Tax Controversy and Financial Crimes Report

Our colleague Ernest Badway writes about a recent decision in a federal criminal case rejecting the defendant’s argument that there was no securities fraud because he was selling digital tokens. The case involved charges that the defendant had defrauded investors in an initial coin offering. Ernie writes that “[o]ne of the big takeaways from this case is that courts, at least, initially, seem to be reluctant to claim crypto instruments are not securities. It almost appears that, like…
Your company is under investigation. You hire outside counsel to debrief your employees about the allegations. But are the interviews privileged? Do you have to provide each employee with his or her own attorney? The fourth episode of Matthew D. Lee’s new five-part podcast, “Federal Agents at the Door,” cuts through the confusion surrounding legal representation during an investigation. A partner in the firm’s White-Collar Criminal Defense & Regulatory Compliance Practice, Matt explains why…
We recently wrote on the new proposed regulations addressing the availability of charitable deductions when taxpayers receive or expect to receive corresponding state or local tax credits for contributions.  The proposed regulations require a taxpayer who makes a contribution to a charitable organization to reduce his charitable deduction by any state or local tax credit that he receives or expects to receive.  Readers may find more about the proposed regulations here.  After the proposed…
The Bipartisan Budget Act of 2018 eases the requirements for combat-zone contractors to claim the foreign earned income exclusion.  A U.S. citizen is generally taxed on his worldwide income.  The foreign earned income exclusion, however, allows a taxpayer to exclude foreign income from his gross income for U.S. tax purposes, up to a certain dollar threshold.  For 2018, the threshold is $103,900. But the exclusion only applies to a taxpayer whose tax home is in…
In a move sure to send shock waves through the offshore banking community, the Justice Department yesterday announced its first criminal conviction for violating the Foreign Account Tax Compliance Act (FATCA). Adrian Baron, the former Chief Business Officer and Chief Executive Officer of Loyal Bank Ltd, an offshore bank with offices in Budapest, Hungary and Saint Vincent and the Grenadines, pleaded guilty in Brooklyn federal court to conspiring to defraud the United States by failing…
The Internal Revenue Service Large Business and International division (LB&I) has announced the approval of five additional compliance campaigns. LB&I announced on January 31, 2017, the rollout of its first 13 campaigns, followed by 11 campaigns on November 3, 2017, five campaigns on March 13, 2018, six campaigns on May 21, 2018, and five more on July 2, 2018. In addition, LB&I continues to review the tax reform legislation enacted on December 22, 2017, to…
The Treasury Department recently issued proposed regulations addressing the availability of charitable deductions when taxpayers receive or expect to receive corresponding state or local tax credits for contributions.  The proposed regulations require a taxpayer who makes a contribution to a charitable organization to reduce his charitable deduction by any state or local tax credit that he receives or expects to receive. Taxpayers have traditionally been allowed itemized deductions for paying state and local taxes.  The…
Your company is under investigation. Or maybe you suspect it will be in the future. What should you do with its computer files, documents and other potential evidence? Here’s a hint: step away from the paper shredder. In episode three of his new five-part podcast, “Federal Agents at the Door,” Matthew D. Lee explains your obligation to preserve evidence. Matt, a former Justice Department trial attorney and partner in Fox Rothschild’s White-Collar Criminal Defense & Regulatory…
Fox Rothschild LLP Partner Matthew D. Lee recently authored an updated version of the Foreign Account Tax Compliance Act Answer Book, published by Practising Law Institute. Lee’s book provides a detailed analysis of the international tax compliance regime imposed by the Foreign Account Tax Compliance Act and its impact on foreign financial institutions, withholding agents and U.S. citizens and residents with offshore bank accounts and investments. In the updated book, Lee describes the latest developments…
August 23, 2018 Articles Law360 By Matthew D. Lee Two weeks ago federal prosecutors announced criminal tax charges against the owners of five Chicago-area restaurants as part of an ongoing federal investigation into the underreporting of gross receipts using sales suppression software. The charges allege that the defendants willfully avoided paying the full amount of federal taxes by reporting gross receipts that were substantially lower than the true amounts. This case appears to be the…