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Fort Worth Tax Law Blog

Houston Tax Court to weigh in on estate valuation issues

In an expected weeklong trial, the family of Carl Pohlad, a billionaire real estate developer and owner of the Minnesota Twins, will argue that the Internal Revenue Service estate tax calculations overstate Pohlad’s remaining interest in the baseball team at his death. The IRS argues the estate owes approximately $255 million in estate taxes.

The IRS challenged the valuation listed on the Form 706 (estate tax return) and sent a Notice of Deficiency to the Pohlad estate in March 2013. A tax court appeal was filed in June 2013.

To fight identity theft, IRS urged to change W-2 requirements

A new Government Accountability Office report includes recommendations for the Internal Revenue Service designed to cut identity theft and fraud. The first is to advance the W-2 filing deadline. The second is to lower a threshold for the electronic filing of W-2 Forms.

In a preliminary analysis of 2013 tax filings, the IRS identified approximately $5.2 billion in fraudulent identity theft refunds. Current safeguards prevented the agency from sending an additional $24.2 billion in refunds. This highlights the size of the problem.

Federal prosecutors appeal tax evasion sentence

The tax case against the founder of Beanie Babies, Ty Warner, continues as prosecutors challenge the lenient probation sentence handed down after Warner pleaded guilty to one count of tax evasion.

Prosecutors alleged that Warner failed to report $24 million by hiding money in two Swiss offshore bank accounts, which allowed him to avoid paying $5.5 million in federal taxes. Sentencing guidelines allowed for prison sentence of up to 57 months, but prosecutors pushed for at least one year in prison to deter others.

Warner’s defense cited to the amnesty program that allowed many with foreign accounts to avoid criminal charges. Even when charged criminally, more than half of those convicted only received probation sentences. Warner had also paid a civil penalty and back taxes plus interest.

Belize firms accused of offshore tax evasion scheme

In a crackdown on offshore accounts, the Internal Revenue Service has placed more focus on the disclosure of foreign accounts. In addition, the Foreign Account Tax Compliance Act went into effect in July and requires foreign financial institutions provide the agency information on U.S. taxpayer clients.

A recently unsealed indictment accuses six individuals and six firms located in Belize of helping U.S. taxpayers avoid taxes by setting up offshore accounts. An undercover F.B.I. agent candidly told executives of the Belize firm that he wanted to set up an offshore account to conceal assets, stock ownership and money transfers from the IRS and Securities and Exchange Commission.

Treasury Officials Arm Themselves for Inversion Battle

Treasury Department officials are preparing an arsenal of administrative weapons for Secretary Jacob Lew to use in the government's battle to prevent U.S. companies from reincorporating overseas in an effort to avoid paying federal taxes, otherwise known as tax inversion.

Citibank sends Form 1099 for bank rewards programs

Most banks have some type of customer loyalty points program where you earn a certain number of points based on dollars charged each month. In some cases, the bank may offer a certain number of points for opening an account.

When you convert the points into a new television or an airline ticket, is it a taxable event? A recent tax court decision says it is appropriate for banks to send out 1099s reflecting the value of the merchandise redeemed, because the amount is taxable income.

Expert Argues In Favor of U.S. Corporate Tax

While the U.S. maintains the highest corporate tax rate at 35 percent, a paper published earlier this month by University of Southern California law professor Edward Kleinbard, suggests many companies use a system of elaborate tax loopholes to avoid paying anywhere near that amount.