International Financial Law Prof Blog

Editor: William Byrnes
Texas A&M University
School of Law

Friday, December 7, 2018

process for all voluntary disclosures (domestic and offshore) following the closing of the Offshore Voluntary Disclosure Program (2014 OVDP) on September 28, 2018

Background and Overview of Updated Procedures

The 2014 OVDP began as a modified version of the OVDP launched in 2012, which followed voluntary disclosure programs offered in 2011 and 2009. These programs were designed for taxpayers with exposure to potential criminal liability or substantial civil penalties due to a willful failure to report foreign financial assets and pay all tax due in respect of those assets. They provided taxpayers with such exposure potential protection from criminal liability and terms for resolving their civil tax and penalty obligations. Taxpayers with unfiled returns or unreported income who had no exposure to criminal liability or substantial civil penalties due to willful noncompliance could come into compliance using the Streamlined Filing Compliance Procedures (SFCP), the delinquent FBAR submission procedures, or the delinquent international information
return submission procedures. Although they could be discontinued at any time, these other programs are still available.

Procedures in this memo will be effective for all voluntary disclosures received after the closing of the 2014 OVDP on September 28, 2018. All offshore voluntary disclosures conforming to the requirements of “Closing the 2014 Offshore Voluntary Disclosure Program Frequently Asked Questions and Answers” FAQ 3 received or postmarked by September 28, 2018 will be handled under the procedures of the 2014 OVDP. For all other voluntary disclosures (non-offshore) received on or before September 28, 2018, the Service has the discretion to apply the procedures outlined in this memorandum.

The objective of the voluntary disclosure practice is to provide taxpayers concerned that their conduct is willful or fraudulent, and that may rise to the level of tax and tax-related criminal acts, with a means to come into compliance with the law and potentially avoid criminal prosecution. Download Ovdp 2018 onward

Proper penalty consideration is important in these cases. A timely voluntary disclosure
may mitigate exposure to civil penalties. Civil penalty mitigation occurs by focusing on a
specific disclosure period and the application of examiner discretion based on all
relevant facts and circumstances including prompt and full cooperation (see IRM during the civil examination of a voluntary disclosure. Managers must ensure
that penalties are applied consistently, fully developed, and documented in all cases.
The terms outlined in this memorandum are only applicable to taxpayers that make
timely voluntary disclosures and who fully cooperate with the Service.


December 7, 2018 in GATCA, Tax Compliance | Permalink | Comments (0)

Wednesday, December 5, 2018

Latin American Ministers launch regional initiative to combat tax evasion and corruption

Uruguay’s Minister of Economy and Finance Danilo Astori hosted  a discussion with Ministers, high level representatives and senior officials from Latin America on how to strengthen regional efforts to combat tax fraud and corruption. The meeting concluded with the signing of  the  the Punta del Este Declaration in which the Ministers and Deputy Ministers of Uruguay, Argentina, Panama and Paraguay agreed to:

  • Establish a Latin American initiative to maximise the effective use of the information exchanged under the international tax transparency standards to tackle tax evasion, corruption and other financial crimes.
  • Explore further means of cooperation including wider use of the information provided through exchange of tax information channels for other law enforcement purposes as permitted under the multilateral Convention on Mutual Administrative Assistance in Tax Matters and domestic laws, and also effective and real-time access to beneficial ownership information.
  • Establish national action plans to further the cooperation objectives and have representatives report on the progress made at the next plenary meeting of the Global Forum.

At the meeting, hosted by Uruguay in the margins of the 11th Global Forum Plenary, the gathered officials also encouraged other interested jurisdictions to join the regional initiative, with additional signatures anticipated in the near future. 

December 5, 2018 in BEPS, OECD, Tax Compliance | Permalink | Comments (0)

Tuesday, December 4, 2018

Irish Finance Minister announces agreement between Revenue Commissioners & Maltese tax authority to prevent ‘Single Malt’ structure

The Minister for Finance and Public Expenditure and Reform, Paschal Donohoe TD, today (Tuesday) welcomed the publication by the Revenue Commissioners of a Competent Authority Agreement that has been reached with the Maltese authorities. 

The Competent Authority Agreement outlines the shared understanding of the authorities in Ireland and Malta that the BEPS Multilateral Convention on Tax Treaties will, once it is in effect in both jurisdictions, make clear that it is not the purpose of the bilateral Ireland-Malta Tax Treaty to enable an aggressive tax planning structure referred to as the ‘Single Malt’. This Agreement will ensure that the Treaty does not enable that aggressive structure.  

Commenting on the Agreement, Minister Donohoe said: ‘While I am confident that US tax reform has already significantly reduced the concerns around the Single Malt structure, I had asked officials to examine any further bilateral action that may be needed.  I am pleased that this agreement has been reached which should eliminate any remaining concerns about such structures. This is another sign of Ireland’s commitment to tackling aggressive tax planning, as set out in Ireland’s Corporation Tax Roadmap’.

The Competent Authority Agreement will be effective as soon as the BEPS Multilateral Convention is in effect for both Ireland and Malta.  Ireland is taking the last legislative steps to ratify this Convention in the Finance Bill 2018 and intends to deposit the final documents with the OECD in early January. 

Ireland remains committed to tax reform implemented at the international level, to address mismatches between jurisdictions and to continue the implementation of new robust global standards that are sustainable in the long run.

Notes for Editors

Concerns have been raised about an aggressive tax planning structure which may have involved some multinationals using a company incorporated in Ireland but tax-resident in Malta.  While US tax reforms introduced at the end of 2017 should have substantially reduced the benefits of operating this type of structure, Minister Donohoe asked officials to investigate what action was needed domestically or bilaterally to resolve any remaining concerns.

Discussions with Malta have been ongoing and have now resulted in a Competent Authority Agreement being reached.  A Competent Authority Agreement is an agreement between the tax authorities in two countries on the interpretation or application of a tax treaty between those countries, which is a treaty intended to avoid double taxation arising. Typically, the Mutual Agreement Procedure Article of such a bilateral tax treaty facilitates entering into this type of agreement.

Competent Authority Agreement between Ireland and Malta

A new Tax and Duty Manual Part 35-01-10 has been created which sets out a Competent Authority Agreement entered into by the Irish and Maltese Competent Authorities under Article 24 (Mutual Agreement Procedure) of the Ireland-Malta Double Taxation Convention.

Revenue, as Competent Authority with respect to the Convention between Ireland and Malta for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income (‘Double Taxation Convention’), has signed a Competent Authority Agreement with the Maltese Competent Authority.

The Competent Authorities have agreed that, in relation to the structure outlined in the Competent Authority Agreement, the Double Taxation Convention’s deeming of a company – incorporated in Ireland but managed and controlled in Malta – to be resident in Malta only, does not serve the purposes of the Double Taxation Convention and is not “for those purposes”.

Accordingly, under Section 23A of the Taxes Consolidation Act 1997, such an Irish-incorporated company will be resident in Ireland and the relevant payments to it will come within the charge to Irish corporation tax.

This Competent Authority Agreement will have effect for taxable periods beginning on or after the expiration of a period of six months from the later of the dates on which the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting enters into force for Ireland and Malta.

December 4, 2018 in Tax Compliance | Permalink | Comments (0)

Monday, December 3, 2018

TaxFacts Intelligence Weekly (Dec. 3)


SEC Announces New Disclosure Requirements for Variable Annuities and Life Insurance 
The SEC recently proposed a rule change designed to improve disclosures with respect to variable annuities and variable life insurance contracts. The new disclosure obligations would help investors understand the features, fees and risks to these types of products in an effort to allow investors to make more informed investment decisions. Under the proposal, annuity and life insurance carriers would be entitled to provide information to investors in a summary prospectus form that would provide a more concise summary of the terms of the contract. For more information on variable annuities, visit Tax Facts Online and Read More.

Digging Into the Details of Hardship Distributions for Primary Residence Purchases
Qualified plans can to allow participants to take hardship distributions to help with the purchase of a primary residence. The distribution must be directly taken to purchase the residence--items such as renovations made prior to move-in do not qualify. Despite this, the distribution can cover more than just the purchase price of the residence itself. Closing costs would also qualify, as would the cost of a piece of land upon which the primary residence would be built. If a participant buys out a former spouse's interest in a jointly-owned home pursuant to divorce, the distribution would also qualify. For more information on the hardship distribution rules, visit Tax Facts Online and Read More.

Avoiding Gift Tax Traps This Holiday Season
Most taxpayers believe that they are not required to file a gift tax tax return if they do not owe gift taxes--as many will not because of the current $11.18 million gift tax exemption will shield most donors from gift tax liability. Despite this, each gift made during a donor's lifetime serves to reduce that $11.18 million amount, which applies both to lifetime gifts and transfers made at death. Taxpayers must file Form 709 to report taxable gifts in excess of the annual exclusion amount to avoid potential IRS penalties for failure to file a return. The form is required not because gift taxes are owed, but to provide the IRS with a mechanism for tracking any given taxpayer's use of the exemption amount during life. For more information on the gift tax filing requirements, visit Tax Facts Online and Read More.

December 3, 2018 in Tax Compliance | Permalink | Comments (0)

Thursday, November 29, 2018

IRS issues proposed regulations on foreign tax credits

 The Internal Revenue Service issued proposed regulations yesterday on foreign tax credits for businesses and individuals.

The 2017 Tax Cuts and Jobs Act (TCJA), legislation passed in December 2017, made major changes to the way the U.S. taxes foreign activities. Significant new provisions include a dividends-received deduction for dividends from foreign subsidiaries and the addition of Global Intangible Low-Taxed Income rules, which subject to current U.S. taxation certain foreign earnings that would have been deferred under previous law.   
The TCJA also modified the foreign tax credit rules, which allow U.S. taxpayers to offset their taxes by the amount of foreign income taxes paid or accrued, in several important ways to reflect the new international tax rules. These changes include repeal of rules for computing deemed-paid foreign tax credits on dividends on the basis of foreign subsidiaries’ cumulative pools of earnings and foreign taxes, and the addition of two separate foreign tax credit limitation categories for foreign branch income and amounts includible under the new Global Intangible Low-Taxed Income provisions. The TCJA also modified how taxable income is calculated for the foreign tax credit limitation by disregarding certain expenses related to income eligible for the dividends-received deduction and repealing the use of the fair market value method for allocating interest expense. The new foreign tax credit rules apply to 2018 and future years.  

Treasury and IRS welcome public comments on these proposed regulations. For details on submitting comments, see the proposed regulations.

Updates on the implementation of the TCJA can be found on the Tax Reform page of

November 29, 2018 in Tax Compliance | Permalink | Comments (0)

Tuesday, November 27, 2018

Global Forum on Tax Transparency marks a dramatic shift in the fight against tax evasion with the widespread commencement of the automatic exchange of financial information

The Global Forum on Transparency and Exchange of Information for Tax Purposes held its annual meeting in Punta del Este, Uruguay on 20-22 November, bringing together over 200 delegates from more than 100 jurisdictions, international organizations and regional groups to strengthen further the international community’s fight against tax evasion.  

The meeting marked the widespread rollout of automatic exchange of financial account of information. Global Forum members took stock of the tremendous progress made in the implementation of the standard of automatic exchange of information (AEOI) with 4 500 successful bilateral exchanges having taken place under the new AEOI Standard in 2018 by 86 jurisdictions. Each exchange contains detailed information about the financial accounts each jurisdiction’s taxpayers hold abroad. Such widespread exchange was also facilitated by the use of the Common Transmission System managed by the Global Forum. Further details can be found in the 2018 AEOI Implementation Report.

Following its review of the legal frameworks, the Global Forum will move to assess the effectiveness of the AEOI Standard in practice. To this end, members adopted a detailed Terms of Reference for such reviews and a work plan further develop, test and refine its approach to conducting the reviews, which will commence in 2020.

The Global Forum also published a further  22 jurisdiction reviews this year in relation to the exchange of information on request (EOIR), which has only increased in relevance with the move to AEOI and transparency initiatives in relation to base erosion and profit shifting (BEPS).

In other developments at the meeting, Global Forum members commended the technical assistance work carried out to support jurisdictions in implementing the standards effectively. This work has grown enormously, and is a truly combined effort of the Global Forum, donors, other international organizations and regional groups, working together towards a common goal.

The Global Forum delegates also welcomed the Punta de Este Declaration which sets up a Latin American initiative to maximize the potential of the effective use of the information exchanged under the international tax transparency standards to not only tackle tax evasion, but also corruption and other financial crimes. This improved international tax cooperation will help counter practices contributing to all forms of financial crimes and improve direct access to information of common interest to all relevant agencies.

The next plenary meeting to be held in 2019 will mark the 10th anniversary of the Global Forum. This will be a key moment to reflect on the role it has played in the effective implementation of the tax transparency standards across the globe and its future direction.

November 27, 2018 in OECD, Tax Compliance | Permalink | Comments (0)

Monday, November 26, 2018

IRS issues proposed regulations on new business interest expense deduction limit

The Internal Revenue Service issued proposed regulations today for a provision of the Tax Cuts and Jobs Act, which limits the business interest expense deduction for certain taxpayers. Certain small businesses whose gross receipts are $25 million or less and certain trades or businesses are not subject to the limits under this provision.

For tax years beginning after Dec. 31, 2017, the deduction for business interest expense is generally limited to the sum of a taxpayer’s business interest income, 30 percent of adjusted taxable income and floor plan financing interest. Taxpayers will use new Form 8990, Limitation on Business Interest Expense Under Section 163(j), to calculate and report their deduction and the amount of disallowed business interest expense to carry forward to the next tax year.

This limit does not apply to taxpayers whose average annual gross receipts are $25 million or less for the three prior tax years. This amount will be adjusted annually for inflation starting in 2019.

Other exclusions from the limit are certain trades or businesses, including performing services as an employee, electing real property trades or businesses, electing farming businesses and certain regulated public utilities. Taxpayers must elect to exempt a real property trade or business or a farming business from this limit.

November 26, 2018 in Tax Compliance | Permalink | Comments (0)

IRS Postpones Updating Form W-4 Until 2020 But Provides New TCJA Withholding Guidance for Taxpayers

Notice 2018-92 relates to the Tax Cut and Jobs Act (P.L. 115-97) changes to sections 3402 and 3405, and the IRS’ and Treasury Department’s decision to delay an overhaul of the Form W-4 from 2019 to 2020.  This notice provides interim guidance for 2019 on income tax withholding, requests comments on certain withholding procedures, and indicates that regulations are planned to update the withholding regulations to reflect changes made by the TCJA. 

Specifically, this notice (1) announces that the 2019 Form W-4 will be similar to the 2018 Form W-4, (2) addresses new TCJA “withholding allowance” terminology, (3) continues until April 30, 2019 Notice 2018-14’s temporary suspension of the requirement to furnish new Forms W-4 within 10 days for changes resulting solely from the TCJA, (4) provides that, for 2019, the default rule when an employee fails to furnish a Form W-4 will continue to be single with zero withholding allowances, (5) allows taxpayers to take into account the qualified business income deduction under section 199A to reduce withholding under section 3402(m), (6) announces that the IRS and Treasury intend to update the regulations under section 3402 to explicitly allow taxpayers to use the online withholding calculator or Publication 505, Tax Withholding and Estimated Tax, in lieu of the worksheets to Form W-4, (7) requests comments on alternative withholding methods under section 3402(h) and announces that the IRS and the Treasury Department intend to eliminate the combined income tax withholding and employee FICA tax withholding tables under Treas. Reg. § 31.3402(h)(4)-1(b), (8) modifies notification requirements for the withholding compliance program, and (9) provides that, for 2019, withholding on annuities or similar periodic payments where no withholding certificate is in effect is based on treating the payee as a married individual claiming 3 withholding allowances  under § 3405(a)(4).

November 26, 2018 in Tax Compliance | Permalink | Comments (0)

Sunday, November 25, 2018

IRS Guarantees It Won't Claw Back Large Gifts When $10.2 Million Exemption Extension Expires 2026

Today the IRS announced that individuals taking advantage of the increased gift and estate tax exclusion amounts in effect from 2018 to 2025 will not be adversely impacted after 2025 when the exclusion amount is scheduled to drop to pre-2018 levels.

The Treasury Department and the IRS issued proposed regulations which implement changes made by the 2017 Tax Cuts and Jobs Act (TCJA). As a result, individuals planning to make large gifts between 2018 and 2025 can do so without concern that they will lose the tax benefit of the higher exclusion level once it decreases after 2025.

In general, gift and estate taxes are calculated, using a unified rate schedule, on taxable transfers of money, property and other assets. Any tax due is determined after applying a credit – formerly known as the unified credit – based on an applicable exclusion amount.

The applicable exclusion amount is the sum of the basic exclusion amount (BEA) established in the statute, and other elements (if applicable) described in the proposed regulations. The credit is first used during life to offset gift tax and any remaining credit is available to reduce or eliminate estate tax.

The TCJA temporarily increased the BEA from $5 million to $10 million for tax years 2018 through 2025, with both dollar amounts adjusted for inflation. For 2018, the inflation-adjusted BEA is $11.18 million. In 2026, the BEA will revert to the 2017 level of $5 million as adjusted for inflation.

To address concerns that an estate tax could apply to gifts exempt from gift tax by the increased BEA, the proposed regulations provide a special rule that allows the estate to compute its estate tax credit using the higher of the BEA applicable to gifts made during life or the BEA applicable on the date of death.

Treasury and IRS welcome public comment, and the proposed regulations provide details on how to submit comments.

26 CFR Part 20 [REG-106706-18] RIN 1545-B072 Estate and Gift Taxes; Difference in the Basic Exclusion Amount

November 25, 2018 in Tax Compliance | Permalink | Comments (0)

Friday, November 2, 2018

OECD and CIAT join forces in promoting stronger tax systems

The OECD and the Inter-American Center of Tax Administrations (CIAT) hosted today the high-level event "Base Erosion and Profit Shifting Implementation: Strategic importance, challenges and opportunities" in Lisbon, Portugal.

The purpose of this event was to promote a common understanding of the impact of the BEPS measures developed under the OECD/G20 BEPS Project, focusing on the pivotal role of the Heads of Tax Administrations and decision makers. The event brought together more than 40 tax administration Commissioners, Director Generals and senior officials from CIAT and CREDAF member countries. The discussions focused on the strategic importance of the work on BEPS in the current global tax context, including the importance of political will and open communications with all stakeholders.

The high-profile of the participants fostered enriching discussions about the opportunities and challenges that arise from the implementation of the BEPS measures within their own Tax Administrations, identifying a common ground to mobilise increased domestic resources and enhance the effectiveness of tax systems more generally.

During the event, in a move that showed their efforts to intensify their collaboration, the OECD and CIAT also signed a Memorandum of Understanding (MoU) to continue their co-operation towards promoting fair and efficient tax systems and administrations to strengthen and modernise the international taxation administrative structures.

Marcio Ferreira Verdi, Executive Secretary of CIAT, stated that "international co-operation and the exchange of experiences is fundamental to support the implementation of the BEPS Plan, in Latin America and the Caribbean, there are different success stories, which, like those in other parts of the world, are of great value to strengthen the public revenues of the countries in our region."

 "CIAT is a very important partner and we have a long-standing relationship of mutual benefit. This is just another demonstration of our joint efforts to strengthen the capacities of CIAT member countries in the fight against tax avoidance and evasion. Our joint work is an essential component to engage non-OECD countries in the international tax agenda", said Grace Perez-Navarro, Deputy Director of the OECD's Centre for Tax Policy and Administration.

November 2, 2018 in Tax Compliance | Permalink | Comments (0)

Thursday, November 1, 2018

IRS: Reduced 24 percent withholding rate applies to small businesses and other payers

Publication 1281, Backup Withholding for Missing and Incorrect Name/TIN(s), posted last month on, has been updated to reflect a key change made by the Tax Cuts and Jobs Act (TCJA). As a result of this change, effective Jan. 1, 2018, the backup withholding tax rate dropped from 28 percent to 24 percent.

In general, backup withholding applies in various situations including, but not limited to, when a taxpayer fails to supply their correct taxpayer identification number (TIN) to a payer. Usually, a TIN is a Social Security number (SSN), but in some instances, it can be an Employer Identification Number (EIN), Individual Taxpayer Identification Number (ITIN) or Adoption Taxpayer Identification Number (ATIN). Backup withholding also applies, following notification by the IRS, where a taxpayer underreported interest or dividend income on their federal income tax return.

Publication 1281 is packed with useful information designed to help any payer required to impose backup withholding on any of their payees. Among other things, the publication features answers to 34 frequently asked questions (FAQs). One of them, Q/A 34, points out that a payer who mistakenly backup withheld at an incorrect rate (such as the old 28-percent tax rate, rather than the new 24-percent rate), need not refund the difference to the payee. However, a payer who chooses to refund the difference must do so before the end of the year and can then make appropriate adjustments to their federal tax deposits.

When backup withholding applies, payers must backup withhold tax from payments not otherwise subject to withholding. Payees may be subject to backup withholding if they:

  • Fail to give a TIN,
  • Give an incorrect TIN,
  • Supply a TIN in an improper manner,
  • Underreport interest or dividends on their income tax return, or
  • Fail to certify that they’re not subject to backup withholding for underreporting of interest and dividends.

Backup withholding can apply to most kinds of payments reported on Form 1099, including:

  • Interest payments;
  • Dividends;
  • Patronage dividends, but only if at least half of the payment is in money;
  • Rents, profits or other income;
  • Commissions, fees or other payments for work performed as an independent contractor;
  • Payments by brokers and barter exchange transactions;
  • Payments by fishing boat operators, but only the portion that's in money and represents a share of the proceeds of the catch;
  • Payment card and third-party network transactions; and
  • Royalty payments.

Backup withholding also may apply to gambling winnings that aren't subject to regular gambling withholding.

To stop backup withholding, the payee must correct any issues that caused it. They may need to give the correct TIN to the payer, resolve the underreported income and pay the amount owed, or file a missing return. The Backup Withholding page,  Publication 505, Tax Withholding and Estimated Tax and Publication 1335, Backup Withholding Questions and Answers have more information.

Payers report any backup withholding on Form 945, Annual Return of Withheld Federal Income Tax. The 2018 form is due Jan. 31, 2019. For more information about depositing backup withholding taxes, see Publication 15, Employer’s Tax Guide. Payers also show any backup withholding on information returns, such as Forms 1099, that they furnish to their payees and file with the IRS.

Like regular federal income tax withholding, a payee can claim credit for any backup withholding when they file their 2018 federal income tax return.

For updates on this and other TCJA provisions, visit

Related forms

November 1, 2018 in Tax Compliance | Permalink | Comments (0)

Wednesday, September 26, 2018

IRS Issues Several Country-by-Country Reporting Reminders

1.  IRS Issues Reminder to U.S. MNEs Filing Form 8975 with no U.S. Schedule A (Form 8975)

When submitting Form 8975 and Schedules A (Form 8975), filers must attach at least two Schedules A (Form 8975) to the Form 8975. At least one Schedule A should be for the United States.

A U.S. MNE group with only fiscally transparent United States business entities would not provide a Schedule A for the United States, but would provide a Schedule A for “stateless” entities.

Filers who do not submit either a U.S. or stateless Schedule A (Form 8975) will receive a letter notifying them that an amended return must be filed to ensure their complete and accurate information is exchanged.

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2.  IRS Issues Reminder to U.S. MNEs of Instructions for Schedule A (Form 8975)

U.S. MNEs must submit a Schedule A (Form 8975) for each tax jurisdiction in which one or more constituent entities is tax resident. The tax jurisdiction field in Part I of Schedule A is a mandatory field, and U.S. MNEs are required to enter a two-letter code for the tax jurisdiction to which the Schedule A pertains. The country code for the United States is “US” and the country code for “stateless” is “X5.” All other country codes can be found at

Form 8975 and Schedule A information is exchanged using the OECD Country Code List that is based on the ISO 3166-1 Standard. Although the country codes found in the IRS link above contain the jurisdictions listed in the table below, those jurisdictions do not correspond to a valid OECD country code for purposes of exchanging the information. Therefore, do not enter any of these country codes on the tax jurisdiction line of Part I of Schedule A.

Tax Jurisdiction Country Code
Akrotiri AX
Ashmore and Cartier Islands AT
Clipperton Island IP
Coral Sea Islands CR
Dhekelia DX
Paracel Islands PF
Spratly Islands PG
Other Country OC

If the tax jurisdiction specified in the above list is associated with a larger sovereignty, use the country code for the larger sovereignty with which the tax jurisdiction is associated (e.g., Akrotiri and Dhekelia are considered a British Overseas Territory, so the country code for the United Kingdom would be used (“UK”)). Otherwise, use a separate Schedule A for “stateless” using the tax jurisdiction code “X5”.  In either case, you should include in Part III of Schedule A the name of the specific constituent entity and the jurisdiction where the constituent entity is located.

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3.  IRS Issues Reminder to U.S. MNEs of Procedures for Mailing Page 1 of Paper-Filed Form 8975 to the Ogden Mailbox

If a U.S. MNE files Form 8975 and Schedule A (Form 8975) on paper, the MNE should mail a copy of only page 1 of Form 8975 to Ogden to notify the IRS that Form 8975 and Schedules A (Form 8975) have been filed with a paper return.

If a U.S. MNE files Form 8975 and Schedules A (Form 8975) electronically, the filer should not mail a copy of page 1 of Form 8975 to the Ogden mailbox.

See the Instructions for Form 8975 and Schedule A (Form 8975) for further guidance.

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4.  IRS Issues Reminder to U.S. MNEs of Procedures for Amending Form 8975

If a U.S. MNE files Form 8975 and Schedules A (Form 8975) that the MNE later determines should be amended, the MNE must file an amended Form 8975 and all Schedules A (Form 8975), including any that have not been amended, with its amended tax return. The U.S. MNE should use the amended return instructions for the return with which Form 8975 and Schedules A were originally filed and check the amended report checkbox at the top of Form 8975.  Note that the amended return (with the amended Form 8975 and all Schedules A) must be filed using the same method (electronically or by paper) as the original submission.  In other words, if the U.S. MNE is required to e-file an original return and need to file an amended or superseding return, the amended return must also be e-filed.  Note that for the paper filer, it must also submit page 1 of Form 8975 to Ogden.

September 26, 2018 in BEPS, Tax Compliance | Permalink | Comments (0)

Friday, September 21, 2018

TaxFacts Intelligence Weekly


IRS Provides Guidance Updating Accounting Method Changes for Terminated S Corporations
The 2017 tax reform legislation added a new IRC section that now requires eligible terminated S corporations to take any Section 481(a) adjustment attributable to revocation of the S election into account ratably over a six-year period. Under newly released Revenue Procedure 2018-44, an eligible terminated S corporation is required to take a Section 481(a) adjustment ratably over six years beginning with the year of change if the corporation (1) is required to change from the cash method to accrual method and (2) makes the accounting method change for the C corporation's first tax year. For more information on the rules governing S corporations that convert to C corporation status post-reform, visit Tax Facts Online and Read More.


IRS Guidance on Interaction between New Association Health Plan Rules and ACA Employer Mandate
The IRS recently released new guidance on the rules governing association health plans (AHPs), which permit expanded access to these types of plans, and the Affordable Care Act (ACA) employer mandate. The guidance provides that determination of whether an employer is an applicable large employer subject to the shared responsibility provisions is not impacted by whether the employer offers coverage through an AHP. Participation in an AHP does not turn an employer into an applicable large employer if the employer has less than 50 employees. For more information on the employer mandate, visit Tax Facts Online and Read More.

OCC Explains Employee Tax Consequences of Employer's Belated Payment of FICA Tax on Fringe Benefits
The IRS Office of Chief Counsel (OCC) released a memo explaining the tax consequences of a situation where the employer failed to include $10,000 of fringe benefits. The employer paid the FICA taxes associated with the benefits in 2018, although the benefits were provided in 2016. The guidance provides that the payment in 2018 did not create additional compensation for the employee in 2016. If the employer collects the amount of the employee portion of the FICA tax from the employee in 2018, the employer's payment is not additional compensation. However, if the employer does not seek repayment, the payment of the employee's portion is additional compensation. For more information on FICA tax issues in the employment benefit context, visit Tax Facts Online and Read More.


Employer Amendments to VEBA Did Not Result in Adverse Tax Consequences
The IRS recently ruled that an employer could amend its voluntary employees' beneficiary association (VEBA) to provide health benefits for active employees in addition to retired employees without violating the tax benefit rule or incurring excise taxes. In this case, the VEBA provided health benefits for collectively bargained retired employees. When the VEBA became overfunded, the employer proposed transferring the excess assets into a subaccount for collectively bargained active employees. The IRS found that this proposed amendment would not violate the tax benefit rule because, the new purpose of providing health benefits to active employees under a collective bargaining agreement was not inconsistent with the employer's earlier deduction. For more information on VEBAs, visit Tax Facts Online and Read More.

September 21, 2018 in Tax Compliance | Permalink | Comments (0)

Thursday, September 13, 2018

Treasury and IRS Issue Proposed Regulations Providing Clarity Regarding Global Intangible Low-Taxed Income

The U.S. Department of the Treasury and IRS today issued their first set of guidance on global intangible low-taxed income (GILTI). The 2017 Tax Cuts and Jobs Act requires U.S. shareholders to include GILTI generated by controlled foreign corporations (CFCs) in their gross income.  “These proposed regulations will implement key provisions of the Tax Cuts and Jobs Act, and mark an important step towards modernizing the U.S. tax system as we shift from a worldwide system toward a territorial system,” said Secretary Steven T. Mnuchin. “We are providing clarity to taxpayers and closing loopholes that previously allowed for inappropriate international tax planning and shifting profits overseas.”  download the proposed GILTI Regs here  Download GILTI Regs

Under the new law, a U.S. taxpayer owning at least 10 percent of the value or voting rights in one or more CFCs is required to include its global intangible low-taxed income as currently taxable income, regardless of whether any amount is distributed to shareholders. This includes U.S. individuals, domestic corporations, partnerships, trusts and estates. The guidance issued today offers clarity for U.S. shareholders on computing global intangible low-taxed income. These proposed regulations do not include foreign tax credit computational rules, which will be addressed in future regulatory packages.  

Income that is not Subpart F income may still be characterized as Global Intangible Low-Taxed Income (“GILTI”). GILTI is not limited to income derived from intangible property nor restricted to low-taxed income earned outside the United States. Instead, IRC Section 951A applies to a much broader earnings pool, imposing a distinct residual tax on a CFC’s income that does not otherwise qualify as Subpart F income, IRC Section 956 income, high-taxed income, dividends from related parties, or “effectively connected income” under IRC Section 864(c).  

The term GILTI means, with respect to a U.S. shareholder, the excess of the shareholder’s net CFC tested income for the taxable year over the shareholder’s net deemed tangible return for the taxable year. GILTI is calculated on an aggregate basis annually for all controlled foreign corporations that are owned by the same U.S. shareholder. The pro rata share of GILTI is deemed to be included in a U.S. shareholder’s income. However, importantly for the energy industry, GILTI does not include foreign oil and gas income, as well as U.S. effectively connected income, Subpart F income, and certain related party payments.

“Net tested income” of a U.S. shareholder is the aggregate net income of each of its CFCs other than (i) income that is effectively connected with a U.S. trade or business, (ii) subpart F income, (iii) income that is subject to an effective foreign income tax rate greater than 90 percent of the maximum U.S. corporate income tax rate, (iv) dividends received from related persons and (v) certain foreign oil and gas income.20 A U.S. shareholder’s “net deemed tangible income return” is generally an amount equal to 10 percent of the tax basis of the “Qualified Business Asset Investment” (“QBAI”) of each relevant CFC minus the net amount of interest expense taken into account in determining the net tested income. QBAI is the quarterly average tax bases in depreciable tangible property used in the corporation’s trade or business. For purposes of the QBAI calculation, the taxpayer is required to use straight-line depreciation. Certain businesses, especially upstream and midstream oil and gas companies, will likely have significant basis of depreciable tangible property offsetting the impact of GILTI for income that falls into the pool.  


For taxable years 2018 through 2025, a deduction is allowed equal to 50 percent of GILTI and from 2026, the deduction is reduced to 37.5 percent. Then a U.S. shareholder is allowed 80 percent of the foreign tax credits attributable to GILTI. In the context of the 21 percent corporate tax rate, GILTI imposes an effective tax rate of 10.5 percent before the 80 percent allowance for foreign tax credits. Until 2026, if a U.S. shareholder’s applicable foreign tax credit to its GILTI is 13.125 percent or higher, then the shareholder will not owe a residual tax because of GILTI. The GILTI regime in effect imposes a foreign minimum tax on 10.5 percent on U.S. shareholders’ CFC income to the extent the CFCs have GILTI. GILTI operates without regard to whether the income in question is from the exploitation of intangible assets. In general, because upstream companies have higher effective rates than 13 percent, GILTI will not impose additional tax.


September 13, 2018 in Tax Compliance | Permalink | Comments (0)

Tuesday, September 11, 2018

OECD releases seven new transfer pricing country profiles and an update of a previously-released profile

The OECD has published new transfer pricing country profiles for Costa Rica, Greece, Republic of Korea, Panama, Seychelles, South Africa and Turkey. In addition, it has also updated the information contained in Singapore’s profile. The country profiles are now available for 52 countries.

The OECD has published new transfer pricing country profiles for Costa Rica, Greece, Republic of Korea, Panama, Seychelles, South Africa and Turkey. In addition, it has also updated the information contained in Singapore’s profile. The country profiles are now available for 52 countries.

The OECD continues to publish and update the transfer pricing country profiles for OECD and all interested members of the Inclusive Framework on BEPS to reflect the current state of each country legislation and practice regarding the application of the arm’s length principle and other key transfer pricing aspects. The transfer pricing country profiles include information on transfer pricing methods, the comparability analysis, intangible property, intra-group services, cost contribution agreements, transfer pricing documentation, administrative approaches to avoiding and resolving disputes, safe harbours and other implementation measures as well as to what extent the specific national rules follow the OECD Transfer Pricing Guidelines.

The information was provided by countries themselves in response to a questionnaire so as to achieve the highest degree of accuracy.

The transfer pricing country profiles reflect the revisions to the Transfer Pricing Guidelines resulting from the 2015 Reports on Actions 8-10 Aligning Transfer Pricing Outcomes with Value Creation and Action 13 Transfer Pricing Documentation and Country-by-Country Reporting of the OECD/G20 Project on Base Erosion and Profit Shifting (BEPS), in addition to changes incorporating the revised guidance on safe harbours approved in 2013 and consistency changes made to the rest of the OECD Transfer Pricing Guidelines.

September 11, 2018 in Tax Compliance | Permalink | Comments (0)

Monday, September 10, 2018

Tax reforms accelerating, with push to lower corporate tax rates, OECD says

Countries have used recent tax reforms to lower taxes on businesses and individuals, with a view to boosting investment, consumption and labour market participation, continuing a trend that started a couple of years ago, according to a new report from the OECD.

This report describes the latest tax reforms across 35 OECD members, Argentina, Indonesia and South Africa. It identifies major tax policy trends and highlights that economic stimulus provided by fiscal policy, including to a large extent through tax policy, has become more significant.

This third edition covers the latest tax policy reforms in all OECD countries, as well as in Argentina, Indonesia and South Africa. Monitoring tax policy reforms and understanding the context in which they were undertaken is crucial to informing tax policy discussions and to supporting governments in the assessment and design of tax reforms.

September 10, 2018 in Tax Compliance | Permalink | Comments (0)

Tuesday, September 4, 2018

Roster for Tax Audit Experts

Application Deadline : 09-Oct-18 (Midnight New York, USA)
Time left : 39d 5h 51m
Additional Category : Management
Type of Contract : Individual Contract
Post Level : International Consultant
Languages Required :
Starting Date :
(date when the selected candidate is expected to start)
Duration of Initial Contract : Varies for each call-off assignment
Expected Duration of Assignment : Varies for each call-off assignment


The United Nations Development Programme (UNDP), with whom the Organisation for Economic Co-Operation and Development (OECD) runs a joint secretariat for the Tax Inspectors Without Borders (TIWB) project, works in more than 170 countries and territories, helping to achieve the eradication of poverty, and the reduction of inequalities and exclusion. It helps countries to implement projects, develop policies, leadership skills, share experiences, develop institutional capabilities and build resilience in order to sustain development results.

The OECD is a global economic forum working with 36 member countries and more than 100 emerging and developing economies to make better policies for better lives. Its mission is to promote policies that will improve the economic and social well-being of people around the world. The OECD provides a unique forum in which governments work together to share experiences on what drives economic, social and environmental change, seeking solutions to common problems.

Tax Inspectors Without Borders (TIWB) is a joint initiative of the OECD and UNDP designed to support developing countries to strengthen national tax administrations through building tax audit capacity and to share this knowledge with other countries. Under TIWB, tax audit experts work alongside local officials of developing country tax administrations on tax audit related issues. TIWB aims to strengthen tax administrations by transferring technical know-how and skills to developing countries’ tax auditors, and through the sharing of general audit practices and dissemination of knowledge products.

For further information on TIWB and the partnership between the OECD and UNDP, please visit the TIWB website.

Duties and Responsibilities

To support implementation of TIWB, an established Roster of Tax Audit Experts is being expanded.

UNDP is looking for energetic, enthusiastic and experienced tax (audit) experts to take on exceptional opportunities, as TIWB Tax Audit Experts in different parts of the world. The main responsibility will be to provide technical assistance to tax administrations of developing countries, on real time audits and on-the-job training programmes to build audit skills.

Experts will need to demonstrate extensive professional experience in all three areas listed below:

  • Conducting tax audits (e.g. transfer pricing; tax crime investigations; anti-avoidance rules; high net worth individuals etc.);
  • Knowledge of industry-specific or sector-specific tax issues (e.g. extractive industries, tele-communications, financial sector, trading, manufacturing etc.);
  • Experience in developing general audit approaches (such as risk assessment and case selection; audit investigatory techniques; audit planning; dispute resolution procedures etc.);

Experience in the following areas will be considered an additional advantage:

  • Knowledge of computer forensics in tax audits
  • Knowledge of working with commercial databases for comparability analysis.

The assignments require close collaboration with the TIWB Secretariat, UNDP and the host administration in the developing country. This role will require travel and missions of varying durations composed of four to six missions (one to two weeks at a time) per year, depending on the programme. A typical TIWB Programme is on average 12 to 18 months long.

The duties and responsibilities detailed below are a representative, but not exhaustive, list of potential activities assignment. Specific Terms of Reference (ToR) will dictate the scope of work and the selection of experts from the vetted Roster for each of the assignments. Key areas of support and activities will include:

Capacity development and training for tax administrations:

  • Deliver practical TIWB audit assistance to host administrations of requesting countries, supporting real-time audit cases
  • Assist the TIWB Secretariat in undertaking skills gap/transfer analysis before and after delivery of TIWB programmes
  • Provide training on different topics at capacity-building workshops organized by the TIWB Secretariat and/or international partners
  • Prepare mission reports after every mission
  • Prepare final report at the end of the programme including an evaluation of the programme

Generation of knowledge and sharing of best practices:

  • Support the development of learning materials and internal guidelines or administrative practices, including case studies and documentation of lessons learned
  • Attend, if requested, at least one international and regional tax organization networking event to build capacity through knowledge sharing as part of TIWB programmes
  • Attend, if requested, international meetings of OECD and/or UNDP where TIWB is presented to stakeholders

The hired consultants will report to UNDP and seek approval/acceptance of outputs as specified in the contract.


Experts will need to demonstrate the following:

  • Specific technical expertise in the areas listed above;
  • Highly organized with strong analytical and research skills;
  • Excellent presentation and communications skills;
  • Ability to prepare succinct reports;
  • Ability to work in a team
  • Diplomatic sensitivity and effective negotiating skills;
  • Focus on impact and results for the client and positive response to critical feedback;
  • Flexible thinking;
  • Ability to work in an independent manner.

Required Skills and Experience


  • University degree in taxation, public finance, law or other field related to taxation is required.


  • Minimum 10 years of substantial, proven experience in tax audit/investigations, obtained from recent employment in a tax administration or government agency. In cases where the candidate has a Masters’ degree, a minimum of five years professional experience is required.
  • At least five years in depth knowledge of international tax/transfer pricing audits, and implementation of related policies and legislation.
  • Proven experience in providing assistance, guidance and/or training to tax officials, including co-ordination and management of technical support;
  • Experience participating in technical assistance programmes;
  • Substantial experience in communication and negotiating with large enterprises and/or their tax advisors;
  • Experience in drafting legislation and administrative guidance
  • Fluency in the use of standard software applications such as Word, Excel and PowerPoint;


  • Fluency in English, French, Portuguese, Spanish or Arabic;
  • Some assignments may be open only to experts having the requisite language capacity whereby the particular language is required for the programme.

Scope of Price Proposal and Schedule of Payments:

  • Indicative: Financial proposals must be all-inclusive and must be expressed on the basis of “a daily fee” in USD. The term ‘all-inclusive” implies that all costs (professional fees, communications, utilities, consumables, insurance, etc.) that could possibly be incurred by the Contractor are already factored into the financial proposal. If an Offeror is employed by an organization/company/institution, and she/he expects her/his employer to charge a management fee in the process of releasing her/him to UNDP under a Reimbursable Loan Agreement (RLA), the Offeror must indicate at this point, and ensure that all such costs are duly incorporated in the financial proposal submitted to UNDP; (Note: Each contractor will however be called upon to submit a fresh financial proposal for each advertised assignment.)
  • Payment will be made upon monthly submission of a certificate of payment request, following a detailed mission report indicating outputs achieved and days worked to be verified and cleared for payment by the supervisor;
  • Arrangements and fees for travel related costs will be determined at time of call off assignments.
  • When opportunity arises, rostered candidates will be contacted for availability and requested to submit a financial proposal for call off assignments fitting their profile. The all-inclusive daily fee provided by each candidate during the application stage will be the maximum fee to be quoted for each call-off assignment under this Roster. Candidates may also be requested to provide costs for travel costs to duty station and/or mission related travels, as applicable.

Recommended Presentation of Offer:

Qualified candidates are requested to apply online via this website. The application should contain:

  • Personal CV or P11, indicating all past experience, as well as the contact details (email and telephone number) of at least three (3) professional references;
  • Brief description of why the individual considers her/himself suitable for the roster with detailed note of professional experience in supporting audits in home country with focus on international tax audits and highlighting any industry-specific experience. Developing country experience would be an added advantage.

Incomplete applications will not be considered. Please make sure you have provided all requested materials. Please group all your documents into one (1) single PDF document as the system only allows uploading of one document maximum.

Qualified women are strongly encouraged to apply.

For individuals currently serving in a tax administration, authorisation from your tax administration may be required to apply for the Roster.

Due to the large number of applications we receive, we are able to inform only the successful candidates about the outcome or status of the selection process.

Criteria for Selection of the Best Offer:

  • All applicants will be initially screened against the minimum requirements as specified above. These long-listed candidates will then be further evaluated against the following criteria.

Desk review of technical criteria as evident in the submitted application:

  • Criteria 1: Demonstrated professional expertise in the three areas listed above: Maximum Points: 15;
  • Criteria 2: Experience in conducting training and providing capacity development support related to tax auditing: Maximum Points: 10; 
  • Criteria 3: Experience in preparing succinct reports on tax audit issues: Maximum Points: 10;

The maximum points that can be achieved in the desk review are 35 points.

  • Criteria 4: Interview: Maximum Points: 35

Only those applicants obtaining a minimum of 25 points in the desk review will be considered for an interview. A total of 35 additional points (with same scoring breakdown as desk review) can then be obtained in the interview bringing the total points for the technical evaluation to a maximum of 70;

Only those candidates who obtain a total technical score of 49 points and above will be considered for the roster.

Contract Award:

Several successful individuals will be selected and placed on the Tax Audit Expert Roster for a period of up to three years. It is to be noted that inclusion in the Roster does not guarantee a contract during the period of three years.

Rostered experts will be contacted when specific assignments arise and will be asked to indicate availability and interest against a specific Terms of Reference which outlines the outputs of the assignment.

Upon secondary selection, an Individual Contract (IC) or Reimbursable Loan Agreements (RLA) will then be awarded for these specific ToRs, including the time frame.


For Individuals who will be represented on behalf of an organization/company/institution, a RLA will be signed between UNDP and the organization/company/institution. RLA: A legal instrument between UNDP and an organization/company/institution, according to which, the latter makes available the services of an individual delivering time bound and quantifiable outputs that are directly linked to payments.

Payments will be made as specified in the actual contract upon confirmation of UNDP on delivering against the contract obligations in a satisfactory manner.

Annexes (click on the hyperlink to access the documents):

Annex 1 - UNDP P-11 Form for ICs

Annex 2 - IC Contract Template

Annex 3 - IC General Terms and Conditions

Annex 4 - RLA Template

Any request for clarification must be sent by email to 

The UNDP Central Procurement Unit will respond by email and will send written copies of the response, including an explanation of the query without identifying the source of inquiry, to all applicants.

September 4, 2018 in Tax Compliance | Permalink | Comments (0)

Monday, September 3, 2018

Treasury Issues Proposed Rule on Charitable Contributions and State and Local Tax Credits

The U.S. Department of the Treasury today issued a proposed rule on the federal income tax treatment of payments and property transfers under state and local tax credit programs.  The proposed rule would prevent charitable contributions from being used to circumvent the new limitation on state and local tax deductions. 

The Tax Cuts and Jobs Act of 2017 (TCJA) limits the amount of state and local taxes (SALT) an individual can deduct to $10,000 a year.  Several states have enacted or are considering enacting tax credit programs to circumvent the TCJA limit.

“Congress limited the deduction for state and local taxes that predominantly benefited high-income earners to help pay for major tax cuts for American families,” said Secretary Steven T. Mnuchin.  “The proposed rule will uphold that limitation by preventing attempts to convert tax payments into charitable contributions.  We appreciate the value of state tax credit programs, particularly school choice initiatives, and we believe the proposed rule will have no impact on federal tax benefits for donations to school choice programs for about 99 percent of taxpayers compared to prior law.”

The proposed rule is a straightforward application of a longstanding principle of tax law:  When a taxpayer receives a valuable benefit in return for a donation to charity, the taxpayer can deduct only the net value of the donation as a charitable contribution.  The rule applies that quid pro quo principle to state tax benefits provided to a donor in return for contributions. 

For instance, if a state grants a 50 percent credit and the taxpayer contributes $1,000, the allowable charitable contribution deduction may not exceed $500.  The proposed rule provides an exception for dollar-for-dollar state and local tax deductions and tax credits of no more than 15 percent of the payment amount or of the fair market value of the property transferred.  These guidelines will apply to both new and existing tax credit programs.

Due to a major increase in the standard deduction, Treasury projects that 90 percent of taxpayers will not itemize under the new tax law.  The proposed rule will not affect these taxpayers at all.  Treasury estimates that approximately 5 percent of taxpayers will itemize and have state and local income tax deductions above the SALT cap.  Those taxpayers will generally see no change in the level of federal tax benefits available to them before the TCJA, but will be unable to exploit the charitable deduction to avoid the SALT cap. 

Treasury expects that only about 1 percent of taxpayers will see an effect on tax benefits for donations to school choice tax credit programs.

View the guidance.

September 3, 2018 in Tax Compliance | Permalink | Comments (0)

Summer 2018 Tax Statistics of Income Bulletin

The Internal Revenue Service today announced that the Summer 2018 Statistics of Income Bulletin is now available on The Statistics of Income (SOI) Division produces the online Bulletin quarterly, providing the most recent data available from various tax and information returns filed by U.S. taxpayers. This issue includes articles on the following topics:

  • Controlled Foreign Corporations, Tax Year 2012: The number of foreign corporations controlled by U.S. multinational corporations increased in 2012 to 88,038. End-of-year assets ($18.6 trillion), total receipts ($6.9 trillion), and current earnings and profits (less deficit) before income taxes ($924 billion) all increased from Tax Year 2010. More than 79 percent of controlled foreign corporations (CFCs) were concentrated in the services; goods production; and distribution and transportation of goods sectors. CFCs were incorporated in 192 different countries of which over 40 percent were incorporated in Europe.

  • Foreign Recipients of U.S. Income, Calendar Year 2015: U.S.-source income payments to foreign persons, as reported on Form 1042-S, Foreign Person's U.S.-Source Income Subject to Withholding, rose to $824.3 billion for Calendar Year 2015. This represents an increase of 13.2 percent from 2014. U.S.-source income payments subject to withholding tax rose by 24.2 percent from 2014, which fueled an increase in withholding taxes of 13.1 percent. Despite these increases, 85.7 percent of all U.S.-source income paid to foreign persons remained exempt from withholding tax. The residual U.S.-source income subject to tax was withheld at an average rate of 15.6 percent.

SOI Bulletin articles are available for download at

September 3, 2018 in Tax Compliance | Permalink | Comments (0)

Tuesday, August 28, 2018

CEO and CFO of Utah Biodiesel Company and California Businessman Charged in $500 Million Fuel Tax Credit Scheme

A federal grand jury sitting in the District of Utah has returned an indictment, which was unsealed today, charging the CEO and CFO of Washakie Renewable Energy (WRE), a Utah-based biodiesel company, and a California businessman with laundering proceeds of a mail fraud scheme, which obtained over $511 million in renewable fuel tax credits from the Internal Revenue Service (IRS), announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division, U.S. Attorney John W. Huber for the District of Utah, Don Fort, Chief of IRS Criminal Investigation and Jessica Taylor, Director of Environmental Protection Agency Criminal Investigation Division.

According to the indictment, Jacob Kingston was Chief Executive Officer and Isaiah Kingston was Chief Financial Officer of WRE and each held a 50% ownership interest in the company. WRE has described itself as the “largest producer of biodiesel and chemicals in the intermountain west.” 

Jacob Kingston, Isaiah Kingston, and Lev Aslan Dermen (aka Levon Termendzhyan), owner of California-based fuel company NOIL Energy Group, allegedly schemed to file false claims for renewable fuel tax credits, which caused the IRS to issue over $511 million to WRE.  Jacob Kingston is separately charged with filing nine false claims for refund on behalf of WRE in 2013.

The IRS administered tax credits designed to increase the amount of renewable fuel used and produced in the United States. These tax credits were paid by the IRS regardless of whether the taxpayer owed other taxes.

From 2010 through 2016, as part of their fraud to obtain the fuel tax credits, the defendants allegedly created false production records and other paperwork routinely created in qualifying renewable fuel transactions along with other false documents.  To make it falsely appear that qualifying fuel transactions were occurring, the defendants rotated products through places in the United States and through at least one foreign country.  The defendants also allegedly used “burner phones” and other covert means to communicate during the scheme.

The indictment further charges that the defendants laundered part of the scheme proceeds through a series of financial transactions related to the purchase of a $3 million personal residence for Jacob Kingston.  Jacob and Isaiah Kingston are separately alleged to have laundered approximately $1.72 million in scheme proceeds to purchase a 2010 Bugatti Veyron.  Jacob Kingston and Lev Aslan Dermen are separately charged with money laundering related to an $11.2 million loan funded by scheme proceeds.

If convicted, the defendants each face a maximum of 10 years in prison for each money laundering count and Jacob Kingston faces a maximum of 3 years in prison for each false tax return count. They also face a period of supervised release, monetary penalties, and restitution.

August 28, 2018 in AML, Tax Compliance | Permalink | Comments (0)