MIAMI -- A New York businessman who last year was talked out of coming clean with the Internal Revenue Service pleaded guilty Tuesday to U.S. tax charges stemming from a wide-ranging investigation into secret accounts at Swiss bank UBS AG.
Jeffrey P. Chernick of Stanfordville, N.Y., owner of a company that represents Chinese and Hong Kong toy manufacturers, faces up to three years in prison after pleading guilty in federal court in Fort Lauderdale. U.S. District Judge James I. Cohn set sentencing for Oct. 30.
Chernick, the third American client of UBS to plead guilty to criminal charges, signed a statement of facts saying he sought in 2008 to reveal his UBS account to the IRS, file amended tax returns and pay back taxes. But Chernick was talked out of it by a lawyer named only as "Swiss Attorney" in the court documents.
This attorney told Chernick that a high-ranking Swiss government official had provided assurances that his name was not scheduled to be turned over to U.S. authorities investigating tax evasion by wealthy American clients. The attorney later told Chernick that this unidentified Swiss official had been paid $45,000 for the information, which Chernick then had withdrawn from his account.
But it was to no avail. Chernick's name was disclosed earlier this year on a list of about 300 UBS clients as part of a deferred prosecution agreement in which the bank also agreed to pay a $780 million penalty.
U.S. taxpayers who have secret offshore accounts face a Sept. 23 deadline to voluntarily come forward to the IRS under an amnesty program that promises reduced penalties, said John DiCicco, acting assistant attorney general for the U.S. Justice Department's tax division.
"Failure to come forward and to disclose offshore assets exposes these Americans to increased penalties and possible criminal prosecution," DiCicco said.
Chernick's plea comes amid intense negotiations between the Justice Department, UBS and the Swiss government over a broad U.S. attempt to force the bank to disclose some 52,000 names of suspected American tax cheats with secret accounts. A hearing is scheduled before a Miami judge Wednesday on the status of a possible settlement.
UBS and the Swiss say Switzerland's long-standing bank secrecy laws would make it a crime to turn over all the names. U.S. prosecutors say that is not the case.
Court documents show that Chernick admitted filing a false 2007 income tax return and had a UBS account in the name of a Hong Kong corporation called Simba International Ltd. In total, Chernick had about $8 million in UBS offshore assets in the name of Simba and other entities, prosecutors said.
Chernick met frequently with UBS advisers and executives, who "would dress as tourists to avoid detection," according to the factual statement. One unnamed UBS executive falsely claimed to customs agents that he was coming to the U.S. to visit his brother, court documents show. UBS officials also physically cut Chernick's name and account number from bank statements so they could not be linked to him.
Source
Monday, September 28, 2009
Monday, September 14, 2009
Home Front: Selling short can be scary
As attempted short sales proliferate across the capital region, many people are worried about bad things that might happen to them – even if they succeed in selling.
Foremost among worries are nasty state tax bills for forgiven debt. With short sales, banks take less than they are owed to avoid the high costs of foreclosing. And governments typically have taxed that kind of forgiven debt as extra income.
Home Front checked this week into the status of legislation that would get people off that hook. As many know, the federal government already has ordered the IRS not to tax forgiven mortgage debt through the end of 2012.
The state of California did the same last year with Senate Bill 1055. It told the Franchise Tax Board not to tax forgiven mortgage debt through the end of 2008. So what about 2009 and beyond? Two bills to extend the protection through the end of 2012 – Assembly Bill 111 and SB 97 – are parked in Assembly and Senate revenue and tax committees.
Technically, if they don't pass, people who do short sales in 2009 will owe taxes on that forgiven debt on April 15, 2010. But don't fret yet; SB 97, at least, by Sen. Ron Calderon, D-Montebello, provides an out.
Even if passed after April 15, "the bill says there are no penalties or interest imposed for failure to pay," said Eileen Newhall, consultant to the Senate Banking, Finance and Insurance Committee. In other words, if the bill passes after the tax filing deadline there are no tax problems for those who do short sales in 2009. (Again, this is only for people who own and occupy their homes, not for investors.)
There's another out, which also applies to investors, said Linda Hainsworth of Sacramento. She conducts classes on short sale complexities for other real estate agents.
"There's an exemption if you're insolvent," she said. The definition of insolvency is tricky, she added, so advice is best taken from a tax attorney.
Source
Foremost among worries are nasty state tax bills for forgiven debt. With short sales, banks take less than they are owed to avoid the high costs of foreclosing. And governments typically have taxed that kind of forgiven debt as extra income.
Home Front checked this week into the status of legislation that would get people off that hook. As many know, the federal government already has ordered the IRS not to tax forgiven mortgage debt through the end of 2012.
The state of California did the same last year with Senate Bill 1055. It told the Franchise Tax Board not to tax forgiven mortgage debt through the end of 2008. So what about 2009 and beyond? Two bills to extend the protection through the end of 2012 – Assembly Bill 111 and SB 97 – are parked in Assembly and Senate revenue and tax committees.
Technically, if they don't pass, people who do short sales in 2009 will owe taxes on that forgiven debt on April 15, 2010. But don't fret yet; SB 97, at least, by Sen. Ron Calderon, D-Montebello, provides an out.
Even if passed after April 15, "the bill says there are no penalties or interest imposed for failure to pay," said Eileen Newhall, consultant to the Senate Banking, Finance and Insurance Committee. In other words, if the bill passes after the tax filing deadline there are no tax problems for those who do short sales in 2009. (Again, this is only for people who own and occupy their homes, not for investors.)
There's another out, which also applies to investors, said Linda Hainsworth of Sacramento. She conducts classes on short sale complexities for other real estate agents.
"There's an exemption if you're insolvent," she said. The definition of insolvency is tricky, she added, so advice is best taken from a tax attorney.
Source
Tuesday, September 1, 2009
IRS Moves to Ban Tax Returns Filed By All But ‘Experts’
In an astonishing power grab, the Internal Revenue Service wants to license all who prepare returns for taxpayers. This means that Uncle Oscar couldn’t help his nephew prepare his income tax return unless a Washington bureaucrat grants a license.
H&R Block and the National Association of Tax Professionals (NATP) are supporting the effort by IRS Commissioner Douglas Shulman for selfish reasons: If Uncle Oscar can’t help, his nephew must pay a “licensed” preparer.
Shulman said in testimony before the House Ways and Means Committee that he expects to make his recommendations to Treasury Secretary Timothy Geithner and President Obama by the end of the year.
Shulman argued that licensing is needed because of bad guy tax preparers. Of the millions of tax returns filed over the last three years, only about 350 preparers were convicted of fraud, according to the IRS’s own records.
Ryan Ellis, tax policy director at Americans for Tax Reform, challenged IRS claims that licensing would generate significant funds from “tax cheats.” He told the Washington Times, “If the IRS thinks that licensing tax preparers will raise a lot of money, it won’t.”
Shulman’s recommendations “could focus on a new model for the regulation of tax return preparers; education and training of return preparers; and enforcement related to return preparer misconduct,” the IRS said.
“Education” and “training”? Many times over the years, newspapers have sent male and female reporters, posing as married couples, to IRS offices for “help” with their returns. They would offer simple situations: two kids and a mortgage. In an overwhelming majority of cases, four different IRS “professionals” would prepare their returns in four different ways.
Shulman said 87 percent of taxpayers now use computer software or paid preparers. “Tax preparers and the associated industry can help us increase compliance and strengthen the integrity of the tax system,” Shulman said. On the subject of “integrity,” he failed to mention David Rockefeller and other billionaires who pay no income tax at all by ducking their obligations with the help of high-priced “preparers.”
The first step in the licensing process, the IRS said, will involve fact-finding
and receiving input from unlicensed tax preparers and software vendors, as well as those who are licensed by state and federal authorities, including enrolled agents, lawyers and accountants.
“H&R Block strongly supports the IRS initiative announced by Commissioner Doug Shulman to review comprehensively alternatives for improving the accuracy of tax filings and the ethics and integrity of all who hold themselves out directly or indirectly in providing tax preparation services,” said Chairman Richard Breeden.
“We are all in favor of raising the bar,” said NATP’s Paul Cinquemani. “If people are operating out there without continuing education, they are on dangerous ground.”
Source
H&R Block and the National Association of Tax Professionals (NATP) are supporting the effort by IRS Commissioner Douglas Shulman for selfish reasons: If Uncle Oscar can’t help, his nephew must pay a “licensed” preparer.
Shulman said in testimony before the House Ways and Means Committee that he expects to make his recommendations to Treasury Secretary Timothy Geithner and President Obama by the end of the year.
Shulman argued that licensing is needed because of bad guy tax preparers. Of the millions of tax returns filed over the last three years, only about 350 preparers were convicted of fraud, according to the IRS’s own records.
Ryan Ellis, tax policy director at Americans for Tax Reform, challenged IRS claims that licensing would generate significant funds from “tax cheats.” He told the Washington Times, “If the IRS thinks that licensing tax preparers will raise a lot of money, it won’t.”
Shulman’s recommendations “could focus on a new model for the regulation of tax return preparers; education and training of return preparers; and enforcement related to return preparer misconduct,” the IRS said.
“Education” and “training”? Many times over the years, newspapers have sent male and female reporters, posing as married couples, to IRS offices for “help” with their returns. They would offer simple situations: two kids and a mortgage. In an overwhelming majority of cases, four different IRS “professionals” would prepare their returns in four different ways.
Shulman said 87 percent of taxpayers now use computer software or paid preparers. “Tax preparers and the associated industry can help us increase compliance and strengthen the integrity of the tax system,” Shulman said. On the subject of “integrity,” he failed to mention David Rockefeller and other billionaires who pay no income tax at all by ducking their obligations with the help of high-priced “preparers.”
The first step in the licensing process, the IRS said, will involve fact-finding
and receiving input from unlicensed tax preparers and software vendors, as well as those who are licensed by state and federal authorities, including enrolled agents, lawyers and accountants.
“H&R Block strongly supports the IRS initiative announced by Commissioner Doug Shulman to review comprehensively alternatives for improving the accuracy of tax filings and the ethics and integrity of all who hold themselves out directly or indirectly in providing tax preparation services,” said Chairman Richard Breeden.
“We are all in favor of raising the bar,” said NATP’s Paul Cinquemani. “If people are operating out there without continuing education, they are on dangerous ground.”
Source
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