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Sacramento Tax Law Blog

Californian Gets Prison Time for Failing to Report Over $1 Million in Marijuana Sales

A California real estate professional was recently sentenced to 2 years in prison for filing false income tax returns that failed to report over $1 million in cash earned through marijuana sales made between 2012 and 2014. In addition, he was ordered to serve one year of supervised release and pay $466,707 in restitution to the IRS.

Good News for Taxpayers with Defunct California Entities!

California taxpayers who ceased doing business but continue to get requests for unpaid taxes or unfiled returns from the Franchise Tax Board (FTB) may benefit from a new bill, AB 2503, which goes into effect January 1, 2019, and provides two options for an administrative dissolution of qualified domestic corporations and LLCs. The FTB will be able to administratively dissolve a business that has been suspended for 5 years or longer, or has ceased doing business, and meets other qualifications. Otherwise, taxpayers may request that the FTB abate unpaid, qualified taxes, interest, and penalties for years for which the entity certifies under penalty of perjury that it did not do business and has no remaining assets.

FTB Top Tax Debtors Owe California Over $646 Million

The Franchise Tax Board (FTB) recently published its updated list of California's top 500 tax debtors, comprising both individuals and businesses that now collectively owe the state more than $646 million in income tax. Since October 2007, this list is updated twice annually. Taxpayers who receive notice of the FTB's intent to include them on the list and then make arrangements to pay their tax debt are removed from the publication.

IRS Offers Guidance on Tax Reform for 2019 Filing Season

The Internal Revenue Service (IRS) has issued additional guidance for taxpayers regarding how the Tax Cuts and Jobs Act will affect filing your 2018 tax returns. The website www.IRS.gov/getready provides information and advice for individuals and families, such as an updated IRS Withholding Calculator, details about refunds, and the new Form 1040.

California Man Faces Prison, Penalties for Failure to Report Foreign Bank Account

Eli Waknine of Huntington Beach, California, pleaded guilty this week to filing a false tax return that failed to report over $2 million held at an Israeli bank between 1994 and 2011. He further attempted to conceal his offshore assets by instructing the bank to forego mailing documents to the U.S. and using "back-to-back" loans to access his offshore funds.

California Woman Pleads Guilty to Scheme to Defraud U.S. of Over $9 Million

A California resident pleaded guilty last week to conspiring to submit false claims for income tax refunds and to bank fraud, according to the Department of Justice Tax Division. The woman worked with others to file false returns and allegedly obtain over $9 million in improper tax refunds. Her co-conspirators pleaded guilty earlier this year to related charges.

Ninth Circuit Confirms Tribal Manufacturers Are Subject to Tobacco Excise Tax

The U.S. Court of Appeals for the Ninth Circuit issued an opinion in U.S. v. King Mountain Tobacco Co., affirming that tribal manufacturers of tobacco products on land held in trust by the United States are subject to the federal excise tax on manufactured tobacco products. The case began as an issue of delinquent excise taxes, which the tribal entity paid until 2009 when it fell into arrears. In the recently decided case, the tribal entity claimed an exemption to these taxes under the General Allotment Act of 1887, 4 Stat. 388, and the Treaty of the Yakamas of 1855, 12 Stat. 951.

"Doing Business" Thresholds in California

The California Franchise Tax Board (FTB) recently announced the 2018 indexed threshold values for determining whether an entity is doing business in the state. If any of the following conditions are met, the taxpayer is considered to be doing business in California:

IRS Offshore Voluntary Disclosure Program Ends - What Are My Options Now?

The Internal Revenue Service's (IRS's) 2014 Offshore Voluntary Disclosure Program (OVDP) officially ends on Friday, September 28, 2018. This program was offered to help taxpayers get into compliance with their foreign account reporting requirements. The end of the OVDP does not mean the IRS is less interested in offshore compliance --- to the contrary, "The IRS remains actively engaged in ferreting out the identities of those with undisclosed foreign accounts with the use of information resources and increased data analytics," said Don Fort, Chief, IRS Criminal Investigation, in the IRS' initial announcement about the program's end. "Stopping offshore tax noncompliance remains a top priority of the IRS."

IRS SS-8 Program Does Not Sufficiently Address Gig Economy Worker Needs

The Treasury Inspector General for Tax Administration (TIGTA) recently audited the Internal Revenue Service's (IRS's) SS-8 Program, which addresses worker classification issues. The standard options have been either employee or independent contractor. However, in recent years, classification has become more complicated with the emergence of the "gig economy," defined by its reliance on short-term contracts and freelance work.

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