Federal Tax Crimes

Latest from Federal Tax Crimes

The USAO SDNY has issued this press release:  Manhattan U.S. Attorney Announces Agreement With Bermudian Bank To Resolve Criminal Tax Investigation: The Bank of N.T. Butterfield & Son Limited Pays $5.6 Million in Forfeiture and Restitution; Receives Non-Prosecution Agreement as a Result of its Cooperation, here.  The combined NPA and Statement of Facts are linked in the press release; direct link is here. Key excerpts from the press release: Audrey Strauss, the United States Attorney for the Southern District of New York, Stuart M. Goldberg, Acting Deputy Assistant Attorney General of the Justice Department’s Tax Division, and James…
There is a U.S. tax compliance problem with offshore activity often beyond the ability of the IRS to obtain or easily obtain relevant information and ensure that tax is properly reported and collected.  A prominent topic on this blog has been the FBAR reporting obligation that, as relevant to tax, assists in U.S. tax compliance with respect to foreign financial accounts.  A similar problem exists for foreign trusts with U.S. owners and beneficiaries and, not surprisingly, there are obligations for the U.S. owners and beneficiaries to report information to the IRS useful for tax compliance. In Wilson v. United States,…
In Harrington v. Commissioner, T.C. Memo. 2021-95, GS here, the Court (Judge Lauber) determined deficiencies and the civil fraud penalty for a taxpayer who played the offshore account game (a pernicious variation of the audit lottery) and lost.  The taxpayer was a UBS depositor; UBS disclosed the taxpayer’s information and documents.  And the rest was, in a sense, inevitable. I won’t detail the particular facts of the taxpayer’s audit lottery gaming, but will discuss the role of credibility. I offer a series of excerpts directly or indirectly addressing the Court’s credibility assessments which did not go well for the…
In Harbor Healthcare System, L.P. v. United States, 2021 U.S. App. LEXIS 20988  (5th Cir. 7/15/21) (Unpublished), here, a nontax case, the Court had this interesting footnote (Slip Op. 6 n. 1):    n1 The government asserts several times in its brief that “Harbor is a subject of a grand jury proceeding.” Under Rule 6 of the Federal Rules of Criminal Procedure, the government’s attorneys “must not disclose a matter occurring before the grand jury.” Fed. R. Crim. P. 6(e)(2)(B)(vi); see also In re Grand Jury Investigation, 610 F.2d 202, 213, 219 (5th Cir. 1980) (“Punishment for contempt of…
In The Matter of the Tax Liabilities of John Does, United States Taxpayers (S.D. N.Y. 7/15/21), CL here, the Court ordered the service of a John Doe Summons upon several prominent financial services businesses related to taxpayers who may have used an offshore law firm, Panama Offshore Legal Services for U.S. tax noncompliance.  I first cut and paste the order (short 2 pages) and then link to another web offering explaining more about it. 1. The Order UNITED STATES DISTRICT COURT FOR THESOUTHERN DISTRICT OF NEW YORK IN THE MATTER OF THE TAXLIABILITIES OF: JOHN DOES, United States taxpayers…
There are collateral consequences to being convicted of a tax crime (as well as other crimes).  Some of the collateral consequences for tax crimes are covered in Michael Saltzman and Leslie Book, IRS Practice and Procedure (Thomsen Reuters 2015), ¶ 12.06 Collateral Consequences.  (Note, I am the principal author  of Chapter 12, titled Criminal Penalties and the Investigation Function.)  Some of those are civil consequences. In Certificate Revocation · “Crime of Moral Turpitude” · 18 U.S.C. §371 (Pennsylvania Law Weekly 7/20/21), the former teacher had his teaching certificate revoked after pleading guilty to a tax defraud conspiracy in 18 USC…
I have written several times on the Wartime Suspension of Limitations Act (“WSLA”), 18 U.S.C. § 3287, here.  In part relevant to tax crimes, the WSLA suspends “the running of any statute of limitations applicable to any offense involving fraud or attempted fraud against the United States or any agency thereof in any manner, whether by conspiracy or not.”  (Cleaned up.) The statute of limitations is suspended from the date of the “specific authorization for the use of the Armed Forces until 5 years after the termination of hostilities as proclaimed by a Presidential proclamation, with notice to Congress,…
In United States v. Taylor, No. CrimAction 06-658-03, 2021 U.S. Dist. LEXIS 134638 (E.D. Pa. July 20, 2021), CL here, the Court found that the Treasury Offset Program (“TOP”) collection, via offset, of criminal restitution from Social Security Benefits was not permitted under the Court’s schedule for restitution ($100 per year) and ordered return of the collections in excess of the Court’s restitution schedule. Key points of the holding: 1. In January 2008, Taylor was convicted of the defraud / Klein conspiracy In ordering restitution in the earlier criminal case, the Court determined restitution was $3,300,000 but that Taylor…
Back in my younger years in the practice of tax law, I heard something like an aphorism or at least a pithy statement meant to suggest some truth that the difference between a doctor and a lawyer cheating on their taxes is that the doctor will file a false return underreporting tax liability (a felony) whereas the lawyer will file no return (generally a misdemeanor).  While there may be some truth in the statement, there is probably not as much truth as those acting on it by failing to file would like to hope. I was reminded of that statement…
In United States v. Gill, 2021 U.S. Dist. LEXIS 12203 (S.D. Tex. 6/30/21), CL here, the court held that an FBAR nonwillful penalty survives the death of the person subject to the penalty.  The decision turned on whether the FBAR nonwillful penalty was remedial or penal in nature.  The general rule is that remedial liabilities survive death, but penal liabilities do not.  The difference between these two categories is based on tests formulated in Hudson v. United States, 522 U.S. 100-101 (1997) (invoking the multi-factor test under Kennedy v. Mendoza-Martinez, 372 U.S. 144, 168–69, 83 S. Ct. 554 (1963)). …