Bryan C. Skarlatos quoted in the Wall Street Journal Article "You Made a Mistake on Your Tax Return. Should You Amend It?"
Whether or not you should do it—and the consequences—depends on the details of your case, experts say
By Tom Herman
Broadway’s brightest star, Alexander Hamilton, summarized the problem neatly.
“In common life, to retract an error even in the beginning is no easy task,” Mr. Hamilton once wrote, according to Ron Chernow’s biography of the nation’s first Treasury secretary. “Perseverance confirms us in it and rivets the difficulty.”
While Mr. Hamilton wasn’t writing about income-tax bloopers, his words undoubtedly will resonate with millions of modern-day taxpayers. Nobody likes to admit mistakes, especially on tax returns. But as lawmakers continually add layers of complexity to the nation’s tax system, millions of taxpayers each year face thorny questions about how—and even whether—to fix errors and omissions.
Tax practitioners often give tax advice on things like how to structure an investment in a business venture, sell an asset, plan for retirement or pass wealth to the next generation. Sometimes a practitioner’s tax advice turns out to be wrong and the IRS assesses a tax deficiency against the taxpayer.
Typically, the question of whether the tax practitioner could be subject to a penalty for providing faulty advice would be governed by the standards under Code Sec.6694—i.e., whether the advice had a reasonable basis and was adequately disclosed, or was supported by substantial authority or, in the case of a tax shelter, it was reasonable to believe that the position was more likely than not to be sustained on its merits. However, another standard also could apply to the tax advisor’s advice. Under Code Sec. 6700, the IRS could attempt to impose a much larger tax shelter promoter penalty if the advisor “had reason to know” the advice was wrong. Most practitioners believe that the penalty under Code Sec. 6700 is designed for abusive tax shelters that are marketed by unscrupulous tax shelter promoters. While that appears to have been the purpose behind the enactment of Code Sec. 6700, the statute itself contains some technical yet broad language which, taken literally, possibly could apply to a wide variety of arrangements that involve tax benefits. There is nothing in the body of the statute that limits the penalty to tax practitioners or tax return preparers, defines the type of investment plan or arrangement that is covered or requires any specific marketing efforts. Thus, the IRS could attempt to argue that Code Sec. 6700 applies to ordinary tax advice if the practitioner giving the advice “knew or had reason” to know that the advice was wrong.
Bryan C. Skarlatos quoted in the Wall Street Journal Article "Donald Trump’s Tax Numbers Sharpen Focus on Treatment of Losses"
The weekend revelation of some of Donald Trump’s tax records put the New York real-estate developer on the defensive by showing the extent of his 1990s financial troubles and suggesting those setbacks could have eliminated his federal income-tax bill for years afterward.
Bryan C. Skarlatos Quoted in The Wall Street Journal Article, "Big Win for Tax Whistleblowers as Pair Gets $17.8 Million"
Ruling marks first time a portion of criminal fine and civil forfeiture are included in award
WASHINGTON—The U.S. Tax Court awarded $17.8 million to a pair of whistleblowers in a decision that significantly expands the scope of what can be claimed in such cases.
The ruling for the first time allowed the whistleblowers to get a portion of criminal fines and civil forfeitures in addition to part of the taxes the government recouped because of information they provided.
“This opens the door to much larger whistleblower payments in offshore-account cases,” said Bryan Skarlatos, a tax lawyer at Kostelanetz & Fink LLP in New York who wasn’t involved in the case.
On June 24, 2016, Industry professionals gathered for the 8th Annual NYU Tax Controversy Forum at the Crowne Plaza Times Square in Manhattan.
Accountants, attorneys, in-house practitioners and tax professionals at all levels who prepare for or handle audits, appeals or tax litigation, as well as those involved in planning and transactional work who could benefit from a better understanding of the implications of their work for audit defense.
Bryan C. Skarlatos quoted in CCN.LA article, "Accountants Ask IRS to Clarify Bitcoin Transactions' Tax Status"
On June 25th, 2016, Bryan C. Skarlatos, Partner at Kostelanetz and Fink, LLP. was quoted in an article on CCN.LA by Elliot Maras. The article assesses the current issues of clarifying the tax status of small virtual currency transactions.
Excerpt from the article:
The number of daily bitcoin transactions has increased to 240,000 from 50,000 two years ago, according to Blockchain.info. Due to this growth, the IRS has conducted audits of bitcoin holders, according to Bryan Skarlatos, a tax lawyer at Kostelanetz & Fink in New York.
On June 22, 2016, at Bergen Community College there were numerous engaging topics scheduled for the Civil & Criminal Tax Enforcement Update including Bryan C. Skarlatos who presented, "What If I Do Nothing? The FBAR, the Form 8938 and Other International Forms That Should Have Been Filed. Defending Against the IRS Assessment of 'Continuation Penalties' for Failure to File Information Returns."
This year's panelists included:
Bryan C. Skarlatos, Esq. - Kostelanetz & Fink, LLP
Frank Agostino, Esq. - Agostino & Associates, P.C.
Charles Rettig, Esq. - Hochman, Salkin, Rettig, Toscher & Perez, P.C.
Lawrence Sannicandro, Esq. - Agostino & Associates, P.C.
Richard Sapinski, Esq. - Sills Cummis & Gross, P.C.
Steven Toscher, Esq. - Hochman, Salkin, Rettig, Toscher & Perez, P.C.
Bryan C. Skarlatos Presented at 2016 AICPA Conference on Tax Strategies for the High-Income Individual
Session 23: Tax Practice and Procedure: Tips for Dealing With the IRS
When it comes to dealing with the IRS, knowing the rules of engagement can be critical to protecting your client’s rights and pocketbook. Whether it is responding to inquiries, IRS examinations or assisting clients to come into compliance with offshore income reporting, there are times when the approach the tax accountant takes must be more limited than that available to the attorney. This session shared insights and best practices about:
- Common issues in audit representation; attorney vs. accountant differences
- Limitations of non-attorney practice
- When the accountant needs to have an attorney guard his or her back
Session 38: Procedures and Penalties for Disclosing Unreported Foreign Assets: An Update
The number of taxpayers with unreported foreign accounts, corporations, and other assets is staggering. This session reviewed alternatives for disclosing unreported foreign assets and how to choose the best strategy for different situations. Topics covered:
- What the IRS is doing now to find and pursue taxpayers who have not reported foreign assets
- How to evaluate a client’s level of risk for large FBAR penalties or even criminal prosecution
- When to advise a client to make a voluntary disclosure, a streamlined submission or file amended returns
The 2016 Private Wealth and Taxation Institute was an exceptional program this year. It was highly informative for private clients and their advisors. The speakers will included Paul Lee, from Northern Trust, Gideon Rothschild, Sandy Schlesinger, Professor Jerome Hesch, Dick Nenno and Sharon Klein from Wilmington Trust, Bryan C. Skarlatos and Megan L. Brackney from Kostelanetz & Fink, LLP, and Jeffrey Goldenberg from Goldman Sachs to name a few. In addition, there was also be a strong representation from the public sector including the Taxpayer Advocates for the Federal, State, and NYC governments, a Tax Court Judge, and the Suffolk County Surrogate Court Judge. Of course, there was plenty of local talent that presented, including several attorneys from The Private Wealth & Taxation Group of Meltzer Lippe and presenters from other Long Island Law Firms and Accounting Firms.
Bryan C. Skarlatos Presented at the Wall Street Tax Association Spring Tax Seminar, "Privilege Issues"
Bryan C. Skarlatos presented, "Protecting Privilege for Legal Advice to the Business by In-House Tax Lawyers," at the Wall Street Tax Association Spring Tax Seminar.
Topics included: Protecting Privilege for Legal Advice to the Business by In-House Tax Lawyers
Panelists: Diana Wollman, Cleary, Gottlieb, Steen & Hamilton
Daniel Dumezich, Deloitte
Bryan Skarlatos, Kostelanetz & Fink, LLP
Moderator: Elena Romanova, CITI