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Pandemic level fraud coordination

On Behalf of | Aug 13, 2021 | Tax Law |

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to include DOJ partnership “with agencies across government to enhance efforts to combat and prevent pandemic-related fraud.”  The focus is on the investigation and eventual prosecution of “the most culpable domestic and international criminal actors.”  For agencies that are working relief programs, they are to increase and enhance coordination mechanisms to efficiently and best identify “resources and techniques” as to the actors and schemes.

Draft Instructions for nonresident aliens remove COVID exception for 2021.  While compensation paid to nonresident alien individuals was generally subject to a 30% withholding/graduated tax rates, depending on treaty and/or personal exemption amount (Instructions to Form 8233).  In June 2020, the IRS provided relief due to COVID-19 per Rev Proc 2020-20, 2020-20 IRB.  See updates to same as such relief is to no longer available in 2021. See. IRS Updates Nonresident Alien Form Instructions, Payroll Update (11/13/2020).

IRS Chief Counsel Advice on Conservation Easement Deeds.  IRS says certain language will generally not result in a violation of “enforceability in perpetuity requirements” of Code Sec. 170(h)(2)(C) and Code Sec. 170(h)(5)(A). Sample language is provided.  (Chief Counsel Advice 202130014)

IRC 6707A IRS Practice Unit discusses the penalty for failure to include reportable transaction. Like most all IRS PU’s, the document is very useful as it identifies the examiner’s step-by-step process for review and the imposition of the failure to report penalty.  IRC 6707A, except for listed transactions, may allow for rescission when it would promote tax compliance and effective tax administration and appeal rights are not available.  Code Sec. 6707A(d); see also, Reg §1.6011-4(e), (‘the taxpayer must send a copy of their Form 8886 to the Office of Tax Shelter Analysis (OTSA).’)

Injunctions, IRC 7402 and Employment Taxes.  Injunction recommended where software co. failed to comply with its employment and unemployment tax obligations.  Govt demonstrated irreparably injury visa vi lost tax revenue and expending unnecessary resources in attempts to collect per taxpayer’s continuous non-compliance addressing both hardship and public interest impact. U.S. v. Twin-Soft Corp., DC VA, 128 AFTR 2d ¶2021-5093.

Chief Counsel Advice 202129006 & SS Levies.  In general, the IRS may collect taxes by levy against any liable person who neglects or refuses to pay within 10 days after notice and demand. (Code Sec. 6331(a)) While continuous wage levies are to be released at the end of the CSED, when it comes to Social Security income levies under  Code Sec. 6331(a), the levy can continue after the CSED because ‘the taxpayer has a fixed and determinable right to future payments of Social Security income at the time the levy arose.’