Taxation

Ca. Tax Lawyer Winter/Spring 2015, Volume 23, Number 4

Message from the Chair

By Robert S. Horwitz

I am pleased to assume the reins as chair of the Taxation Section effective in October. By the time you read this, you will have received the brochure for the 2015 Annual Meeting of the California Tax Bar and California Tax Policy Conference, which will be held at the Hilton Torrey Pines in La Jolla. The format ofthis year’s event has changed from prior years. Instead of Thursday, Friday and Saturday, this year we will kickoff with a networking dinner where attendees can meet and mingle with the speakers and other guests on Wednesday, November 5. Although there will be one program Wednesday evening, the balance of the educational programs will be on Thursday and Friday, November 6 and 7. Speakers include a number of officials from California tax agencies, the Internal Revenue Service (the "IRS") and the Department of Justice. It will be a great opportunity to meet representatives of federal and state tax agencies and to network with your peers. I look forward to seeing you there.

This past May, the Taxation Section’s annual Washington, D.C., Delegation (the "D.C. Delegation") traveled to Washington, D.C., to confer with officials from the IRS, Department of Treasury, Joint Committee on Taxation, Senate Finance Committee, House Ways and Means Committee and Tax Court. For the second year in a row, members of the D.C. Delegation also met with high-ranking officials of the Department of Justice Tax Division, including Acting Assistant Attorney General Caroline D. Ciraolo, who candidly discussed the Tax Division’s priorities. She asked that members of the D.C. Delegation make practitioners aware of those priorities, which I now will share with you. Major enforcement priorities include:

  • Criminal and civil enforcement of employment taxes, including enforcement against professional employer organizations and payroll tax firms — The Tax Division intends to vigorously prosecute people who willfully fail to collect, account for and pay over withholding taxes. Internal Revenue Code section 7202 is the criminal counterpart to the trust fund recovery penalty imposed by section 6672. The elements needed to convict under section 7202 are identical to those needed to impose civil liability under section 6672, so practitioners should advise clients not to pyramid payroll taxes, because doing so can result in criminal prosecution.
  • The prosecution of the perpetrators of stolen identity refund fraud schemes — Each year several million tax returns are electronically filed using stolen identities to claim approximately $30 billion in fraudulent refunds. Although the IRS is able to stop or recover a majority of the refunds claimed, it still results in billions being drained from the Treasury.
  • Injunction actions against fraudulent return preparers, promoters of abusive tax shelters and persons devising fraudulent schemes in violation of U.S. tax laws
  • International enforcement and offshore tax evasion
  • The Swiss Bank Program — For those of you who are interested, Jack Townsend’s Federal Tax Crimes blog has updates on Category 2 banks that have entered into non-prosecution agreements with the Tax Division.
  • Legal source income tax evasion
  • Abusive tax shelter civil litigation
  • Criminal prosecution of promoters of abusive tax avoidance devices
  • Civil and criminal actions against "tax defiers"
  • Collection actions
  • Summons enforcement

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