners (“Anchor”), for their violation of the False Claims Act after several qui tam actions were filed against the companies. The case is notable given that the government’s theory for liability under the False Claims Act deviates from its historical positions because Anchor was not actively involved in the alleged misconduct. Rather, the government alleged that Anchor failed to stop past wrongdoings that it had knowledge of.
Alliance provides…
Rental Tax Losses for Those With Irregular Hours
Tax cases are interesting in that they apply a fairly well-developed set of rules to varying fact patterns. These varying fact patterns can result in surprising, and often unintended, consequences. The more complex the tax law in question, the more likely it is that the outcome will be something other than what Congress may have…Continue…Continue readingRental Tax Losses for Those With Irregular Hours
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The Statute of Frauds in Texas
The statute of frauds is an affirmative defense in a breach of contract suit that, where applicable, renders a contract unenforceable.[1] It exists to “prevent fraud and perjury in certain kinds of transactions by requiring agreements to be set out in a writing signed by the parties.”[2] In order to be enforceable, a contract that is subject to the statute of frauds must be in writing and signed by the person to be charged with the promise or agreement (or by someone lawfully authorized to sign for them).
The statute, in other words, bars claims arising out of…
The Trademark Counterfeiting Act
In the United States, trademarks, service marks, certification marks, and collective marks are protected not only under civil law pursuant to the Lanham Act, but also under criminal law pursuant to the Trademark Counterfeiting Act, 18 U.S.C. § 2320.[1] Section 2320 sets forth a criminal statute against trafficking in counterfeit goods.
§ 2320 encourages businesses to control the quality of their goods and services and invest in their brands.[2] § 2320 also encourages consumers to rely on the marks of business brands by penalizing those who attempt to mislead consumers into purchasing counterfeit goods or…
Prosecution IRS Agent’s Contact with Defense Expert Without Defense Counsel (9/8/21)
In United States v. Shun, 2021 U.S. Dist. LEXIS 161023 (W.D.N.Y. Aug. 25, 2021), Cl here, in a tax crimes prosecution (conspiracy and tax perjury), one of the questions discussed in the opinion is whether an attempt by IRS CI agents assisting the prosecutor in the case to interview an expert designated by the defense was a violation of the defendant’s Sixth Amendment right to counsel. The discussion is short but instructive, so I just cut and paste (Slip Op. pp. 4-7):
Shun’s Motion for Relief Based on Violations of her Sixth Amendment Rights
On July 22, 2021,…