By: Michael Sardar
The CPA Journal
May 2019 Edition

The Tax Cuts and Jobs Act (TCJA), signed into law on December 22, 2018, delivered sweeping changes to the federal tax code. These changes brought with them ambiguity and uncertainty, which will likely lead to federal tax audits and disputes on how such provisions should be applied and interpreted. One of the TCJA’s changes, however, is expected to trigger state tax collateral consequences that may lead to an increase in state and local income tax audits and disputes, specifically audits by states and localities to determine if a taxpayer is a resident and thus subject to tax on all income. These are often called residency audits.

By: Michael Sardar
Tax Stringer
April 2019 Edition

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On March 13, 2018, the IRS announced that it would end its long-running Offshore Voluntary Disclosure Program (“OVDP”) on September 28, 2018. With the closure of one of the IRS’s most successful compliance enforcement programs, practitioners were anxious for the IRS to announce a new program to take its place. On November 20, 2018, the IRS issued a memorandum titled “Updated Voluntary Disclosure Practice,” which announced new guidance for the way the IRS would process new voluntary disclosure applications made after the closure of the OVDP.

By: Bryan C. Skarlatos & Michael Sardar
June - July 2018 Edition
Journal of Tax Practice & Procedure

Imagine a situation in which Congress passed a statute establishing civil penalties for certain conduct, including the maximum penalty that may be imposed for such conduct, and delegated enforcement of the statute to a federal agency. What if the federal agency issued a regulation stating the maximum penalty the agency would impose under the statute and then Congress later amended the statute to increase the maximum penalty the agency could impose, but the agency never changed its own self-limiting regulation? Would the agency be bound by its regulation, or could it ignore the regulation and impose the higher penalties authorized under the new statute?

By: Michael Sardar
August 2018 Edition
The CPA Journal

On March 13, the IRS announced that it will close the Offshore Voluntary Disclosure Program (OVDP), effective September 28, 2018. In the announcement, the IRS encouraged taxpayers who need to disclose noncompliant and unreported foreign accounts and assets to come forward before the September deadline. Qualifying taxpayers who have unreported foreign accounts can still use the OVDP to come into compliance while avoiding the risk of criminal prosecution and minimizing otherwise applicable civil penalties, but only until that date. As of this writing, it not yet known whether the IRS will announce a new program or initiative to replace the OVDP. 

By Michael Sardar
The CPA Journal
September 2017 Edition

Several years ago, the IRS started its successful takedown of secret Swiss banking with the use of a John Doe summons.

By Michael Sardar
The CPA Journal
July 2016 Edition

It is not often in life that one is able to hit pause, rewind, and redo something that has already happened. To many taxpayers’ surprise, however, taxes are just one such area. Knowing the various options for correcting an error on a tax filing can help mitigate the many consequences of an erroneous tax return, including the elimination of penalties.

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.

By Michael Sardar
The CPA Journal
March 2015 Edition

For decades, the IRS has pursued U.S. taxpayers who maintain hidden offshore income and assets. Until recently, most tax professionals would have agreed that the IRS’s success in the area of offshore tax evasion was limited at best. The IRS has greatly ramped up its offshore compliance efforts over the past eight years. For the most part, these efforts have been met with success. Yet some taxpayers continue to maintain unreported foreign assets hoping to get away with noncompliance, or hoping that they will face no repercussions when they get caught. In reality, the IRS is becoming more skilled at discovering offshore noncompliance, and it has made it clear that the price of noncompliance will go up.

By Bryan C. Skarlatos and Michael Sardar
Unreported Foreign Assets
2014-15, Volume 27, Number 1

Brian and Helena are getting divorced. Brian has a successful electronics company that sells products around the world. Several years ago, a European customer owed a lot of money to Brian’s company and Brian instructed the customer to divert part of the payment to a numbered bank account in the Channel Islands controlled by Brian. The account now has a little over one million dollars. Helena has always known about the account and now she is threatening to tell the judge, or worse, call the Internal Revenue Service, unless Brian agrees to her settlement proposal.

By Bryan C. Skarlatos and Michael Sardar
Journal of Tax Practice & Procedure
August - September 2012 Edition

 In Williams, the Fourth Circuit Court of Appeals, in an unpublished two to one decision, reversed a district court decision and held that a taxpayer’s reckless conduct satisfied the proof requirement for a willful civil FBAR penalty. The Fourth Circuit reached this conclusion after reviewing the traditional definition of willfulness, which requires an intentional violation of a known legal duty, and after discussing issues of willful blindness. The Fourth Circuit went on to stretch the concept of willful blindness so far that it equated reckless blindness with willful blindness. The Fourth Circuit’s decision is contrary to long-standing judicial precedent as well as the IRS’s own statements regarding willfulness.