An influential Democratic senator has demanded answers from the IRS about what it has done since the Panama Papers were published last spring to combat tax fraud committed through anonymous shell companies.
Oregon’s Ron Wyden is the top Democrat on the Senate Finance Committee and could become its chairman if Democrats regain control of the chamber in November elections. He sent a three-page letter on Wednesday to Treasury Secretary Jacob Lew and IRS Commissioner John Koskinen, asking for data on required reporting about shell companies.
“It’s critical to determine whether our government has the right tools to discern legitimate businesses from criminal enterprises, and to identify what additional measures might be needed to fight financial crime,” Wyden said in his letter.
Switzerland said it plans to give information to U.S. tax authorities about accounts at HSBC Holdings Plc’s (HSBA.L) Swiss private bank, as part of a U.S. investigation into tax evasion.
HSBC’s Swiss unit has already paid tens of millions of dollars in fines after admitting substandard compliance on tax evasion and other issues.
The Swiss government said it made the announcement about its plans on Tuesday to alert HSBC account holders whom it has been unable to locate, and to give them the chance to lodge a legal appeal if they object to having their information sent to the U.S. Internal Revenue Service (IRS).
The move comes after the IRS asked Swiss tax authorities in April for assistance on HSBC Private Bank (Suisse) SA accounts held by Swiss-registered “domiciliary companies” with U.S. beneficial owners between 2002 and 2014.
U.S. officials revealed to NBC News that they have taken part in two global meetings about the Panama Papers to plan how to use the huge trove of leaked documents to catch criminals — and urged Americans to come clean now before illegal activity is discovered.
Last week’s discussions in Paris and Washington between IRS and Treasury officials and their counterparts from around the world are the first evidence of U.S. involvement in the growing international coalition eager to analyze and use the data about more than 214,000 offshore companies listed by Panamanian law firm Mossack Fonseca.
In a statement to NBC News, the IRS acknowledged participating in a “special project meeting” of JITSIC, the Joint International Tax Shelter Information and Collaboration network, about the papers in Paris last week.
The IRS also encouraged any U.S. citizens and companies that may have money in offshore accounts to contact the agency now before any possible illegal activity on their part is identified. According to media reports, the documents contain information on potentially thousands of U.S. citizens and firms that have at least an indirect connection to offshore accounts affiliated with Mossack Fonseca. Many other firms provide similar services, and the Treasury Departmentestimated last year that more than $300 billion dollars of illicit proceeds are generated in the United States annually, with criminals using such companies here and abroad to launder funds.
If you’re behind on tax payments you could soon hear from a private debt collector.
Over the objections of a union representing Internal Revenue Service workers and some congressional Democrats, the final version of a highway bill released Tuesday contains a provision forcing the IRS to contract some tax collection services to private companies.
The debt-collection provision is tucked into a $305 billion, five-year highway bill. Current highway funding expires on Friday, and the House and Senate are expected to vote on it soon. House Speaker Paul Ryan said Tuesday he expects the bill to pass with “good majority support.”
Tony Reardon, president of the National Treasury Employees Union, said in a statement that efforts to use private collection agencies to collect federal taxes were scuttled twice in the past 20 years. Both attempts lost money for the government, the Washington Post reported last month.
“The third time won’t be the charm,” Reardon said. “Reviving the [private collection agencies] experiment again will deliver the same disastrous results.”
Law360, New York (December 23, 2014, 4:24 PM ET) — The Internal Revenue Service and U.S. Department of the Treasury released final regulations on Tuesday explaining that fully or partly foreign-owned businesses will have to file information returns with their income tax returns and cannot file them separately if those returns are late.
U.S. corporations that are 25 percent foreign-owned and foreign companies that do business in the U.S. must file a Form 5472 Information Return. The federal government used to allow those businesses to file Form 5472 separately from their income tax returns if the…
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If only she understood the rules of depositing cash payments. Click here.
An Iowa woman named Carole Hinders saw her bank balance go from $33,000 to zero thanks to IRS confiscation. Hinders, who owns a small, cash-only Mexican restaurant, has not been charged with any crime and is not suspected of tax fraud. The IRS says they took her money solely because she deposited too little of it at a time, and the agency claims she did so to avoid the required reporting of any bank transaction over $10,000. She says she just thought it was helpful to save the bank paperwork.
Though the $10,000 rule is ostensibly designed to help catch terrorists and drug dealers, it is far more often used on regular citizens who are unlikely to ever see their money returned. “I don’t think [the IRS is] really interested in anything,” said a lawyer representing another seizure case. “They just want the money.”
To keep her restaurant afloat following the confiscation of her savings, Hinders has had to take out a second mortgage and max out her credit cards. “How can this happen?” she asks. “Who takes your money before they prove that you’ve done anything wrong with it?”
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Wells Fargo & Company v. United States of America
Nature of Suit
Patrick J. Schiltz
Law360, New York (July 22, 2014, 4:48 PM ET) — A special master on Monday deniedWells Fargo & Co.’s bid for summary judgment in its suit claiming the Internal Revenue Service owes it a $164 million tax refund because a complex transaction known as STARS was not a tax shelter, saying there is a clash in the factual record.
The denial quashes one of Wells Fargo’s eight motions in the case, which stems from a structured trust advantaged repackaged securities transaction involving a $1.25 billion loan from Barclays PLC. The IRS said the deal was essentially a tax shelter with no economic substance and denied the $164 million refund tied to it.
Wells Fargo motioned for the court to find that the transaction was motivated by an economic purpose, but the special master determined that this was still an issue of factual dispute.
“The parties have submitted contrary evidence with respect to the purpose of the transaction,” wrote Special Master Charles H. Gustafson. “As a result, the motion cannot properly be granted.”