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Fort Worth Tax Law Blog

Tax deductions for casualty losses: What steps should you take now?

Many Texans have been through calamitous weather conditions in recent months. Floods, tornadoes and storms have hit hard, causing extensive damage.

If you are one of the people who suffered storm damage, how will that affect your taxes? In this post, we will take note of some tips from the IRS for making good use of tax deductions for casualty losses.

Offshore enforcement update, part 2: Swiss banks and non-prosecution agreements

In the first part of this post, we began discussing how federal regulators use non-prosecution agreements (NPAs) and deferred prosecution agreements (DPAs) to resolve various legal compliance concerns. In the tax community, this has particularly been the case with offshore accounts.

Indeed, for nearly two years, the Tax Division of the Department of Justice (DOJ) has had a program for Swiss banks seeking to come into compliance with U.S. reporting requirements for foreign accounts. In this part of the post, we will update you on some of the recent developments in this area.

No, it is Not Illegal to Withdraw Less than $10,000 from Your Bank Account

Recently, there have been many stories involving people being prosecuted - or assets being seized - due to withdrawals or deposits being conducted at the bank in amounts less than $10,000. Most noteworthy is the example of former House Speaker Dennis Hastert, who was recently indicted for it. These reports have led to a great deal of concern about what the law really says about engaging in bank transactions under $10,000.

As part of the Bank Secrecy Act, financial institutions are required to file a Currency Transaction Report ("CTR") anytime a cash transaction is conducted in excess of $10,000. The purpose of the law is to detect things like tax evasion, money laundering, or terrorist financing. The term "structuring" is used to describe cash transactions above $10,000 that are broken down into two or more smaller transactions of less than $10,000 for the purpose of avoiding the filing of a CTR by the bank. The law has been misinterpreted by some to mean that you are not allowed to conduct cash transactions under $10,000, but that is not the case. Most cash deposits or withdrawals of less than $10,000 are totally legitimate.

California Says Uber Driver is Employee

California's Division of Labor Standards Enforcement (DLSE) recently held that an Uber driver is an employee, rather than an independent contractor, in a decision that could have far-reaching ramifications for the popular and quickly expanding app-based car service. Uber has appealed the ruling.

There are many advantages to a business if workers are classified as independent contractors, rather than employees. For employees, businesses are required to pay the employer's share of employment taxes; whereas, independent contractors must pay it on their own. Classifying workers as independent contractors also provides advantages from a liability standpoint. Employers are generally held to be vicariously liable for acts of their employees committed within the scope of the employment. For example, if an Uber driver gets into a car accident and causes injuries to others, Uber could be held liable if the driver is considered an employee.

IRS, tax prep industry seek to improve security of personal data

We will conclude our two-part post on non-prosecution agreements regarding offshore accounts in next week's post. This week we will take note of the ongoing story of a serious data breach at the IRS.

In early June, the Senate Finance Committee held a hearing on the breach, after hackers gained unauthorized access to personal information about more than 100,000 taxpayers stored in IRS computers. The thieves used the information to file fraudulent tax refund claims that cost the federal government millions of dollars.

Several More Swiss Banks to Turn Information Over to US

Rothschild Bank AG and Banca Credinvest SA are the two latest Swiss Banks to settle with U.S. authorities as part of the Department of Justice's ongoing Swiss Bank Program. In exchange for non-prosecution agreements, the banks will pay fines and turn over detailed information about their American clients.

Rothschild was one of several Swiss banks to sign up American clients who were fleeing UBS, after UBS came under criminal investigation. Rothschild had 332 American clients with balances totaling about $1.5 billion. Many of these accounts were held in the names of entities created in Panama, Liechtenstein, the Cayman Islands, or other foreign entities. Despite knowing that the beneficial owners were U.S. persons, the bank obtained false declarations to the contrary. The bank offered numbered accounts and held all mail correspondence at the bank, to offer additional secrecy. Rothschild will pay a penalty of $11.5 million.

US Authorities Indict FIFA Officials, Seek Extradition

The Department of Justice has unsealed a 47 count indictment against 14 individuals related to allegations of FIFA corruption, including charges of tax fraud, money laundering, wire fraud, and racketeering. As part of the alleged conspiracy spanning 25 years, the co-conspirators used false consulting agreements to disguise the illicit payment of bribes, as well as the use of shell entities and numbered bank accounts in various tax havens around the world.

On Wednesday, May 27, Swiss authorities raided FIFA's headquarters in Zurich. They also announced that they have launched an investigation into the bidding process for the 2018 and 2022 World Cups, which were awarded to Russia and Qatar. Both bids have been under fire for allegations of bribery, while the Qatar bid also faces a host of other criticisms, including the deaths of more than 1,000 migrant workers to date related to construction of the World Cup venues.

Offshore enforcement update, part 1: What is a non-prosecution agreement?

In recent years, increased U.S. enforcement of offshore account reporting requirements has not only affected individual taxpayers. Foreign financial institutions have also been deeply affected. Swiss banks, historically a haven for undisclosed accounts, have come under particular scrutiny.

And so it was no surprise that Forbes reported this week on the growing list of Swiss banks that have entered into deferred prosecution agreements with U.S. authorities to resolve allegations that the banks facilitated tax evasion by U.S. taxpayers.

IRS Criminal Investigation Prosecuting Less Cases, But Conviction Rate Up

IRS Criminal Investigation (CI) released its annual report, which details statistics for the 2014 calendar year, as well as its current enforcement priorities. The report yielded some interesting findings.

As expected, the budget cuts that have afflicted the IRS have also affected CI, with the overall number of investigations initiated down substantially from the two preceding years. Despite this decrease in investigations, however, the number of overall criminal convictions in 2014 was roughly the same as it was in 2013, and it is substantially higher than the number of convictions in 2012.