Monday, September 11, 2017

Tax Administration Continuum - The Law was Made for Man, not Man for the Law - Paper presented by Second Commissioner, Andrew Mills

At Leichhardt in Sydney, for instance, branch staff were at their wits end. The team had been observing continual suspicious deposits, secret alarms linked to the IDMs were going off and machines were even jamming through over-use. The branch sent an email to the Group Security team on June 30, with the desperate subject header “Urgent!!!”.

“We have had people coming in and depositing about 5 times into account with $50 notes.. this is just short of $10,000.00 Then that night there is a transfer sent to china for just short of $50K. The person who is making the deposit would clearly know the process as sometimes they deposit into all different accounts until the ATM is full then leave,” the email said. “I believe that there should be other security measures in place as this is crazy.. if you review these people’s accounts they have sent millions and millions overseas!!”
Many words have been written about the Commonwealth Bank money-laundering scandal and many, many more will be written still; being caught for 55,300 breaches is no mean feat. Fused with the state, backed by taxpayers, too big to fail, a financial success and a moral failure; Commonwealth Bank has become a symbol for what is wrong with big business and government. No better story has been written about the CBA fiasco than the following investigative feature by Nathan Lynch of Thomson Reuters’ Financial Crime and Risk, Regulatory Intelligence division. Nathan has kindly allowed us to publish outside the paywall in the public interest 

DOJ Tax has announced here the indictment of Teymour Khoubian for tax obstruction, tax perjury, false FBARs and false statements

I don't see the Klein conspiracy raised often in the popular press.  So, I was surprised to see it here.   Spencer Ackerman and Betsy Woodruff, ‘Dopey’ Donald Trump Jr. Just Might Be Saved by His Own Ignorance (DailyBeast 7/11/17), here.  And, Another article taking off the Daily Beast article is TRUE BLUE REPORT: I learned a new term today—Republicons are the KLEIN CONSPIRACY PARTYhere.

I assume most readers are now aware about the news buzz of an additional Russian off-the-radar screen connection for the Trump Administrations -- Donald Trump Jr.'s emails and meeting with a Russian Lawyer allegedly close to the Putin Kremlin.  So, what does the known information mean in the real world.  Well, on its face, perhaps not much in a traditional crimes sense (for the crimes commonly known).  But that is where the broad sweep of the defraud conspiracy under 18 USC § 371 comes in.  The Klein conspiracy is often a shorthand for the defraud conspiracy, but I use the term in a narrower sense to mean the defraud conspiracy related to impairing or impeding the lawful function of the IRS.  Klein was a tax defraud conspiracy case.  United States v. Klein, 247 F.2d 908 (2d Cir. 1957).  For any readers that my be interested in my views on my concerns with the potential scope of the defraud conspiracy in a tax setting and its companion tax obstruction crime, § 7212(a), much in the tax crimes news lately, see:  John A. Townsend, Tax Obstruction Crimes: Is Making the IRS's Job Harder Enough, 9 Hous. Bus. & Tax. L.J. 255, 334-335 (2009)).

HMRC Enlists Financial and Other Professionals to Warn UK Citizen Clients About Offshore Accounts (8/23/17)Peter Reilly has a great write up on the conservation easement tax scam -- aka bullshit tax shelter (my description, not his) -- that has featured prominently in many recent cases and is the subject of Notice 2017-10, here.  Peter's write up is New IRS Scandal - Syndication Of Conservation Easement Deductions (Forbes/Taxes 7/24/17), here.  And  I have previously written on Notice 2017-10 in IRS Designates Syndications Exploiting Improper Valuations for Conservation Easement Deductions(Federal Tax Crimes Blog 1/2/17), here.

Bullshit tax shelters are built on one or two foundations (sometimes both) -- fake law and fake facts.  The bullshit conservation easement shelters often get the law right, but fail on the facts -- particularly the valuations.  I encourage readers to review Peter's article and then read the extra materials I offer below.

Camilla Hodgson, 'Life-changing consequences:' HMRC warns on risks of hiding wealth offshore in new crackdown (Business Insider Date not indicates but I believe today or yesterday), here.

The UK tax collector is sending letters warning of the "potentially life-changing consequences" of failing to disclose offshore-held wealth, as part of a drive to prevent people skirting tax rules. 

OBEYING THE LAW? THAT’S FOR THE LITTLE PEOPLE! The IRS Is Mining Taxpayer Data On Social Media In Violation Of Federal Privacy Law


DOJ Tax and USAO SDNY announced here  and here that it has reached a nonprosecution agreement ("NPA") with Prime Partners SA (“Prime Partners”), a Swiss asset management firm,  The plea agreement and attached Statement of Facts ("SOF") are here.

The cost to Prime Partners is $5 million, consisting of $4.32 million in forfeiture (representing a portion of the gross revenue it earned with respect to the undeclared accounts for 2001-2010) and $0.068 million in restitution to the IRS (representing the approximate unpaid taxes from Prime Partners' clients)

‘They probably know more than you do’: Sophisticated ATO tech leaves nowhere to hide, experts warn

Tax: Be careful with that big return, it could be a costly scam

Big pharma in ATO's firing line  Story that the ATO is turning to multinational pharmaceutical companies after its recent transfer pricing win against Chevron

WA Libs threaten Turnbull with High Court challenge on GST - Report on WA Liberal Party's plan to challenge the Commonwealth's GST carve-up