Publications

Filing Amended and Current Returns in Cases of Past Noncompliance: How Not to Make Matters Worse

By Megan L. Brackney
The CPA Journal
May 2016 Edition

When a CPA discovers a taxpayer’s past noncompliance, there are both ethical and practical questions to answer. The last thing a CPA should want to do in this situation is turn a manageable issue into a serious problem. Although these issues have many nuances, there are some basic principles to follow in deciding how to address past noncompliance by clients and how to handle the filing of tax returns that are currently due. 

Read more Share

Bryan C. Skarlatos Quoted in Tax Notes Article, "News Analysis: Be Nice to Whistleblowers"

By Lee A. Sheppard
May 2016

Bryan C. Skarlatos is quoted in the Tax Notes article, "News Analysis: Be Nice to Whistleblowers" by Lee A. Sheppard. With the whistleblower program celebrating its 10th anniversary, practitioners still complain about an unwillingness to take hard cases, lack of communication, and slowness in the payment of awards. In an excerpt from the article:

"LB&I has its own culture and beliefs about how things should be done. "There's a cultural issue," said Zerbe. Skarlatos said that he got the sense that overworked LB&I revenue agents, who are very expert in their specialties, seem to resent the help and may not recognize the value of the information. Zerbe concurred that it is difficult to sell LB&I on a case involving an insider at a Fortune 500 company. "C'mon, guys, this guy got fired for what he disclosed!" said Skarlatos, who praised the quality of the evidence offered by insiders.

LB&I has an audit plan and may be reluctant to take up a case when its audit of the reported company has been completed. "It's tough changing the audit plan," Skarlatos noted. There is no placeholder in the audit plan for issues raised by whistleblowers. Zerbe wanted the Whistleblower Office to have the power to go to the commissioner to change the audit plan, that is, essentially reopen the audit of the reported company."

Read more Share

Bryan C. Skarlatos Quoted in Tax Analysts Article, "U.S. Taxpayer Revelations From Panama Leak Expected to Be Modest"

By Amanda Athanasiou
May 2016

Bryan C. Skarlatos is quoted in the Tax Analysts article, "U.S. Taxpayer Revelations From Panama Leak Expected to Be Modest" by Amanda Athanasiou.  In the article, Mr. Skarlatos states:

The data are unlikely to reveal large-scale noncompliance by U.S. taxpayers that hasn't already been disclosed or cleaned up, said Bryan C. Skarlatos of Kostelanetz & Fink LLP. "The main contribution of this data is that it's lifted back the curtain, enabling us to see evidence of hidden accounts and bearer share company structures that the public hears about, but never really sees," Skarlatos said. The primary impact in the U.S. will be to raise awareness about how bank secrecy works around the world, through the use of those bearer share corporations, he added.

Read more Share

A Limit on the IRS's Prerogative to Change its Mind: Reliance on a Prior No-Change Letter as a Defense to Penalties

By Megan L. Brackney
Journal of Passthrough Entities
May - June 2016 Edition

It is the IRS’s prerogative to change its mind. The IRS can conclude the audit of one tax year with no change and then make adjustments in a later tax year on the exact same tax positions present in the prior audit. But, can the IRS approve of a tax reporting position in one year and then turn around and assess penalties on the ground that the taxpayer was negligent for having taken that position in a later year? Two recent decisions consider when the result in a prior audit is a reasonable cause defense to penalties: Brinks Gilson & Lione and J.J. Powell, Inc. This column discusses both cases and then provides some tips for successfully defending against penalties based on a favorable result in a prior audit.

Read more Share

The Panama Papers: A Reminder to Taxpayers That It’s Not Too Late to Clean Up Unreported Offshore Assets

By Bryan C. Skarlatos, Esq., and Michael Sardar, Esq.
Tax Stringer - NYSSCPA
May 2016 Edition 

Recent Developments

Over the past few weeks, a giant trove of information regarding individuals holding assets through Panamanian corporations has been leaked to the press. So far, the “Panama Papers” - as they have come to be called - have disclosed that several high-profile individuals around the world were holding foreign bank accounts and other assets through Panamanian offshore entities. Additional information and names are expected to be released as the media sifts through the large volume of now public documents. While holding an offshore entity or bank account may be legal, the implication is that at least some implicated individuals were engaged in illegal activity or failed to properly report the assets.

Read more Share

Bryan C. Skarlatos Quoted in TaxAnalysts Article, "IRS Participate in International Meeting Over Panama Papers"

Bryan C. Skarlatos quoted in article by Andrew Verlarde and Nathan J. Richman in Taxanalysts, "IRS Participates in International Meeting Over Panama Papers".

In an excerpt from the article:

Bryan C. Skarlatos of Kostelanetz & Fink LLP said that while thousands of U.S. taxpayers had Panamanian corporations, most of those taxpayers have already made disclosures under the IRS's offshore voluntary disclosure program. "The IRS and the Department of Justice have done a very good job of pressuring the taxpayers and financial institutions to get these foreign accounts cleaned up," he said.

Read more Share

Guest Post: Marjorie Peerce’s Commitment to Clemency Project Should Be an Inspiration to All

By Sharon L. McCarthy
Women Criminal Defense Attorney Blog
April 2016

Every once in awhile, we meet people who truly inspire us to be better people and better lawyers. Marjorie Peerce is one of those people. As a partner in the New York office of Ballard Spahr she focuses her practice on white collar, regulatory and commercial defense. Yet since 2014, in addition to her busy practice, she has made time to work tirelessly to recruit and train volunteer lawyers to provide free legal assistance to federal inmates who may be eligible to have their sentences commuted or reduced by the President of the United States. Over 3,000 attorneys across the country have volunteered their time to work on this project, including 100 lawyers from Ballard Spahr. Every application submitted by Ballard Spahr is reviewed by Marjorie. She recently saw the first fruits of her labor and that of her colleagues when, on March 29, 2016, Obama granted clemency to 61 federal inmates, 25 of whom came through Clemency Project 2014 and two of whom were represented by Ballard Spahr attorneys.

Read more Share

The Trust Fund Recovery Penalty and Encumbered Funds: No Easy Way Out

By Henry Stow Lovejoy
CPA Journal
April 2016 Edition

The “trust fund recovery penalty” can impose sizeable liabilities on officers and other employees of financially struggling or failed companies that fail to pay withholding or employment taxes. Individuals facing this penalty will often claim that they had no choice, that there were no funds not already spoken for or controlled by others. To their chagrin, these employees learn that the trust fund recovery penalty imposes a strict obligation on any person with knowledge of unpaid employment taxes, with only a narrow exception for encumbered funds.

Read more Share

Sidney Kess published in Journal of Accountancy, "Kess Honored for Distinguished Service in PFP"

April 2016

Sidney Kess, Esq., CPA, of counsel to Kostelanetz & Fink LLP, received the Institute's 2015 Personal Financial Planning Distinguished Service Award, which is granted annuaily to a member whose volunteer efforts have made significant contributions to the growth and advancement of the personal financial planning profession.

Read more Share

The Kovel Privilege: How Does it Work?

By Sharon L. McCarthy
CPA Journal
June 2015 Edition

A client’s communications with an accountant enjoy a limited privilege under the Tax Code. In non-criminal tax matters, that privilege applies to any communication that “would be considered a privileged communication if it were between a taxpayer and an attorney” [IRC section 7525(a)(1)]. In the criminal context, however, no such privilege applies to communications between an accountant and a client, except when the accountant assists an attorney in providing legal advice to a client. This has been well-established law since 1961, when the Second Circuit Court of Appeals decided United States v. Kovel [296 F.2d 918 (2d Cir. 1961)].

Read more Share