Trump’s Sister Retires, Highlighting Judge Misconduct Loophole

Maryanne Trump Barry’s quiet retirement earlier this year from a federal appeals court short-circuited a judicial ethics investigation, allowing the president’s older sister to dodge potentially serious consequences such as loss of full retirement benefits, reports Bloomberg Law.

The former Third Circuit judge faced the civil probe into whether she and her siblings, including her brother Donald, benefited from alleged tax schemes linked to her late father, according to Bloomberg’s Melissa Heelan Stanzione. Four complaints of judicial misconduct were filed in October of 2018. At the time, Barry, now 82, was semi-retired and not hearing cases.

“The treatment of her case is not without recent precedent, and raises questions about a loophole in the conduct code for federal judges that allows them to avoid scrutiny by stepping down,” writes Stanzione.

Read the Bloomberg Law article.



Ex-NFL Player’s Tax Lawyer Gets 3 Years for False Returns

Bloomberg Law is reporting that a Northern California tax attorney was sentenced April 1 to three years in federal prison for stealing $1.2 million in refunds fraudulently obtained on behalf of his NFL player client.

Hiram M. Martin was charged with falsifying returns for Antrel Rolle, a former Pro Bowl NFL safety who played for the Arizona Cardinals, New York Giants, and Chicago Bears. Martin reportedly filed tax documents in Rolle’s name without his permission, and forged his client’s signature, writes Bloomberg’s David McAfee.

Prosecutors said Martin also worked to keep the IRS from contacting Rolle and to keep Rolle from contacting the IRS when a news story ran about the athlete’s tax liabilities.

Read the Bloomberg Law article.



REIT Tax Lawyer Cristina Arumi Returns to Hogan Lovells

REIT tax lawyer Cristina Arumi is rejoining Hogan Lovells, the firm announced in a release.

She will be head of the firm’s U.S. REIT tax practice and will work alongside David Bonser, who heads up the REIT practice. Arumi joins from Ernst & Young, where she worked in the REIT and pass-through group from the national tax office.

“Cristina is a superstar – she is highly regarded by clients and colleagues for her lightning-sharp tax acumen, creative solutions, and strong client relationship skills,” said Prentiss Feagles, a Hogan Lovells partner who has led the REIT Tax practice. “These qualities, together with her strong leadership skills, make Cristina perfect to work with David Bonser and others in building one of the strongest REIT practices in the United States.”

Before departing for Ernst & Young in 2013, Arumi spent 17 years with Hogan Lovells, focusing her practice on the tax aspects of capital markets and M&A transactions, including REITs, real estate funds and joint ventures as well as the tax aspects of foreign investment in U.S. real estate. As a principal in Ernst & Young’s national tax department’s pass-throughs and real estate group, Arumi led real estate transactions working extensively with REITs, including many clients of Hogan Lovells, sovereign wealth funds and other major investors in U.S. real estate, the firm said.

“Hogan Lovells’ REIT practice is one of the best in the country, and I am excited to rejoin the team,” Arumi said. “I’ve maintained strong relationships with many of my friends and colleagues at Hogan Lovells, and I’m looking forward to the opportunity to work with David and the other partners to build on the continued success of the REIT practice.”

Arumi received her B.A. from the University of North Carolina, her J.D. from Duke University School of Law, and her LL.M in tax from the Georgetown University Law Center.



Nissan Ex-Chairman to Get a Day in Court Almost Two Months After Shock Arrest

Carlos Ghosn will finally see the inside of a Japanese court room next week, almost two months after his arrest on financial crimes, reports Bloomberg.

Ghosn’s lawyer said his client will attend a hearing of the Tokyo district court on Jan. 8 in an effort to obtain an explanation on why the former Nissan Motor Co. chairman — who was taken into custody Nov. 19, and has had his detention extended repeatedly — remains in jail.

Bloomberg’s Kae Inoue reports: “While Ghosn has been indicted by Japanese prosecutors on allegations of under-reporting his compensation, the length of his detention and the lack of clarity provided on the case has drawn criticism.”

Read the Bloomberg article.



Local Taxation of Oil and Gas Activities Fails Again

The Texas Supreme Court issued four opinions addressing the taxation of compressors used to deliver natural gas into pipelines, according to a post on Gray Reed & McGraw’s Energy & the Law blog.

Charles Sartain and Isreal Miller introduce a discussion of the rulings:

“Local taxing authorities frequently look to out-of-towners to bear what the locals consider the outsiders’ fair share of the burdens of increased oil and gas activity. The counties are often small and rural. (See the Dimmit County road tax).You can’t blame them, but  Reeves County (county seat: Pecos, 2010 pop. 13,783), Loving (county seat: Mentone, 2010 pop. 1,340), and Ward (county seat: Monahans, 2010 pop. 10,658) have been reminded by the big guys and gals in Austin that these efforts are not likely to succeed. It didn’t work for Huey Long and it isn’t working well now.”

Read the article.




Transactional Tax Partner Jeffrey Tate Joins Arent Fox

Arent Fox LLP announced the expansion of its Tax practice in Washington, DC with the addition of partner Jeffrey Tate. Tate’s practice focuses on domestic and international transactional work, and includes counseling on mergers and acquisitions, real estate investments, joint ventures, securitizations, private equity and hedge fund investments and structuring, financial products, pass-through entities, FATCA compliance, and capital markets transactions.

Tate joins Arent Fox from Shearman & Sterling LLP, where he worked with corporate, financial institution, investment fund, and sovereign clients. Tate is fluent in Portuguese and he was principally responsible for overseeing all Latin American capital markets tax matters at his prior firm. He also has experience advising Latin American and other clients on fund formation, mergers and acquisitions and inbound investment matters.

The firm said Tate’s recent work includes advising sovereign wealth funds on U.S. real estate investment and development matters and fund investments; advising a Brazilian digital payments processer on its NYSE-listed initial public offering; and advising various private equity, real estate, hedge, and other investment funds on structuring and tax matters and portfolio acquisitions.



Jorge Castro Joins Miller & Chevalier’s Tax Department

Miller & Chevalier Chartered today announced that Jorge E. Castro, who previously served on the staff of senior Democratic members of both the Senate Committee on Finance and the House Committee on Ways and Means and as Counselor to the Commissioner of the Internal Revenue Service (IRS), joined the firm as a member in the Tax Department.

Castro joins Miller & Chevalier from Castro Strategies, LLC, a Washington, DC, tax consulting firm he founded to counsel clients on a wide array of policy and regulatory issues.

“Miller & Chevalier is best-in-class when it comes to providing strategic counsel and technical tax advice, and I am excited to continue my practice here,” Castro said. “The firm’s long tax history and reputation, robust platform, and team of savvy tax lawyers will allow me to offer more resources and services to my clients.”

The firm said Castro gained legislative experience serving as the primary tax policy advisor to senior Democratic members of both Congressional tax-writing committees. He served as Senior Counsel and Lead Economic Policy Advisor to Senator John D. Rockefeller IV (D-WV), a senior member of the Senate Committee on Finance. He also served as Tax and Trade Counsel to the late Representative Stephanie Tubbs Jones (D-OH), a senior member of the House Committee on Ways and Means. In 2010, Tax Notes magazine named Jorge as one of the top “Congressional Staffers Shaping Tax Policy.”

During his tenure at the IRS, Castro directly advised the Commissioner on tax reform initiatives and legislative proposals, and worked closely with senior IRS and U.S. Department of the Treasury (Treasury) officials to advance the agency’s domestic and international objectives. He also collaborated with the Treasury on a variety of priority guidance projects, including the implementation of the Foreign Account Tax Compliance Act (FATCA).

“Jorge’s experience working directly with the Commissioner of the IRS will be an invaluable resource to our global clients across the wide array of regulatory, enforcement, administration, and compliance issues they are facing with the agency,” said Lawrence B. Gibbs, Senior Counsel in Miller & Chevalier’s Tax Department who served as Commissioner of the IRS from 1986 to 1989.

“Jorge brings a deep understanding of government decision-making processes and uses that knowledge in coordination with his technical tax expertise to help clients resolve complex matters in the most efficient, effective ways possible,” said George A. Hani, Chair of Miller & Chevalier’s Tax Department. “Given his unique combination of legislative and tax administration experience, he has the proven ability to work a bill completely through the legislative process, and then guide clients through the administrative guidance process.”

Castro represents the second recent significant hire Miller & Chevalier has made to its growing government relations practice, following the arrival of Loren C. Ponds, former Tax Counsel to the House Committee on Ways and Means under Chairman Kevin Brady (R-TX), in late October.

“Jorge is well regarded in the tax policy community, particularly by members of Congress, senior Treasury and IRS officials, and their staffs,” said Marc J. Gerson, Chair of Miller & Chevalier’s Executive Committee. “Having worked together on Capitol Hill, I am particularly pleased to welcome him to the firm.”

Castro earned a J.D. from the University of Wisconsin Law School and a B.A. from the George Washington University. He is currently an adjunct professor at the Catholic University Columbus School of Law, where he teaches a course in the Law and Public Policy Program.



Fewer Lawsuits for Corporations, But More Oversight on Data andTax Risk

Corporate counsel report a decrease in the number of lawsuits against their companies over the last year, but they face more regulatory proceedings and arbitrations in navigating increased cyber risk, data protection and tax issues.

Norton Rose Fulbright’s 2018 Litigation Trends Annual Survey polled 365 senior corporate counsel representing US-based organizations on disputes-related issues and concerns.

Two thirds of respondents report feeling more exposed in 2018 to cybersecurity and data protection disputes. The survey also found that the growing international nature of many business operations has caused a spike in conflicts related to countries’ differing discovery and data protection laws and regulations.

See the survey results.



Committee on Ways and Means Tax Counsel Moving to Miller & Chevalier

Miller & Chevalier Chartered announced that Loren C. Ponds will join the firm as a member in the Tax Department, effective Oct. 29, 2018. Previously, Ponds served as tax counsel to the U.S. House of Representatives Committee on Ways and Means, where she was instrumental in the development of the international tax provisions included in the Tax Cuts and Jobs Act of 2017 (TCJA).

“Miller & Chevalier is known for tax excellence,” Ponds said. “I was drawn to the firm’s outstanding reputation and talented practitioners, who are able to provide specialized tax guidance across varied issues, an important factor given my interdisciplinary practice.”

Prior to her role with the Committee on Ways and Means, Ponds worked in Ernst & Young LLP’s National Tax Department, with a focus on transfer pricing. She advised multinational companies on international tax planning projects, including intellectual property planning, supply chain optimization, and restructuring projects. In addition, Ponds regularly counseled companies on a wide variety of controversy matters, including advance pricing agreements, mutual agreement procedure cases, and Internal Revenue Service audit defense projects. She also spent two years working directly with the leader of Ernst & Young’s global transfer pricing practice in Germany.

At Miller & Chevalier, Ponds will focus her practice on the implementation of the TCJA and other tax policy matters. She will also work with clients on transfer pricing and broader international tax issues.

“Loren’s first-hand experience at the Committee on Ways and Means, especially the critical role she played in drafting the international tax provisions of the TCJA, makes her one of the most well-equipped lawyers to advise clients navigating the new legislation,” said George A. Hani, Chair of Miller & Chevalier’s Tax Department. “Her counsel is grounded in deep knowledge of the underlying policies and her perspective from inside the process. She offers unique, detailed insight that few in the field can provide.”

“From executing complicated supply-chain restructurings, to guiding companies through transfer pricing dispute resolution, to drafting international tax legislation, Loren has gained vital experience and will be a tremendous resource to our clients. Her legislative experience, combined with her technical expertise, makes her uniquely situated to assist our clients as they seek to implement the TCJA, as well as pursue related technical corrections and administrative guidance,” said Marc J. Gerson, Chair of Miller & Chevalier’s Executive Committee. “We are thrilled to welcome her to the firm.”

Ponds earned an LL.M. in Taxation from the Georgetown University Law Center, a J.D. from the American University Washington College of Law, and an A.B. from Davidson College.



How IRS Taxes Kill Plaintiff’s $289M Monsanto Weedkiller Verdict

Even if the $289 verdict against Monsanto last week survives the appellate process, the plaintiff will see much of his award go the IRS because of  taxes imposed by the a new tax law involving legal fees, according to tax lawyer Robert W. Wood, a Forbes contributor.

In his article, Wood explains: “Under President Trump’s tax bill passed in late 2017, there is a new tax on litigation settlements: no deduction for legal fees. Amazingly, many legal fees simply can’t be deducted. That means [plaintiff Dewayne] Johnson must pay tax even on monies his attorney collects. That is so even though the attorney must also pay tax on the same money.”

Johnson’s suit claimed Monsanto’s Roundup weedkiller caused his cancer.

Read the Forbes article.



Supreme Court Closes Sales Tax Loophole in E-Commerce

Taxes - IRS - Internal Revenue ServiceThe Supreme Court ruled Thursday that states can force retailers to collect state and local sales taxes no matter where the seller operates its business, saying those taxes support local police and fire departments and other services.

“The decision, in South Dakota v. Wayfair Inc., was a victory for brick-and-mortar businesses that have long complained they are put at a disadvantage by having to charge sales taxes while many online competitors do not,” explains The New York Times. “And it was also a victory for states that have said that they are missing out on tens of billions of dollars in annual revenue.”

Justices split 5-4 on the ruling, with Anthony M. Kennedy, Clarence Thomas, Ruth Bader Ginsburg, Samuel A. Alito Jr. and Neil M. Gorsuch in the majority.

Read the Times article.



Lawyer Convicted of Abetting Tax Evasion By Wall Street Executive’s Adult Children

The lawyer who taught New York’s first family of tax evasion the tricks of the trade might be spending his golden years in prison, according to Crain’s New York Business.

A Manhattan jury found Michael Little, 67, guilty of helping the adult children of a Wall Street executive tap into their Swiss bank accounts, which held millions in inheritance money, without alerting the IRS.

Reporter Aaron Elstein writes that the case appears to mark the end of an extensive government crackdown on wealthy families and their advisers who avoided paying taxes by parking money offshore. Federal authorities have charged more than 60 account holders with tax evasion and 30 bankers or lawyers with enabling them during the past eight years.

Little’s troubles began in 2001 when the children of Harry Seggerman, who’d made his fortune at Fidelity investing in Japanese and later Korean companies wanted to access their late father’s $24 million estate, about half of which was tucked away in a Zurich vault.

“Little advised the Seggermans that they could get their inheritance dollars back into the United States without alerting authorities by taking ‘little chunks’ using travelers checks or disguising transfers by saying they were related to sales of art or jewelry,” writes Elstein.

Read the Crain’s article.



‘Tax Case of the Millennium’ Hits High Court: A Primer

Oral arguments in the biggest U.S. Supreme Court tax case in years are just days away, reports Bloomberg Law.

Oral arguments in South Dakota v. Wayfair are scheduled for Tuesday, April 17.

Reporter Ryan Prete writes that the case directly challenges the 1992 decision in Quill Corp. v. North Dakota, prohibiting states from imposing sales tax collection obligations on vendors lacking an in-state physical presence.

“The case has set off perhaps the largest amount of state and local tax-related activity in the past decade as states have tried to ‘kill Quill’ as online commerce has replaced traditional brick-and-mortar markets,” according to Prete.

He quotes Max Behlke, director of budget and tax at the National Conference of State Legislatures, as saying the South Dakota case is the “tax case of the millennium.”

Read the Bloomberg article.



Dear Employer, You Could Owe the IRS Millions of Dollars

The first batch of employers are getting estimates from the IRS of penalties they owe for not providing health coverage to employees in 2015. Some of the estimates are in the millions, reports Bloomberg.

Kristen Ricaurte Knebel writes that the IRS won’t say how many “226-J” letters have gone out or who’s getting them.

“But some practitioners expect Industries like trucking, restaurant, and staffing to see a high proportion of them,” she explains. “That’s because there is a high turnover rate inherent in those industries, which makes it challenging to keep track of workers, Alden J. Bianchi, a member at Mintz, Levin, Cohn, Ferris, Glovsky & Popeo PC in Boston, told Bloomberg Law.”

The Affordable Care Act in 2015 required employers with 100 or more full-time employees to offer minimum essential coverage to at least 70 percent of full-time workers. Failure to do so could result in a penalty of $2,080 for every full-time employee, with penalties sometimes reaching $10 million.

Read the Bloomberg article.



Cryptocurrency Tax Webinar Covers New IRS Scrutiny on Reporting

Smart contracts - bitcoin - blockchainEarlier this month, tax attorneys Steven Toscher and Michel R. Stein, principals at Hochman Salkin Rettig Toscher & Perez P.C., delivered a presentation titled “New IRS Scrutiny on Cryptocurrency Reporting: Filing Requirements and Exchange Treatment.”

Toscher and Stein’s presentation explains, “Cryptocurrency is drawing increased attention from government regulators.” They note that in November 2017, Coinbase was ordered to release information on approximately 14,000 customers.

They also discuss the means of obtaining virtual currency, problems posed by “fair market value,” and issues that are unresolved.

Read the article.



Jackson Walker Lawyers Squeeze Tax Law Options Onto One-Page Interactive Graphic

Tax lawyers at Jackson Walker LLP have reduced the details of the new U.S. tax law to a one-page interactive graphic to help businesses, individuals and their accountants sort out the new law’s complexities.

The one-page interactive graphic is linked to a 233-page PowerPoint presentation for the webcast “2018 Tax Reform: What You Need to Know Now.” Dallas tax lawyer William “Willie” Hornberger of Jackson Walker and Jason B. Freeman of Freeman Law made the presentation to the State Bar of Texas.

The Jackson Walker tax lawyers studied an array of situations and options to provide guidance on the kinds of adjustments companies and certain individuals may want to make this year as they look ahead to 2019 under the new Tax Cuts and Jobs Act.

“What will the law mean for partners in my LLC? How should I handle depreciation of equipment? What expenses can I write off? These are some of the questions we address,” said Hornberger, who advises corporations and partnerships. “Our audience is businesses, investors, individuals in partnerships, CPAs and lawyers.”

“This law has many complexities, and we will be taking deeper and deeper dives into it to advise our clients,” Hornberger said. “It will save many of our clients money, but it isn’t always simple to figure out.”

Download the graphic and slides.



Sexual Harassment Settlements are No Longer Tax Deductible

Confidential sexual harassment settlements and accompanying attorney’s fees are no longer tax deductible under the new tax reform bill, according to a new post by Natalie Lynch of Lynch Law Firm in Austin.

In short, companies will no longer be able to use confidential settlements pertaining to sexual harassment as a tax-deductible settlement, she explains.

Non-confidential settlements can still be used for tax deductions. While the reform bill makes it clear that sexual harassment settlements that carry non-disclosure agreements can no longer be used as tax deductions, it stops short of making all confidential settlements non-deductible. Language that would include gender discrimination, retaliation, or Title IV is entirely absent in the bill.

Read the article.



Tax Reform Impact On Energy? Short Answer: MLPs Are Fine

Taxes - IRS - Internal Revenue ServiceBaker Botts partner Mike Bresson told listeners at the beginning of the law firm’s recent webinar that “Master limited partnerships [MLPs] did just fine on tax reform.”

Joseph Markman, writing in Oil and Gas Investor about the webinar presentation, quoted Bresson: “The first big [change], which is definitely a positive, is a reduction in tax rates,” said Steve Marcus, partner and Dallas-based department chair in taxes. “The corporate tax rate’s been reduced from 35% to 21%.”

Another change, however, may have a slightly negative impact, now that interest deductions are limited. The limitation amounts to about 30% of an MLP’s adjusted taxable income. How this affects the typical MLP depends on its tax shield.

Markman explains: “For an MLP to calculate the 30% limitation on its ability to deduct its own net business interest expense, it must determine its share of ‘excess taxable income’ allocated to it from a subsidiary partnership. An MLP’s unitholder would then determine ‘excess taxable income’ in calculating the limitation with respect to its net business interest expense.”

Read the article.



Corporations May Dodge Billions in U.S. Taxes Through New Loophole: Experts

Taxes - IRS - Internal Revenue ServiceReuters is reporting that a loophole in the new U.S. tax law could allow multinational corporations like Apple Inc to avoid paying billions of dollars in taxes on profits stashed overseas, according to experts.

Reporter David Morgan explains that the loophole involves the tax rates — 15.5 percent or 8 percent — that companies must pay on $2.6 trillion in profits they are holding abroad.

Stephen Shay, a senior lecturer at Harvard Law School, said the loophole clearly is the result of rushed legislation. He explained that a U.S. multinational could manipulate its foreign cash positions and potentially save  money by shifting profits to the lower rate from the higher one.

Read the Reuters article.



Companies Have Up to a Year for New U.S. Tax Bill Reporting: SEC

Taxes - IRS - Internal Revenue ServiceU.S. financial regulators said that because the new tax bill could make timely financial reporting difficult, public companies can make reasonable estimates when uncertain of the impact of the new tax law in financial reports, and will have up to a year to report final numbers, Reuters reports.

“The $1.5 trillion tax bill, signed into law on Friday by U.S. President Donald Trump, will significantly affect many companies’ year-end financial statements because listing rules oblige them to flag any potential material risks or changes to their operations and financial outlook to shareholders,” according to the report.

Regulators gave public companies a “measurement period” to study the new law.

Read the Reuters article.