Tax News & Views Understand Your Tax Obligation Roundup

June 21, 2023

Big news of the day:

Tax and Firearm Charges Filed Against Robert Hunter Biden -

WILMINGTON, Del. – The United States Attorney for the District of Delaware filed charges today against Robert Hunter Biden (“Hunter Biden”) of Los Angeles. Hunter Biden has been charged with two misdemeanor tax offenses and a felony firearm offense and has agreed to enter a plea of guilty to the tax offenses and enter into a pre-trial diversion agreement with regard to the firearm charge at a proceeding to be scheduled by the assigned United States District Court judge.

According to the tax Information, Hunter Biden received taxable income in excess of $1,500,000 annually in calendar years 2017 and 2018. Despite owing in excess of $100,000 in federal income taxes each year, he did not pay the income tax due for either year.

Hunter Biden Pleads Guilty To 2 Tax Charges - Leslie Pappas, Law360 Tax Authority ($):

Hunter Biden, the son of U.S. President Joe Biden, has pled guilty to two counts of failure to pay income tax in Delaware federal court and will enter a pretrial diversion agreement to resolve a firearm charge.

"With the announcement of two agreements between my client, Hunter Biden, and the United States Attorney's Office for the District of Delaware, it is my understanding that the five-year investigation into Hunter is resolved," Biden's attorney, Christopher J. Clark of Clark Smith Villazor LLP, said in a statement emailed to Law360 Tuesday.

Hunter Biden Failed To Pay Taxes—Here’s Why He’s Likely Not Going To Jail - Kelly Phillips Erb, Forbes ($):

After months of speculation, Hunter Biden, the son of President Joe Biden, has been charged with tax and gun charges. According to court documents, he is expected to plead guilty to two misdemeanor tax charges as part of a plea deal.

Tax Charges
According to the letter, Biden has agreed to plead guilty to two charges of failure to pay under section 7203 of the Tax Code. That section covers a wide variety of offenses, including:

1. failure to pay estimated tax or tax;
2. failure to file a return;
3. failure to keep records; and
4. failure to supply information.

EB Insight: Specifically on the tax front, Mr. Hunter Biden pled guilty to not paying his 2017 and 2018 taxes on time (individual tax must be paid on April 15th after the end of the respective tax year). Court documents indicate he had approximately $1.5 million of income each year. It has been reported that he has since met his tax obligations and is being assessed a penalty for failure to pay.  We must use this time to remind readers... understand (and meet) your federal and state tax obligations AND do so on time. Please contact Eide Bailly's Controversy team if you need assistance resolving an outstanding tax dispute with the IRS or other tax authority. 

More cases that serve as reminders to understand (and meet) tax obligations:

Health Co. Accuses Ex-Exec Of Causing Tax Hit In Canada - Theresa Schliep, Law360 Tax Authority ($):

The former chief commercial officer of a health care automation company cost his ex-employer up to CA$1.2 million ($907,000) in Canadian taxes after failing to disclose that he had been working in that country, the business told a Colorado federal court.

In a complaint Friday, Translogic Corp., which does business as Swisslog Healthcare, told the court that [NAME REDACTED] lied to his former employer about his work location, potentially costing the business more than a million Canadian dollars for 2018 to 2023. Despite telling Swisslog that he was working in Florida, [NAME REDACTED] had actually been working in Canada, and the business hadn't been withholding Canadian taxes for the duration of his employment there, according to the complaint.

Ex-Super Bowl Champ, Wife Owe $15M In Tax, US Says - Kat Lucero, Law360 Tax Authority ($):

Four-time Super Bowl champion Bill Romanowski owes more than $15 million in unpaid federal income taxes and related penalties tied to privately held corporate stocks and other assets, the U.S. told a California federal court Tuesday.

In an 18-page complaint, the U.S. Department of Justice sought a judgment against Romanowski and his wife, Julie Romanowski, based on income tax liabilities determined by U.S. Tax Court decisions in two previous lawsuits the couple had lodged against the Internal Revenue Service. The complaint also sought to prohibit the couple from litigating the tax liability.

Movie Investor Can't Deduct $5M In Losses, Tax Court Says - Anna Scott Farrell, Law360 Tax Authority ($):

A movie investor cannot claim $5 million in tax deductions for net operating losses, the U.S. Tax Court ruled Tuesday, saying the investor had no basis in the film companies in which he invested.

The Internal Revenue Service was right to nix the $3 million deduction because Bryan's company, Watley Group LLC, was not liable for Pool Boy's debts due to a loan agreement the company had executed, meaning Watley lacked a basis in the company, the court said. Because of a similar loan agreement, the agency was also right to disallow Watley a $1 million deduction for 2009 from NOTD Investments LLC — a Louisiana company formed to produce the movie Night of the Demons, the court said.

Justices Won't Review Drug Exec's $1.4M Tax Penalty - David Hansen, Law360 Tax Authority ($):

A former pharmaceutical executive lost his last chance to reduce a $1.4 million penalty for failing to report a foreign bank account when the U.S. Supreme Court declined on Tuesday to hear the case.

The court will not consider [NAME REDACTED] argument that the U.S. should have used a subjective standard to determine whether he acted recklessly in failing to report an account he held at UBS in Switzerland on his 2007 tax forms. [NAME REDACTED] had almost $1.9 million in the account, which he had operated since the 1970s, according to court documents.

Tax Court Tosses Petition Filed 11 Seconds Late - Anna Scott Farrell, Law360 Tax Authority ($):

A North Carolina man who petitioned the U.S. Tax Court 11 seconds past deadline is out of luck, the court ruled Tuesday, saying the court's online filing system was working just fine.

Even though the electronic filing system showed that [NAME REDACTED] set up an account and began the process of filing his tax challenge two hours before the deadline, the deadline can't be extended unless the government's system was shown to be inaccessible, which it was not, the court said.

DC Circ. Urged To Revisit Timeliness Of IRS Shelter Penalties - Theresa Schliep, Law360 Tax Authority ($):

The D.C. Circuit should revisit a split panel decision finding that the Internal Revenue Service didn't run out of time to assess about $256,000 in penalties against a man who promoted abusive tax shelters, he told the appeals court.

The tax code makes it clear that the three-year statute of limitations under Internal Revenue Code Section 6501(a) applies to the penalties the IRS assessed against [NAME REDACTED] for his work promoting tax shelters, he told the D.C. Circuit in a petition Friday. The appeals court should revisit a panel decision that arrived at a contrary conclusion, he argued.

In other daily news:

Now Is The Time For State And Local Sales Tax Simplification - Charles Maniace, Law360 Tax Authority  ($):

It's been five years since the landmark U.S. Supreme Court decision in South Dakota v. Wayfair Inc., and many remote sellers have worked diligently to bring their organizations into nationwide sales tax compliance. But the work is not yet complete. To bring the rest of the business community into compliance, and to do so in a way that ensures sales tax doesn't represent an undue burden on interstate commerce, meaningful simplifications must be considered and adopted.

Almost Ready for Applications: The Low-Income Communities Bonus - Marie Sapirie, Tax Notes ($):

As part of Congress’s endeavor to unite clean energy deployment with economic benefits to low-income households, the Inflation Reduction Act (IRA, P.L. 117- 169) outlined a new program for the IRS and Treasury to create and administer: the low-income communities bonus credit (REG-110412-23). This article examines the notice of proposed rulemaking under section 48(e) on that program, which is one of several new initiatives the IRS is attempting to deploy as it simultaneously works out all the regulatory guidance needed for other credits changed or added by the IRA.

The IRS and Treasury have issued two pieces of guidance on the section 48(e) allocation, but the details are still being worked out. Given the volume of IRA-related regulatory projects and the extensive collaboration with other agencies that some of them require, the delay is understandable, even if it’s a little disappointing to taxpayers hoping to apply for the bonus for 2023.


The Corporate AMT in the Inflation Reduction Act - Kyle Pomerleau, Tax Notes ($):

On August 16, 2022, President Biden signed the Inflation Reduction Act (IRA, P.L. 117-169) into law, which included a new 15 percent minimum tax on large corporations. The minimum tax is based on financial statement or “book” income, with several adjustments that allow for the use of accelerated depreciation, general business tax credits, net operating loss deductions, and a foreign tax credit.

The stated purpose of the minimum tax is to crack down on perceived tax avoidance by large multinational corporations. In recent years, large corporations, such as Amazon, with significant book profits have reported little or no federal tax liability. Biden has argued that the new tax will ensure all companies pay at least 15 percent of their profits. Other proponents argue that the minimum tax is a politically feasible, second-best alternative to directly reforming the corporate tax code and that it could address profit shifting of large multinational corporations. The provision also raises new revenue to offset new spending in the IRA.

US Could Lose Billions Under OECD Tax Deal, JCT Says - Dylan Moroses, Law360 Tax Authority ($):

The U.S. could lose more than $120 billion in tax revenue as countries implement the Organization for Economic Cooperation and Development's global minimum tax, according to a Joint Committee on Taxation analysis published Tuesday by top Republicans on congressional tax panels.

The JCT analysis detailed how countries implementing the OECD's 15% global minimum tax, known as Pillar Two, could affect U.S. federal tax receipts. The report was ordered by House Ways and Means Committee Chair Jason Smith, R-Mo., and Senate Finance Committee ranking member Mike Crapo, R-Idaho.

And more from the headline we will be reading about for a while:

GOP Reps. Seek Info On IRS Whistleblower Retaliation Claims - Asha Glover, Law360 Tax Authority ($). "The chairmen of the House Ways and Means and Judiciary committees demanded information Tuesday on what they said was retaliation against an IRS whistleblower who accused the U.S. Department of Justice of mishandling a reported investigation into President Joe Biden's son Hunter Biden."


Today is International Yoga Day! To keep with today's theme, Keep Calm and File and Pay Your Taxes.


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