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Income tax

Tax

Banker Pleads Guilty in Tax Shelter Case

Federal prosecutors investigating abusive tax shelters struck a plea agreement with a banker on Thursday in the first criminal charges brought in the case, according to the Washington Post. Domenick DeGiorgio, the former managing director of HVB Group, pleaded guilty to four counts of conspiracy, wire fraud and tax evasion relating to his participation in selling a tax shelter known as BLIPS or Bond Lined Issue Premium Structure, created and marketed by KPMG. DeGiorgio said he knew the tax structure lacked economic justification.
Tax

Cases Referred in KPMG Case

The investigation and possible prosecution of KPMG has been the focus of a larger investigation by the Department of Justice (DOJ) into abusive tax shelters sold to corporate taxpayers and wealthy individuals by accounting firms, banks, and law firms. There are now signs that DOJ is working toward a decision.DOJ found that KPMG sold four types of overly aggressive tax shelters to over 350 people between 1997 and 2001 that brought in $214 million in fees according to the Senate Subcommittee on Investigations. These shelters cost the Government around $1.4 billion in unpaid taxes.
Tax

KPMG's Admission May Hurt Civil Tax Shelter Case

KPMG's acknowledgement of “unlawful conduct” in selling questionable tax shelters may help the firm it in its negotiations with criminal prosecutors, but it may make big civil fines more likely.Big Four accounting firm KPMG, in a statement last week, said it “deeply regrets” tax shelter abuses and “takes full responsibility.” Its admission may hurt the other defendants who also worked on selling the tax shelters and were sued by investors along with KPMG, the Wall Street Journal reported.The other firms include: Sidley Austin Brown & Wood, which provided advice to investors;
Community News

KPMG, Justice Negotiating on Tax Shelter Case

Justice Department officials are mulling whether to seek a criminal indictment against KPMG for obstruction of justice and the sale of abusive tax shelters, the Wall Street Journal reported Thursday.Talks between federal prosecutors and KPMG could determine the fate of the Big Four accounting firm, the Journal reported, citing lawyers briefed on the case.If the firm is indicted, KPMG could suffer the fate of now-defunct Arthur Andersen, which could not withstand a Justice Department obstruction of justice indictment and its association with scandal-ridden Enron Corp."In light of the A
Tax

Land Conservation Easements Tax Breaks Being Investigated

The Internal Revenue Service (IRS) revealed at a heavily attended hearing before the Senate Finance Committee, that it has set up a team to gather information relating to the abuse of land conservation easements. The team will conduct investigations of large and small organizations promoting land conservation tax schemes. The most prominent organization under consideration is the Nature Conservancy. Senate staffers have been examining the Nature Conservancy’s land transactions and relationships with for-profit businesses since July 2003.
Tax

Son of Boss Settlement Causes Firms to Refocus Priorities

With the nation's largest accounting firms returning to their core business of auditing publicly held companies, they seem to be moving away from the tax-shelter business that landed the firms-and their clients-in the hot seat with the Internal Revenue Service.The tax-shelter boom of the 1990s, complete with a marketing machine operating at full speed, seems to be phasing out as the IRS cracks down on abusive shelters, such as Son of Boss.Last Thursday, the IRS announced it had collected a record $3.2 billion in taxes and penalties from participants in an abusive tax shelter known as Son
Tax

IRS and States Collect from Son of Boss

The IRS announced on Friday that more than $3.2 billion has been collected in the biggest ever crackdown on improper tax shelters. In addition, the states of Arizona, Illinois, Maine, Michigan, New York, Ohio, Utah, and Virginia have collected more the $23.5 million in voluntary state tax return amendments.The $3.2 billion has been collected from 1,165 taxpayers participating in the “Son of Boss” tax shelter settlement.
A&A

Family Partnerships are Under the Microscope

Tread carefully if you are thinking of moving family estate assets into a partnership to reduce your tax burden. A U.S.
Tax

Highlights of IRS Commissioner Everson's Speech to the National Press Club

Exactly one year ago today, I stood here and gave you my assessment of our tax administration system. I spoke of the IRS mission of service and enforcement, and about our need to modernize. What I said one year ago was that the IRS was doing a good job improving service, had a mixed record on modernization, and a lot of work to do to restore enforcement to proper levels.Electronic filing continues to grow. Last year Americans filed 62 million electronic returns. This year the IRS expects that over half of all individual returns will be e-filed.
Tax

IRS Rebuts Those Making Frivolous Arguments on Paying Taxes

The Internal Revenue Service this week issued guidance describing and rebutting frivolous arguments taxpayers should avoid when filing their tax returns.“Every filing season, thousands of taxpayers hear groundless theories suggesting that they don’t have to pay taxes or file returns,” said IRS Commissioner Mark W. Everson. “We want people to know the truth about these frivolous arguments: they don’t work.”IRS Notice 2005-30 describes 23 frivolous arguments that taxpayers should avoid when filing their returns.
AccountingWEB Life

Federal Court Bars Three From Promoting 'Sham Trust' Tax Scam

The Justice Department announced last week that a federal court in Florida has permanently barred Fred J. Anderson and Deborah A. Martin, of Lehigh Acres, Florida; and Richard A. Walters, of Arlington, Texas, from promoting sham trust tax schemes or any other tax fraud scheme.The court also barred Martin, a tax return preparer, from preparing returns for customers that assert unrealistic positions. The court in January barred Tax Strategies, Inc., a company the three defendants ran, from promoting sham trust or other tax fraud schemes.
Tax

Abusive Tax Scheme Halted in Nationwide Sweep

Washington DC - The Justice Department this week sued Nicholas P. Magalhaes, of Altamonte Springs, Florida, formerly of Smithtown, New York, to bar his alleged promotion of an abusive tax shelter for employers. The government’s complaint, which was filed in the U.S. District Court for the Eastern District of New York, contends that Magalhaes and his businesses -- Asset Accumulation, Inc., Pinnacle Wealth Group, L.L.C., Strategic Ventures, Inc., and Pinnacle Wealth Concepts, Ltd. -- sell what they purport to be voluntary employees’ beneficiary association (VEBA) plans to employers.
Tax

Treasury, IRS Issue Guidance on Life, Annuity Insurance and Annuity Contracts

This week, the Treasury Department and the Internal Revenue Service (IRS) finalized a regulation that would limit the use of life insurance and annuity contracts as a way to avoid current taxation of investment earnings. The regulation, together with other guidance previously issued, will prevent taxpayers from turning otherwise taxable investments in hedge funds and other entities into tax-deferred or tax-free investments by purchasing the investments through a life insurance or annuity contract.
Tax

IRS Announces the 2005 Dirty Dozen Tax Scams

The Internal Revenue Service (IRS) on Monday unveiled its annual listing of notorious tax scams, the "Dirty Dozen," reminding taxpayers to be wary of schemes that promise to eliminate taxes or otherwise sound too good to be true.The "Dirty Dozen" for 2005 includes several new scams that either manipulate laws governing charitable groups, abuse credit counseling services or rely on refuted arguments to claim tax exemptions.
Tax

Tax Dodger Owes $210M, Largest Criminal Tax Case in US History

A Washington telecommunications executive faces a lengthy prison term if the government is successful in its attempts to prosecute him for failing to pay nearly $210 million in taxes, Dow Jones Newswires reported.In the largest individual criminal tax case in U.S. history, Walter Anderson, 51, was charged Wednesday on a 12-count sealed indictment handed down by a federal grand jury.The District of Columbia resident allegedly used numerous corporations to hide earnings totaling nearly $450 million, evading federal and District taxes.
Tax

Tax Shelters Remain A Mystery To Many Affluent Investors

Don't assume that wealthy investors know all the tricks to avoiding taxes.More than two-thirds (70%) of affluent investors admit they have little to no knowledge of tax shelters, according to the Spectrem Perspective report "Tax Planning and the Affluent Investor," released late last week.
Tax

GAO Report: Tax Schemes Saved Fortune 500 Companies Billions

Recent legislative and regulatory changes have addressed the relationship between auditor provided tax services and auditor independence.
Tax

Settlement Offer Extended for Executive Stock Option Tax Scheme

The Internal Revenue Service announced a settlement initiative for executives and companies that participated in an abusive tax avoidance transaction involving the transfer of stock options or restricted stock to family controlled entities.Under this scheme, executives, often facilitated by their corporate employers, transferred stock options to family controlled partnerships and other related entities typically created for the sole purpose of receiving the options and avoiding taxes on compensation income normally taxed to the executive.
Tax

Treasury Provides Guidance On Abusive 'SILO' Arrangements

The Treasury Department and the Internal Revenue Service on Monday issued guidance that designates "sale-in/lease-out" or "SILO" arrangements as abusive tax avoidance transactions. SILO arrangements are designed to exploit the tax law by shifting tax benefits from a tax‑indifferent party that cannot use them to a taxpayer that can. Taxpayers entering into SILO arrangements cannot claim tax benefits as the purported owners of property subject to the lease because they do not acquire tax ownership of the property.
Community News

New Report Highlights KPMG's Tax Shelters

KPMG says it “regrets its participation” in four tax shelters studied by a Senate subcommittee, which on Thursday released new details about how the accounting firm developed and sold the products being investigated.The Permanent Subcommittee on Investigations, in its second report on questionable tax shelters, noted that a KPMG senior executive said in a 2003 hearing that the firm did not have the technical capability to track sales and revenues from the tax shelter sales, the New York Times reported.

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