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Media & Articles

Jim Malone and Peter Hardy Discuss Employment Taxes and International Tax Issues with Tax Notes

February 16, 2016

In the February 1, 2016 article for Tax Notes, "What to Look for in Enforcement," Tax Controversy Co-Chairs James R. Malone, Jr. and Peter D. Hardy discussed the IRS' current tax enforcement priorities - including employment taxes and undisclosed foreign bank accounts. 

Commenting on employment taxes, Mr. Malone noted:

"In order to uncover cases to refer for prosecution as well as help taxpayers come into compliance voluntarily, the government has said it will focus on identifying [employment tax] problems early. By 2017 the IRS should be able to notify taxpayers within 48 hours that a deposit has been missed. That’s a good thing, because from the civil side we saw two main fact patterns — businesses with cash flow problems and businesses where there was an employee who shouldn’t have been trusted [to handle the tax deposits], but the business owner was unaware of the problem. The alerts for unremitted taxes in the planned ‘‘soft notice’’ program will help reduce the problems caused by dishonest employees by preventing the unremitted amounts and accompanying penalties from increasing over time, resulting in crippling financial burdens to the business owner."

Mr. Hardy, addressing international enforcement within the article:

"When the government brought the John Doe summons against UBS AG in 2008, it created a new template for pursuing unreported financial accounts that could be replicated around the world. To reinvigorate voluntary disclosures in the international context, the government should find a relatively dramatic prosecution involving a financial institution outside Europe, Hardy said. 'In the absence of that, many account holders are not going to feel very motivated to come into compliance,”  [Hardy] said.  Although account holders have effectively had notice for years about how to declare unreported accounts, and additional compliance measures such as the Foreign Account Tax Compliance Act are giving the government more information than it has ever had, another prosecution like UBS is likely the government’s best bet for bringing more taxpayers into compliance.'"