TAX CONTROVERSY 360
TAX CONTROVERSY 360
McDermott’s Real-Time Tax Disputes Insights
TAX CONTROVERSY 360
McDermott’s Real-Time Tax Disputes Insights
Uncategorized
Subscribe to Uncategorized's Posts

DOJ Announces Largest Employee Retention Credit Fraud Indictment

by , and | Jan 28, 2025 |

On January 22, 2025, the US Department of Justice (DOJ) announced the indictment of seven individuals in the largest Employee Retention Credit (ERC) fraud scheme to date. According to the indictment, the defendants filed more than 8,000 refund claims for ERCs and Sick and Family Leave Credits (SFLCs), totaling more than $600 million.

The ERC and SFLC programs were designed to help businesses retain employees on the payroll during the COVID-19 pandemic. Prosecutors allege that the defendants exploited these programs by submitting fraudulent claims on behalf of ineligible businesses, inflating employee numbers, and misrepresenting wages. DOJ asserted that the defendants concealed their involvement by not identifying themselves as preparers on the returns, using virtual private networks and through other means.

Practice Point: DOJ’s announcement makes clear that ERC fraud remains an enforcement priority for 2025. Taxpayers and tax professionals should prepare now to defend their ERC claims, including by compiling and maintaining substantiation to support each claim, and be ready to take immediate steps should they receive an IRS audit notice, a request for documentation or information, or are otherwise contacted by the government.

Read more here.



read more

Update on Exit Tax for Investment Shares

by and | Jan 6, 2025 |

Exit taxes will apply to private investors in investment funds who leave Germany and have purchased investment shares priced at a minimum of €500,000, including common exchange-traded funds. This was decided by the German Federal Parliament (Bundestag) and the German Federal Council (Bundesrat) via the Annual Tax Act 2024 (Jahressteuergesetz 2024).

The new regulation will apply starting January 1, 2025. However, investors can ensure that the exit tax does not apply or is only payable in installments – even after January 1, 2025. Similar rules on exit taxes are already applied to corporations and business investors, such as entrepreneurs. The new rule does not directly affect custodian banks and financial investment management companies.

Read more here.



read more

Margie Rollinson Becomes First Female IRS Chief Counsel

by | Mar 7, 2024 |

On March 6, 2024, the Internal Revenue Service (IRS) announced that Margie Rollinson has been sworn in as the 49th chief counsel, making her the first female to take on the role. The position has been vacant since Michael Desmond stepped down on January 20, 2021. It took nearly a year for the US Senate to confirm his appointment. We previously reported on Ms. Rollinson’s nomination to the top job.

Ms. Rollinson began her career at Ernst & Young (EY) in 1987, became a partner in 1997 and was eventually named Deputy Director of the National Tax Department, where she also led the International Tax Technical Committee.

In 2013, Ms. Rollinson left EY and joined the IRS Office of Chief Counsel as the Technical Deputy Associate Chief Counsel in the Office of the Associate Chief Counsel International. In 2016, she was named Associate Chief Counsel International and oversaw 100 tax lawyers responsible for issuing published guidance and providing technical guidance.

Practice Point: The IRS Chief Counsel position is appointed by the President of the United States (with the advice and consent of the Senate) and serves as the chief legal advisor to the IRS Commissioner on all matters pertaining to the interpretation, administration and enforcement of the Internal Revenue Code. Under the Internal Revenue Service Restructuring and Reform Act of 1998, the Chief Counsel reports to both the IRS Commissioner and the General Counsel of the Department of Treasury.



read more

Issues With the IRS? Here’s Why More Taxpayers Should Enlist the Help of the Taxpayer Advocate Service

by and | Jan 12, 2024 |

The Taxpayer Advocate Service (TAS) recently released its annual report to US Congress. The report highlights the TAS’s accomplishments in 2023 and its continued areas of focus and concern in the new year. While the report is an interesting read, in this article we discuss why it’s beneficial for taxpayers to have the TAS involved in their cases.

Created in 1996 by Congress, the TAS is an independent agency within the Internal Revenue Service (IRS). Its mission is to assist taxpayers with systematic issues involving the IRS. For example, suppose you are owed a refund and have been waiting to receive the check for two years now. Or perhaps you changed the name of your business, and the IRS keeps rejecting your returns because the name in their system does not match the new name because the name change has not been processed yet by the IRS. The TAS can typically help in these specific examples and in other similar IRS snafus.

To start the process, file Form 911 with your local TAS office. We suggest providing a comprehensive explanation of the issue you are facing and the steps you have taken to try and fix it in your Form 911. This will help the TAS advocate assigned to your case with getting you a solution quicker.

Practice Point: The TAS is not only for individual taxpayers. We have sought their assistance for all sorts of taxpayers, including large multinational public companies. We cannot emphasize enough how much faster it is to resolve an IRS issue with the help of the TAS rather than calling the general IRS service phone number or writing countless letters to the IRS.



read more

IRS Criminal Investigation Division Is on the Hunt for Malta Pension Plan Participants and Promoters

by , , and | Jul 25, 2023 |

There has been a growing trend of US taxpayers contributing non-cash assets, such as appreciated property, securities and cryptocurrency, into Maltese pension plans since the US-Malta Tax Treaty went into effect in 2011. These transactions were marketed to many US taxpayers as a way to cash in on their earnings without being subject to US federal taxation. The Internal Revenue Service (IRS) is now investigating these transactions as possible tax fraud and evasion.

Read more.



read more

President Biden Announces IRS Chief Counsel Nominee

by and | Jun 6, 2023 |

On June 2, 2023, US President Joe Biden announced that he has picked Marjorie Rollinson as the Internal Revenue Service (IRS) Chief Counsel, the top attorney position at the IRS. Rollinson has had a distinguished career in tax service, both in the public and private sectors, and would be the first woman to serve in the role if confirmed by the US Senate. She began her career at Ernst & Young (EY) in 1987, became a partner in 1997 and was eventually named Deputy Director of the National Tax Department where she also led the International Tax Technical Committee.

In 2013, she left EY and joined the Office of Chief Counsel as the Technical Deputy Associate Chief Counsel in the Office of the Associate Chief Counsel International. In 2016, she was named Associate Chief Counsel International where she oversaw 100 tax lawyers responsible for issuing published guidance and providing technical guidance.

Practice Point: The Chief Counsel position has been vacant since Michael Desmond stepped down on January 20, 2021. It took nearly a year for the Senate to confirm his appointment. Senate Finance Committee Chairman Ron Wyden made a statement that he hopes the Senate will be able to process the nomination quickly given the complexity and demands of leading the IRS’s legal team.



read more

Senate Confirms New IRS Commissioner

by and | Mar 13, 2023 |

The US Senate has confirmed Daniel Werfel as the next commissioner of the Internal Revenue Service (IRS). The Senate voted 54-42, achieving bipartisan support for the nominee.

Undoubtedly on top of Werfel’s priority list will be how to deploy the agency’s $80 billion in new funding provided by the Inflation Reduction Act of 2022. During his confirmation hearing, Werfel said he did not plan to boost audit rates for taxpayers making less than $400,000 a year but would focus on compliance for the highest income earners. He also mentioned modernizing taxpayer service at the IRS.

Werfel is not new to the commissioner post as he previously served as acting commissioner from May to December 2013 during the Obama administration. He also previously served in the Office of Management and Budget. Werfel’s new appointment will run until November 2027.

Practice Point: We are interested to see how the IRS will be administered under Werfel. The IRS has numerous challenges ahead, but we are hopeful that Werfel, along with the additional funding allotted by US Congress, will usher in a new era for the agency.



read more

McDermott Named #1 Firm for Tax Thought Leadership

by | Mar 6, 2023 |

We greatly appreciate our readers over the past year and are pleased to share that we were recently recognized as the #1 firm for tax thought leadership in the 2023 JD Supra Readers’ Choice Awards, which acknowledge top authors and firms for their thought leadership in key topics during all of last year. Partner and blog editor Andrew Roberson was also recognized as a “Top Author” for tax.

Through our various blogs, thought leadership pieces and tax-focused events, we are dedicated to maintaining our position as a leading firm for tax work and keeping clients abreast of significant and relevant topics in the industry.



read more

President Biden to Nominate New IRS Commissioner

by and | Nov 10, 2022 |

On November 10, 2022, US President Joe Biden announced his intent to nominate Danny Werfel to serve as Commissioner of the Internal Revenue Service. US Secretary of the Treasury Janet Yellen has expressed her support for Werfel’s nomination. Charles Rettig, whose term expires on November 12, 2022, is the current IRS Commissioner and Doug O’Donnell has been selected to serve as acting IRS Commissioner until the position is formally filled.

The White House press release provides the following background on Werfel:

Danny Werfel is a public and private sector leader who has served under both Democratic and Republican administrations. Across more than 15 years of government service, Werfel served President Barack Obama and President George W. Bush to lead some of the governments’ most complex management challenges as the Internal Revenue Service (IRS) Acting Commissioner and Office of Management and Budget (OMB) Controller. In the wake of an Inspector General report alleging various forms of mismanagement and bias in the determination of tax-exempt status for non-profit organizations, President Obama appointed Werfel to serve as Acting Commissioner of IRS in 2013. Werfel provided immediate stability to the IRS, effectively responding to numerous Congressional investigations, successfully launching the Affordable Care Act technology that IRS was responsible for, and navigated the IRS through a multi-week government shutdown. At the end of his tenure, both the majority and minority leaders of the Senate Finance Committee publicly recognized his contribution and performance. As OMB Controller, Werfel successfully led a cross-government effort to ensure the $787 billion American Recovery and Reinvestment Act was implemented transparently and with minimal fraud or error. He also led the government-wide efforts to prepare for and implement the budget sequester of FY2013. Werfel played a key role under the Bush Administration in the implementation of the Emergency Economic Stabilization Act of 2008, overseeing the efforts of the Office of Financial Stability to achieve a clean financial statement audit in its first year of existence.

 

Werfel has spent the last nine years at Boston Consulting Group where he helped launch their U.S. public sector practice. He holds a Bachelor of Science in Industrial and Labor Relations (with honors) from Cornell University, a Juris Doctor (with honors) from the University of North Carolina, Chapel Hill, and a Master of Public Policy from Duke University. Werfel lives in the District of Columbia with his wife and two children.



read more

Former Tax Court Judge Herbert Chabot Passes Away

by and | Oct 17, 2022 | ,

The US Tax Court announced that former Judge Herbert Chabot passed away on October 11, 2022.

Judge Chabot joined the Tax Court in 1978, serving as a regular judge and then as a senior judge for almost 40 years. Before being appointed to the Tax Court, he served on the staff of the Congressional Joint Committee on Taxation for over a dozen years. Prior to that, he clerked at the Tax Court, served on the Legal Staff of the American Jewish Congress and served in the US Army and the Army Reserves.

We both knew Judge Chabot well during our time clerking at the Tax Court. He was very thoughtful and cared deeply about reaching the correct result in each case. The Tax Court’s announcement aptly states: “He was a delightful storyteller and often regaled his colleagues and law clerks with wonderful stories. His charm, humor, and ubiquitous bowtie will be missed.”



read more

BLOG EDITORS

Evan Walters

Edward Froelich

Michael Scarduzio

STAY CONNECTED

Subscribe

TOPICS

ARCHIVES

jd supra readers choice top firm 2023 badge