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Fort Worth Tax Law Blog

Closely held companies, part 2: owners and entities are not alter egos

In the first part of this post, we outlined the basic considerations involved in defining when an organization is “closely held” for tax purposes.

In this part of the post, we will look in more detail at how the Tax Court and the IRS have differed recently in interpreting and applying this definition.

What the Increased 50% OVDP Penalty Means for You

Last summer, the IRS announced sweeping changes to its ongoing offshore compliance initiatives. The biggest change was the announcement of new Streamlined Compliance Procedures. Under these procedures, eligible taxpayers who resided in the United States can qualify for a reduced offshore penalty of 5%, with those who resided outside of the U.S. paying no penalty at all.

At the same time, the IRS also increased the penalty for participants in the Offshore Voluntary Disclosure Program (OVDP) from 27.5% to 50%, if the taxpayer had accounts at a foreign financial institution or facilitator that has been publicly identified as being under investigation or as cooperating with a government investigation. Currently, the list of such financial institutions includes the following:

PTIN Holders Have No Right to Know If They Are Under Investigation

The Treasury Department announced a Final Rule this week to avoid having to reveal to PTIN holders the names of agencies that have requested their files. The purpose of the rule is to prevent these individuals from finding out that they are under investigation and destroying evidence. This new rules comes after reports that certain return preparers are taking advantage of taxpayers with limited English proficiency.

5 U.S.C. § 552, more commonly known as the Freedom of Information Act (FOIA), allows for the disclosure of previously unreleased information and documents maintained or controlled by the federal government. Under § 552a(j), however, the head of each federal agency is allowed to make rules exempting certain items from FOIA disclosures, including information compiled for the purpose of a criminal investigation.

Closely held companies, part 1: How does the IRS define them?

Closely held businesses can sometimes seem synonymous with their owners. But for tax purposes, there are important respects in which that is not true.

In this post, then, we will ask and address the following question: How does the IRS define a closely held corporation?

Swiss Banks Struggling to Get American Clients to Disclose to IRS

Prior to his death in 1980, Maurice Pinot opened a Swiss account with approximately $1 million, which would pay interest and dividends to his longtime companion, and after her death, to her daughter. That daughter, Micheline Fournie, an 81 year old French citizen with U.S. residency, is now resisting pressure from the bank to voluntarily disclose the account to the IRS.

As a result of the U.S. crackdown on offshore tax evasion that started around 2008, Swiss banks have eagerly been trying to convince American clients to voluntarily disclose their accounts to the IRS and sign waivers of Swiss bank secrecy laws. Nonetheless, there are still many American taxpayers who simply refuse to voluntarily declare their accounts to the IRS.

IRS Hits Robert De Niro with Federal Tax Lien

The IRS filed a federal tax lien against Robert De Niro, stemming from $6.4 million in unpaid tax liabilities from the 2013 tax year. The lien was filed on February 3, 2015, and the actor paid the balance in full three weeks later.

The 71 year old actor, best known for starring in films like Raging Bull and Goodfellas, claims that he was unaware of the notices send by the IRS for the past few months, as he has multiple residences and does not check the mail at all of them on a regular basis.

Senate tax report suggests what Dems might like to reform

There doesn't seem to be a great deal of dispute among the politicos in Washington about whether the U.S. tax code needs reform or not. Just about everyone agrees it needs fixing. The question then becomes, just what is likely to be possible considering the current makeup of Congress and its recent history of inaction.

As has been widely reported for a while, Republicans in the majority of both chambers favor the idea of broad tax reforms covering everyone from individuals to corporations. Meanwhile, the top Democrat among Senate tax writers recently took a position on reforms that should be of interest to high net worth individuals in Texas and elsewhere.

UBS Client Sentenced

A former UBS client has been sentenced to four months of incarceration and two years of supervised released by a federal court in Georgia. The internet entrepreneur was convicted of FBAR violations, stemming from his undeclared offshore accounts in Switzerland and other countries.

Gregg Kaminsky, the founder and CEO of Circlenet LLC, controlled accounts at UBS from 2000 to 2008. He caused his income from at least two U.S. companies to be paid directly to this Swiss account, so that he could avoid being taxed on it. From time to time, he transferred funds from this account to other offshore accounts in Thailand and Hong Kong.

New York Restauranteur Pleads Guilty to Offshore Charge

The owner of Le Perigord, a popular French restaurant in Midtown Manhattan, has pleaded guilty to obstruction charges stemming from undeclared Swiss bank accounts he held from 1992 to 2011.

Georges Briguet, 77, grew up on his family's vineyard in Switzerland. In 1960, he moved to New York and opened Le Perigord soon after. The restaurant became well known after a photograph of Elizabeth Taylor and Richard Burton dining there was featured on the front page of the New York Post.