Posts Tagged ‘Andrew Mitchel’

Tax Roundup, 10/8/12: Ottumwa gets a Ponzi scheme. Also: Service, it’s in our name.

Monday, October 8th, 2012 by Joe Kristan

“Inheritance investment?” Are you serious?

Ottumwa man pleads guilty to tax charges in connection with Ponzi scheme.  Known to TV viewers of a certain age as the home of Radar O’Reilly, Ottumwa, Iowa now also has its own Ponzi scam.  CBSNews.com reports:

An Ottumwa, Iowa investment manager is likely heading to prison after pleading guilty to charges of wire fraud and tax evasion stemming from a $1.1 million Ponzi scheme.

John Francis Holtsinger pleaded guilty Friday during a hearing in federal court in Des Moines as part of a plea agreement with prosecutors.

The plea deal says that Mr. Holtsinger told people that he would invest their money, and he instead spent most of it.  On what?  Things that might be sold to recover funds for the investors?  The indictment doesn’t offer much hope for recovery (my emphasis):

Of the $493,000 in funds received from investors, only $155,000 was transferred to an investment account at Interactive Brokers.  The remainder was deposited into accounts controlled by Holtsinger and used by him to further his scheme and for his personal use including, but not limited to, legal expenses, cas withdrawals, payment of living expenses, trips, accessing web-based “dating” sites, and other purposes different than he represented to investors.

Interesting scare quotes around “dating.”  In any case, it’s not an investment likely to produce anything that his victims would want.

The indictment and plea deal together show that there were warnings to his investors.  He wasn’t a registered investment advisor, for starters.  And this from the indictment should have triggered BS detectors:

After conducting trades on behalf of investors for a short period of time, Holtsinger offered and sold investments to the investors in the form of promissory notes.  He represented that the notes would yield high returns with no risk including, but not limited to, what he called an “inheritance investment” that would be invested through his mother and pay out upon her death.  The “inheritance investment” required a $20,000 deposit and was to pay annual returns of 9% with automatic liquidation and payout if the investment dropped below 3% of its initial value.

The “high returns with no risk” fairy is the Tax Fairy’s evil twin sister.   When she shows up, it’s time to back away quickly from whoever brings her into the room.  Other red flags:

- When he couldn’t come up with cash, he came up with excuses, like “informing investors… that their funds had been frozen as a result of actions taken by state or federal authorities.”

- After learning he was being investigated, “…he attempted to convince investors to lie to law enforcement and under oath regarding the purpose of the funds they had given to him.  The defendant instructed these individuals to describe their payments to him as ‘interest-free loans,’ when in reality they were investments.  The defendant also threatened that anyone who cooperated with law enforcement would not be repaid.”

Unfortunately, the not getting repaid part was already true.  The plea deal says that Mr. Holtsinger faces a four-to-seven year sentence.

 

Service: It’s in our name.  Victims of Identity Theft Get Little Help From IRS

Service: It’s in our name (II):  Report Fraud to the IRS? Watchdog Says IRS Flubs Over 100,000 Tips Annually (Robert W. Wood,Forbes).

They can take it, but they can’t dish it out.   Indiana Public Officials Indicted for Tax Fraud and Other Offenses  (FBI press release)

Andrew Mitchel, Form 1099 for Payments to Foreign Contractors for Services?

One question that often comes up is how a domestic U.S. business should treat payments to a foreign contractor for services performed outside the U.S.  Is a Form 1099 required?  Is withholding required?

As long as the foreign contractor is not a U.S. person and the services are wholly performed outside the U.S., then no Form 1099 is required and no withholding is required.

Jason Dinesen,  Connecting Strange Baseball Rules to Taxes   The infield fly rule is involved.

Martin Sullivan,  Ways and Means Chairman To Cut Corporate Interest?

Russ Fox,  Gillette Decision Upheld, But Beware.  Important news for taxpayers with California activity.

Kay Bell,  Pastors’ tax break for housing under renewed fire

TaxGrrrl,  WWJD*? Pulpit Freedom Sunday Likely to Bring Slams Against Obama, Romney

Anthony Nitti,  Crunching Numbers on a Hypothetical Cap on Deductions

William McBride,  More on How to pay for Romney’s Tax Cuts

Trish McIntire,  EFTPS Changes

Daniel Shaviro,  Follow-up on the financial transactions tax

Jim Maule,  Say One Tax-and-Spending Thing, Do Another

Robert D. Flach has a new Buzz tax roundup.

The Tax Update is so awesome, our comment trolls have Pulitzers.

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Tax Roundup, 9/5/2012: Laying it on thick for the fertilizer plant. Math is hard. So is tax, even with TurboTax.

Wednesday, September 5th, 2012 by Joe Kristan

Governor Branstad’s administration is making a big push to promote STEM education: Science, Technology, Engineering and Math.  This headline in the Des Moines Register today shows how badly we need math education, especially in Iowa’s “Economic Development” bureaucracy:

165 jobs, $110 million in aid

Officials mull boosting incentives to keep $1.3 billion fertilizer plant project in Iowa

This is the worst kind of smokestack chasing, which is always the preferred approach of “economic development officials.”  Never mind that Iowa already has competing fertilizer plants — as Sioux Citian Debi Durham, Iowa chief official economic developer, surely knows.    Never mind that Iowa and Illinois are getting played shamelessly by Orascom, the fertilizer company.  Never mind that the money comes from taxes paid by existing competitors, and by thousands of unsubsidized businesses like ours, and our employees.  Never mind all that — it’s about buying a ribbon-cutting, not about making the state a good place for everyone to do business Unless, of course, Roth & Company gets a nice state check for $21.3 million for the jobs we have already created.

At least some folks are catching on to the game.  From the article:

Orascom has attracted a diverse group of opponents, from parents, environmentalists and liberal groups such as Iowa Citizens for Community Improvement and Iowa Policy Project, to conservative groups such as Public Interest Group, Lee County Tea Party and Americans for Tax Reform.

So there’s agreement from left to right that it’s a bad idea for the state.  But if politicians think it’s a good idea for them, it will go through.

Related: Taking your wife’s purse to buy drinks for the girls and  LOCAL CPA FIRM VOWS TO SWALLOW PRIDE, ACCEPT $28 MILLION

 

Who catches the identity thieves?  Hint: it’s not Doug Shulman’s IRS.  From the Bradenton (Florida) Patch:

Det. B. Pieper from the police department’s gang unit put together the case by paying close attention during a routine drug bust…

Pieper was one of several detectives watching traffic coming to and from a house where police suspected drugs were sold. He said he and his partner watched a car leave the house and then run a stop sign. When they pulled over the car Brydson was in the passenger seat with a laptop and a bag of marijuana on her lap.

Brydson quickly closed the laptop, which made Pieper suspicious. When he searched her purse, he said he found several TurboTax debit cards with different names on them. He also noticed a 60-step instruction sheet on how to perform tax fraud through TurboTax.

So local cops have to do the IRS’s job of stopping the thieves who take $5 billion of our taxes annually while the IRS is busy building a new preparer regulation bureaucracy at the behest of the national tax prep firms.  Priorities!

 

 Courtney A. Strutt Todd: Congratulations on Your Scholarship. Don’t Forget to Pay Uncle Sam (Davis Brown Tax Law Blog)

TaxProf, Tax Planks in Democratic Party Platform

Andrew Mitchel, Partnership Definition

Martin Sullivan, The Effects of Interest Allocation Rules in a Territorial System (Tax.com)

Linda Beale, Romney and Private Equity’s Questionable Schemes for Paying Very Little Tax

Kay Bell, Tax moves to make in September 2012

Robert D. Flach has a new Buzz roundup of tax blog posts.

Jim Maule offers A Peek at the Production of Tax Ignorance.  It’s booming.

I think spending less than you earn works even betterDo Mandates or Tax Subsidies Do a Better Job of Boosting Savings?

Have a nice dayCBO: Federal Healthcare Spending Will Exceed Discretionary Spending by 2016 (William McBride, Tax Policy Blog)

GIGO: it’s Tax Court Doctrine!  From a case rejecting a taxpayer’s use of TurboTax as an excuse for a bad return:

It is apparent that a portion of the information petitioner entered into the TurboTax program was incorrect; hence the mistakes made (which resulted in the underpayment) were made by petitioner, not TurboTax. TurboTax is only as good as the information entered into its software program. See Bunney v. Commissioner, 114 T.C. 259, 267 (2000). Simply put: garbage in, garbage out.

Tim Geithner, call your office.

Cite:  Bartlett, T.C. Memo 2012-254.

Related:  Reason #17 to Hire Me: Blaming Turbo Tax Can Not Protect You From Penalties (Anthony Nitti)

 

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Tax Roundup, 8/7/12: sales taxes, Olympian taxes, California fever dreaming.

Tuesday, August 7th, 2012 by Joe Kristan

Iowa’s sales taxes are right in the middle, per this map from the Tax Policy Blog:

 

Roger McEowen: 2012 Drought Raises Questions About Deferring Crop Insurance, Livestock Sales and Cash Forward Grain Contracts 

California ponders suicideCalifornia’s Proposition 30 would raise top income tax rate, sales taxes  (Kay Bell)  California already has one of the highest tax burdens in the nation, but the bill would raise the top marginal rates to 12.3% on income over $500,000 — with no deduction for state taxes.  In a state where over 12,000 public employee retirees have pensions over $100,000, the problem probably isn’t that taxes are too low.

Brian Strahle, Texas “Fresh Start” Amnesty Program Ends August 17, 2012 – What Should You Do?

TaxGrrrl, President Obama Supports Tax Exemption for Olympic Athletes.  It’s too bad that the expats and others victims of the current jaywalker-shooting policy of enforcing offshore reporting requirements never learned to run fast, do gymnastics, or play basketball.   Andrew Mitchel reports that 189 U.S. citizens expatriated in the second quarter of 2012.  No doubt IRS harassment was behind some of these.

TaxTV: The Truth on Taxation of Olympic Gold Medals

Dan Meyer, “And Uncle Sam and his IRS Revenue Agent Buddy Step to the Podium”

Is there a gold medal for this? The Title of Most Awful Accountant in the World Is Spoken For (Going Concern)

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Quick hits

Wednesday, March 21st, 2012 by Joe Kristan

There’s much good stuff out there on taxes that I would to spend all day reading and posting about.  Tax returns pay better, though, so here are links to better reading for those of you with more persistence and longer attention spans:

Finally, Andrew Mitchel shows how voluntary expatriations have soared in the wake of the IRS foreign compliance pogrom, with this chart:

http://intltax.typepad.com/.a/6a00e54fb13f5188340168e8ff8a37970c-pi

Courtesy Andrew Mitchel

When you fire into the crowd, the crowd will scatter.

 

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Jaywalkers flee the gunfire

Thursday, February 2nd, 2012 by Joe Kristan

From Andrew Mitchel’s International Tax Blog:

In 2011, the total number of expatriates was 1,781, a 16% increase from 2010. Last year had the highest number of expatriates since at least 2004 (when I started keeping these records), and perhaps the most in any year in U.S. history.
According to the I.R.S., an estimated five to seven million U.S. citizens reside abroad. Many of these individuals have never lived in the U.S. and never expect to live in the U.S. However, these U.S. citizens must annually file U.S. tax returns.
For example, I spoke with a Canadian the other day who was born to two U.S. citizen parents in Canada. This individual therefore is a U.S. citizen. However, he has never lived in the U.S. and never expects to live in the U.S. Despite that he has never lived in the U.S., he will have to file U.S. tax returns for his entire working life.

The IRS hits people like these — many of whom had no idea they were supposed to be filing — with severe financial penalties. Meanwhile, it provides relatively cushy deals with actual criminals through its OVDI program, because you have to shoot the jaywalkers to really slap the wrists of the serious offenders. No wonder the jaywalkers don’t want to play anymore.
Update: The TaxProf has more.

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Flight of the jaywalkers

Thursday, August 18th, 2011 by Joe Kristan

The dedication of the IRS to shooting jaywalkers in their foreign account compliance programs is yielding impressive results. From Andrew Mitchel:

The number of Published Expatriates for the second quarter of 2011 was 519. This is the second highest number of quarterly Published Expatriates during the past seven years. The only higher quarter during this time was the second quarter of 2010, with 560 Published Expatriates.
If current trends continue, the number of Published Expatriates for 2011 will exceed 2010 by 30% or more. The following graph shows the quarterly average number of Published Expatriates since 2004.


It’s a tribute to the sensitive and judicious IRS handling of trivial violations of the foreign account reporting rules.

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Big news for Americans in the UK:

Tuesday, August 16th, 2011 by Joe Kristan

London may be burning, but there’s one piece of good news for Americans across the pond. Andrew Mitchel explains the new IRS Rev. Rul. 2011-19.

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Hot video: the Big Busted 351 Transaction

Thursday, June 30th, 2011 by Joe Kristan

Is tax geekery suited for video? Andrew Mitchel, proprietor of the International Tax Blog, means to find out. He has posted a YouTube video on failed tax-free incorporations. Check it out for yourself.

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Foreign accounts: IRS relaxed some deadlines for old years, but not for this year.

Friday, June 17th, 2011 by Joe Kristan

From Andrew Mitchel’s International Tax Blog:

In Notice 2011-54, the I.R.S. has provided an additional extension for persons having signature authority over, but no financial interest in, a foreign financial account in 2009 or earlier calendar years for which the reporting deadline was extended by Notice 2009-62 or Notice 2010-23. These persons now have until November 1, 2011, to file FBARs with respect to those accounts. The deadline for reporting signature authority over, or a financial interest in, foreign financial accounts for the 2010 calendar year remains June 30, 2011.

LInk: Notice 2011-54
Other coverage:
Federal Tax Crimes Blog: Pre-2010 FBAR Filing Extension to 11/1/11 for Signatories Only

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Mechanics of carried interests

Monday, May 16th, 2011 by Joe Kristan

“Carried interests” of hedge fund and private equity fund managers remain a political hot potato. They are a form of “profits interests” in partnerships. Andrew Mitchel LLC has put up a great chart explaining the mechanics of how these things are taxed.

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Jaywalkers flee the gunfire

Monday, March 7th, 2011 by Joe Kristan

I have likened the government’s brutal penalties for trivial failures to report offshore bank accounts to “shooting jaywalkers.” U.S. Citizens posted abroad for work or living abroad find penalties in the tens of thousands, or even hundreds of thousands of dollars, for failing to file the “FBAR” Form TD 90-22.1. The IRS is proposing these penalties even for taxpayers who attempted to come into compliance in the 2009 “amnesty” for FBAR penalties.
Now Andrew Mitchel reports that renunciation of U.S. citizenship is soaring:
20110307-1.jpg
The FBAR rules require U.S. citizens to file an FBAR report whenever they have a foreign bank account with a balance that rises over $10,000 in a year. Penalties can be up to half the account balance for each year the account is not reported. Americans who have move abroad after getting married, or who have taken overseas jobs, have found themselves in violation of a rule that many had never heard of. No wonder many Americans abroad have decided that it’s just too risky and expensive to remain U.S. citizens.
The IRS is conducting another FBAR amnesty. We can only hope this one is better-run than the last one. Meanwhile, an organization called American Citizens Abroad is collecting FBAR horror stories in an attempt to change government policy towards minor FBAR violators.
Update, 3/10/2011: The TaxProf has more.

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Wait – you want me to withold on interest I pay to my broker?

Thursday, February 24th, 2011 by Joe Kristan

If you have an offshore margin account, you just might have to withhold and remit U.S. taxes on interest paid to your stockbroker. Andrew Mitchel explains.

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IRS adjusts housing cost allowances for overseas taxpayers

Thursday, February 3rd, 2011 by Joe Kristan

The IRS has adjusted the housing exclusion numbers for overseas residents (Notice 2011-8). Andrew Mitchel explains.

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Digging to the bottom of the stocking

Monday, December 20th, 2010 by Joe Kristan

Mom knitted us all giant Christmas stockings — so big it seemed like we could always find another piece of chocolate down there somewhere.
The new tax law signed last week is sort of like that. We’ll be finding goodies for weeks, probably. Unfortunately, it’s like a stocking with a few scorpions in the bottom too.
For payroll providers, the first challenge will be dealing with the 2011 2 percentage-point reduction in employee (but not employer!) FICA. The IRS has issued guidance (IR-2010-124), including an option for employers who can’t get their systems updated in time for their first 2011 payrolls to withhold at the old rates and refund the overpayment during the first quarter.
Meanwhile, the tax blog world is digging down into the stockings:
Roger McEowen summarizes the thing, as does Robert D. Flach.
Peter Pappas covers the payroll tax relief provisions.
Roni Deutch compares the FICA tax break to the now-defunct “making work pay” credit.
Kay Bell explains the choices available to people who die this year — well, to their executors.
Linda Beale calls for death to the fascist insect who preys on the life of the working people.
Andrew Mitchel reminds us that the rule that allows controlled foreign corporations to not treat interests, dividends, rents and royaltes received from another CFC as foreign personal holding company income.
You can find our discussion here.

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Don’t be an international scam victim

Wednesday, November 3rd, 2010 by Joe Kristan

Nobody is really going to come to you from across the ocean with a risk-free opportunity to make a bunch of money. Sadly, the belief in financial unicorns leads many to grief, as Andrew Mitchel notes:

I don

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What price citizenship?

Thursday, October 28th, 2010 by Joe Kristan

Sobering statistics from international tax attorney Andrew Mitchel show that Americans are turning in their passports in record numbers.
20101028-1.jpg
It could be just a coincidence that this increase occurs as Treasury steps up its shoot-the-jaywalkers approach to international tax compliance, but I doubt it.
Related: FBAR est FUBAR

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A Prius driving backwards?

Thursday, July 29th, 2010 by Joe Kristan

Andrew Mitchell explains what a “reverse hybrid” is in “Hybrid Entities and Reverse Hybrid Entities.”

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Details on the ‘Jobs’ bill

Monday, March 22nd, 2010 by Joe Kristan

Roger McEowen provides details on the recently-enacted “jobs” legislation, including the forgiveness of employer FICA and the $1,000 tax credit for “qualified” new employees.
Andrew Mitchell has more on the international tax “shoot the jaywalker” $10,000 penalties for failing to disclose foreign assets:

The accuracy related penalty under Code

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Unintended consequences of the offshore crackdown

Monday, March 8th, 2010 by Joe Kristan

International tax lawyer Phil Hodgen files a report from his recent trip to Asia that should give us pause to consider how we deal with taxes of our offshore taxpayers:

Here

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Run for the border

Friday, March 5th, 2010 by Joe Kristan

Andrew Mitchel:

Today the Treasury Department published the names of individuals who renounced their United States citizenship (

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