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Sacramento Tax Law Blog

Three More Swiss Banks Reach Resolution With the United States

In the past two weeks, three Swiss banks--Bank Linth LLB AG (Bank Linth), Bank Sparhafen Zurich AG (BSZ), and Ersparniskasse Schaffhausen AG (EKS)-have reached resolutions under the Department of Justice's Swiss Bank Program. The Swiss Bank Program, which was announced on Aug. 29, 2013, provides a path for Swiss banks to resolve potential criminal liabilities in the United States. Swiss banks eligible to enter the program were required to advise the department by Dec. 31, 2013, that they had reason to believe that they had committed tax-related criminal offenses in connection with undeclared U.S.-related accounts. Banks already under criminal investigation related to their Swiss-banking activities and all individuals were expressly excluded from the program.

FBARs Due June 30, 2015

For those with one or more bank of financial accounts located outside the United States, or those who have signature authority over such accounts, Report 114, Report of Foreign Bank and Financial Accounts is due Tuesday, June 30, 2015. For more information, see the IRS website here.

Berwick V Uber California labor Commissioner decision

On June 3, 2015, the California Labor Commissioner found an Uber driver to be an employee, and thus eligible for reimbursement for mileage and other expenses while providing rides for the tech company, which claims to be engaged in the business of providing lead generation to transportation providers using its mobile application. (Berwick v. Uber Technologies, Inc., Labor Commissioner Case No.: 11-46739 EK http://cdn.arstechnica.net/wp-content/uploads/2015/06/04954780-Page0-20.pdf) Uber Technologies Inc. is appealing the decision in the Superior Court of California, County of San Francisco. This case coincides with recent federal court wage and hour claims, in which Uber and a similar provider, Lyft, are defending claims that the transportation providers are employees and misclassified as independent contractors. (O'Connor v. Uber Technologies, Inc., No. 3:13-cv-03826-EMC (N.D. Cal. Mar. 11, 2015); Cotter v. Lyft, Inc., No. 3:13-cv-04065-VC (N.D. Cal. Mar. 11, 2015))

United States Secures Cooperation From Two More Swiss Banks

On June 9, 2015, the Department of Justice Tax Division announced it had reached resolution with two more banks in its Swiss Bank Program. Société Générale Private Banking will pay a $17.807 million penalty and Berner Kantonalbank AG will pay a $4.619 million penalty and both continue to cooperate with the Department of Justice. The Swiss Bank Program, which was announced on Aug. 29, 2013, provides a path for Swiss banks to resolve potential criminal liabilities in the United States where officers, employees, and others facilitated the concealment of foreign accounts belonging to US Taxpayers, leading to the evasion of their U.S. tax obligations. Click here for the Department of Justice's full press release http://www.justice.gov/opa/pr/two-more-banks-reach-resolutions-under-justice-departments-swiss-bank-program-0

Estate Planning for Your "New" Adult

With graduations in full swing and high school seniors preparing to leave home for college, employment, or other adventures, it may be time to consider estate planning documents for your 18 year old. It may not initially make sense for an 18 year old to need an estate plan since most do not have significant assets. However, in most states, an 18 year old is an adult, with legal rights relating to privacy and decision making. As soon as a child turns 18, parents will lose authority to view medical and financial records related to the child, as well as be prevented from making decisions on their child's behalf. 

Closing a Business in California

When you close your doors, you have to follow certain formalities so that California knows you are no longer in business. The California Franchise Tax Board has published helpful information to dissolve, surrender, or cancel a business entity in California. In addition to filing final tax returns and paying tax obligations, the appropriate forms must be filed with the California Office of the Secretary of State. For complete details, visit https://www.ftb.ca.gov/professionals/taxnews/2015/May/05.shtml

California Tax Preparer Convicted of a Felony and Promises to Turn Over Names

A tax preparer was recently convicted in U.S. District Court, Eastern District for aiding and assisting in the preparation and presentation of a false and fraudulent tax return. The defendant, Sarad Chand, admitted preparing false tax returns with inflated or false tax credits or deductions, frequently through the use of claiming unreimbursed employee business expenses or by creating Schedule Cs with false business income and expenses. The IRS examined over 900 returns prepared by the defendant finding an understatement of tax of over $2.7 million. The defendant has agreed to provide a list of all customers for whom he prepared federal tax returns or claims for refunds since January 1, 2012.

Vatican Seeks Tax Transparency, Signs FATCA

In its pledge to seek financial transparency, the Holy See (the ecclesiastical jurisdiction of the Catholic church) signed on to become the newest member to FATCA, the U.S. Foreign Account Tax Compliance Act, that requires banks and financial information to report certain financial information of U.S. Citizens and permanent residents directly to the United States if the accountholder¹s assets exceed $50,000.

Ninth Circuit finds that Tax Court failed to apply correct legal standard in transferee liability case.

On Monday the Ninth Circuit Court of Appeals issued an opinion in Slone v. Commissioner of Internal Revenue, No. 12-72464 (and related cases). At issue in Slone was whether shareholders of Slone Broadcasting could be held liable for the unpaid tax liabilities of Slone Broadcasting, including penalties and interest.

After the IRS was unable to collect the tax liabilities from Slone Broadcasting, it issued notices of liability to the former shareholders of Slone Broadcasting under the provisions of I.R.C. § 6901. Normally, a shareholder is not liable for the tax debts of a corporation. However, the IRS has a variety of tools with which to collect unpaid corporate tax liabilities from shareholders or other third parties. Some of these tools are based upon judicial constructs, such as nominee and alter ego theories. G.M. Leasing Corp. v. United States, 429 U.S. 338 (1977) (nominee theory); Wolfe v. United States, 798 F.2d 1241 (9th Cir. 1986) (alter ego theory).

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