Monday, December 31, 2018

Wickenby on Steroids


Heather M. Field (UC-Hastings), Offshoring Tax Ethics: The Panama Papers, Seeking Refuge From Tax, and Tax Lawyer Referrals, 62 St. Louis U. L.J. 35 (2017):
The fallout from the “Panama Papers” scandal leaves many questions unanswered, including: How did U.S. taxpayers get to the Panamanian law firm of Mossack Fonseca? And what were the ethical responsibilities of the individuals (particularly U.S. lawyers) who connected these U.S. clients with Mossack Fonseca, especially in the cases where the U.S. clients sought offshore assistance in order to avoid or evade U.S. taxes? This symposium essay answers these questions and uses insights gained from an examination of the Panama Papers leak to make recommendations about how to respond ethically to referral requests for assistance with offshore tax avoidance/evasion.


Behind the $430m Wickenby saga - Financial Review

 Mastering the art of the narrative - Michael O'Neill
Police target lawyers and accountants helping families become frauds. Charles Miranda, News
Corp Australia NetworkSupt O'Mahony also said it could be networked and part of a scam known as “phoenixing” where liquidators or ... via a string of Australian accountants offeringtax avoidance schemes, ...Police target lawyers and accountants helping families become frauds

 Fraud, white collar crime: AFP targets Medicare, NDIS, day care tax avoidance | Daily Telegraph

 Perth tax scam gambler's luck runs out after 14 years

Taxman sues Acquire Learning directors

New York Times editorial, A Gutted I.R.S. Makes the Rich Richer:
Let’s take a moment to pity the Internal Revenue Service. Yes, to many Americans, it’s a money-grabbing ogre siphoning hard-earned cash to the faceless federal bureaucracy.
But the nation’s tax collector today is an enfeebled enforcer. Its budget has been bled dry by a Republican Congress in service to wealthy donors and businesses aggressively pursuing tax avoidance, leaving uncollected 18 percent to 20 percent of potential tax revenues annually. 
That’s the conclusion in articles by the journalism site ProPublica, co-published by The Atlanticand The Times.

Tax Court Case Shows That the IRS Burden to Prove Fraud by Clear and Convincing Evidence Is Formidable Indeed 





Article on Ethics Issues in Referring Clients to Foreign Aggressive Tax Planners/Enablers 

Tax Crimes enthusiasts may be interested in this law review article:  Heather M. Field, Offshoring Tax Ethics: The Panama Papers, Seeking Refuge From Tax, and Tax Lawyer Referrals,, St. Louis U L.J.  62 St. Louis U. L.J. 35 (2017), Offshoring Tax Ethics: The Panama Papers, Seeking Refuge From Tax, and Tax Lawyer Referrals,

Despite the investigative research and scholarly analyses of the Panama Papers, many questions remain, including: How did U.S. clients get to the Panamanian law firm of Mossack Fonseca? What were the ethical responsibilities of the individuals (particularly lawyers) who connected these U.S. clients with MF, especially in cases where the U.S. clients sought offshore assistance in order to avoid or evade U.S. taxes? And what, if anything, should individuals in similar situations do differently in the future? 



Survey finds one in four Aussies had their personal information Survey finds one in four Aussies had their personal information misused


Shopping sprees using stolen credit card details have declined as identity thieves increasingly try to extract money by lodging fraudulent tax returns or accessing superannuation funds.

ATO in Five Eyes blitz on tax crime

EXCLUSIVE


ATO deputy commissioner Will Day says the new inter­national body would pursue cyber-related identity theft, tax evasion using cryptocurrencies, corporate ‘phoenixing’ and international tax evasion using tax havens. Picture: AAP

ATO deputy commissioner Will Day says the new inter­national body 
would pursue cyber-related identity theft, tax evasion using, 
corporate ‘phoenixing’ and international tax evasion using tax havens. Picture: AAP
The Netherlands is seen as crucial to the co-operation agreement, after research last year found the country was a channel for nearly one-quarter of cor­porate investments around the world that finally ended up in a tax haven.
The Australian Taxation Office will launch an unprecedented international blitz on tax crimin­als that is being compared to the intelligence community’s “Five Eyes” alliance.

The five-nation tax intellig­ence-sharing operation is being described by experts as “Project Wickenby on steroids”, a reference to the ATO’s much-­debated, nine-year war on tax evasion that ended in 2015, and which claims to have resulted in nearly 50 criminal convictions.


In an exclusive interview with The Australian, ATO deputy commissioner Will Day revealed that a $182 million grant in the federal government’s mid-year economic and fiscal outlook this month would be used from early next year to “supercharge” Aust­ralia’s involvement in the new body, known as the Joint Chiefs of Global Tax Enforcement (or J5 for short).
Mr Day said the new inter­national body would pursue cyber-related identity theft, tax evasion using cryptocurrencies, corporate “phoenixing” and international tax evasion using tax havens.
He said J5 applied similar principles to that of Five Eyes, one of the most far-reaching espionage pacts ever signed.
“The fact we are relying on longstanding relationships with these other countries with a ­history of an alliance with us, and the fact that they also face similar threats, means it is analogous to the Five Eyes,” Mr Day said.
“It is pretty similar from a tax point of view.”
The intelligence-sharing org­an­isation, quietly established five months ago, includes the heads of tax crime and senior officials from Australia, the US, Britain, The Nether­lands and Canada.
Its composition closely resembles Five Eyes, the only difference being that The Netherlands is a member instead of New Zealand.
So far, the joint efforts have involve­d identifying targets.
“A number of operations have been identified, and a number are to be commenced,” Mr Day said. “We’ll be starting to initiate them in the first half of next year.”

Mr Day said a key realisation from the body’s work had been the need to target “enablers” of tax evasion, who he declined to identify. He described them as “shadowy characters who sit behin­d websites that encourage people to hide income and assets offshore to avoid tax”.
“The focus is to track down the internationally located enablers of that tax crime, even when they’re sitting offshore,” he said.
“Bringing together the five countries is a large part of that, and we’ve made significant progres­s in identifying operational targets, utilising the improved partnerships.”
Mr Day said at a meeting in Utrecht in The Netherlands in November, each of the J5 member­s had identified one huge international criminal target actin­g as an enabler.
“We actually all agreed on an enabler of inter­national tax crime who was rated the highest level of threat for all of the J5 countries,” he said.
This revelation has echoes of Wickenby, in which the primary focus was Swiss accountant ­Phillip Egglishaw, whose firm Strachans, based in the tax haven of Jersey, was linked to hundreds of Australians.
He remains on an ­Interpol most-wanted list.
The ATO alleged he set up a $300 million network of tax-avoidance schemes and said it had recouped nearly $1 billion in cash collections through the Wickenby investigation.

Pressed for more details on who the ATO was targeting, Mr Day would not reveal whether the enabler was an individual, a firm or a company.
He said the details were “very operationally sensitive”.
An industry source who did not wish to be named said the new program was likely to be targeted against tax advisers who promoted offshore tax-­evasion schemes.
The source said that the J5 appeare­d to be less about recouping money and more about creat­ing an effective deterrent against ­future tax crime.
“If they put a tax adviser in jail, it will send an earthquake through the shadowy world of people who create and promote these schemes,” the source said.
Mr Day said the “Five Eyes of tax” was not setting specific financial targets, but its success would be measured by the number of criminals it caught. “We do a lot of it to ensure the ongoing confidence in the Australian tax system,” he said. “We’ve taken a lot of corrective action already, and we want to maintain that confidence going forward.”
PwC’s Australian head of tax, Pete Calleja, said the new inter­national pact between the five countries looked set to become a much larger version of Wickenby, the ATO-led cross-agency taskforce that became one of the country’s biggest tax investigations. “This seems to me like a ­supercharged, new-age version of Wickenby,” he said.

 Mr Day conceded that “in a way, the mischief hasn’t changed” since Wickenby. “It’s about the use of secrecy or low-tax jurisdictions to channel funds that have been illegally held through other entities, such as trusts,” he said.
Another major emerging problem area, Mr Day said, was “cyber-enabled identity crime”.
“It’s about using identity theft as a way of evading tax, or of committing refund fraud,” he said.
“Phoenixing”, or the practice of using a new company to rebirth failed businesses of a previous company, was also being targeted by the J5. “It is domestically facilitated, but we would certainly see the laundering of the proceeds of illegal phoenix activity offshore, in tax havens,” he said.
Mr Day also said the body was particularly interested in “cryptocurrencies on the dark net”.
Mr Calleja believes the new international tax pact will be primarily targeted at the inter­national black economy.
“If we know the Australian share of the black economy is $50 billion, the ‘Five Eyes’ black economy has to be hundreds of billions of dollars,” he said.
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