SEC: Virtual Tokens Issued in Blockchain-Based ICO’s may be “Securities”

Jason Freeman Blockchain, Uncategorized Leave a Comment

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The Securities & Exchange Commission (“SEC”) recently issued a Report finding that DAO Tokens—digital, Ethereum-based tokens issued to investors—should be classified as securities under the Securities Act of 1933 (“Securities Act”) and the Securities Exchange Act of 1934 (“Exchange Act”).  The Report emphasizes the risks of emerging technologies and investor interfaces when it comes to compliance with federal securities laws.  …

Employee vs. Contractor: A Warning from the IRS About Getting it Right

Jason Freeman Employment Tax, Uncategorized Leave a Comment

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The IRS recently issued a reminder, Notice FS-2017-09, to small businesses on the importance of properly classifying workers as employees or independent contractors.  Worker classification has long been a top enforcement priority for the IRS.  The notice warns that “[c]lassifying an employee as an independent contractor with no reasonable basis for doing so makes employers liable for employment taxes.”  Improper …

Living Abroad? You May Still Owe FICA Taxes

Zach Smith Employment Tax Leave a Comment

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Every employee notices the line on his or her paycheck that refers to FICA tax being withheld; even certain taxpayers working abroad have these taxes withheld. The Federal Insurance Contributions Act (FICA) is a tax on an employee’s wages comprised of both the Social Security tax and the Medicare tax. U.S. citizens and resident aliens who work abroad for an …

Employment Tax Enforcement is Trending

Jason Freeman Employment Tax Leave a Comment

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Employment tax enforcement is a critical element of the IRS’s overall tax enforcement effort. It is an area in which the IRS has unique tools at its disposal—tools that some practitioners may find surprising. Recent government reports indicate a growth in “egregious employment tax noncompliance” and focus on the need to combat this trend through increased use of civil and …

Representing Taxpayers in Sensitive Audits: A Look at the Fundamental Challenges of an Eggshell Audit

Jason Freeman Eggshell Audits Leave a Comment

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Sensitive audits present the tax practitioner with unique challenges.  They require the exercise of judgment and discretion, as well as an understanding of administrative procedure and even a command of constitutional and evidentiary rules.  At times, they may also require that the practitioner carefully balance duties to a client with their own ethical and legal obligations. Sensitive audits come in …

Non-US Residents May Still Be Subject to FBAR Reporting Guidelines

Zach Smith International Tax Leave a Comment

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The IRS is bringing FBAR (FinCEN Report 114) enforcement suits against US citizens living abroad. The U.S. Department of Justice Tax Division recently brought suit to assess FBAR penalties of US$860,300 against a Canadian resident that is a dual-citizen of Canada and the United States. The citizen failed to report foreign bank accounts that he held in the years of …

The New Partnership Audit Rules: An Expansive Scope and Penalty Defenses

Jason Freeman Partnership Tax Leave a Comment

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The Bipartisan Budget Act of 2015 (“BBA”) was enacted into law on November 2, 2015.  Section 1101 of that act repeals the current TEFRA and Electing Large Partnership rules governing partnership audits and replaces them with a new centralized partnership audit regime that, in general, assesses and collects tax at the partnership level. On January 19, 2017, the Treasury released …

The Badges of Fraud

Jason Freeman Tax Fraud Leave a Comment

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Over the years, courts have developed a litany of so-called “badges” of fraud that may indicate that a taxpayer exhibited fraudulent intent.  These badges (or “flags” or indicators) of fraud may be used by the IRS as a basis to infer the existence of the level of intent necessary to assert a civil fraud penalty under Section 6663 of the Internal …

Why (Nearly) Every Partnership Agreement Should be Amended

Jason Freeman Partnership Tax Leave a Comment

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The new partnership audit rules generally take effect for tax years beginning in 2018—partnerships and their partners will ignore them at their peril.  The new rules, enacted under the Bipartisan Budget Act of 2015 (the “BBA”), dramatically change the regime that currently governs partnership tax audits, assessments, and collection.  The changes will impact not only how tax adjustments are assessed, …

Suspected Currency Structuring Leads to Enhanced Sentence for Tax Fraud

Jason Freeman Tax Fraud Leave a Comment

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In a recent opinion, the Fifth Circuit Court of Appeals upheld an above-Guidelines sentence in a criminal tax case involving indications of currency “structuring.”  The defendant, Nguyen, was charged with aiding and assisting in the preparation of a false and fraudulent tax return.  The 36-month sentence, handed down by the lower district court, was approximately 2 years longer than the …