An Illinois foundation that doles out college scholarships was among the investors in what the FBI claims was a foreign currency scam involving two Bergen County men.

In what appears to be the first investor lawsuit in the unfolding case, the MWF Foundation Inc. — a non-profit run by Michael Fehrenbacher — invested $655,000 into the alleged fraud.

The suit, filed Monday in federal court in Illinois, sheds new light on who invested in an alleged fraud involving foreign currency trading as well as others associated with the case.

Samuel Neschis, Fehrenbacher’s attorney, said the foundation also donates to food pantries. “They’re unable to make additional grants at this time,” Neschis said.

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For more information or for assistance with other criminal tax concerns, contact Horowitz & Weinstein.

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For more information on the 2012 Offshore Voluntary Disclosure Program or for more tax related legal concerns, contact Horowitz & Weinstein.

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Illinois Senator Dick Durbin is one of the Senators who introduced Internet Sales Tax Reform through the Marketplace Fairness Act which, according to the Act is designed to  “restore States’ sovereign rights to enforce State and local sales and use tax laws, and for other purposes.”

The Act establishes a basis and methodology for States to charge sales tax when a Seller makes a sale to a customer in another State.  Intriguing though, is the Small Seller Exemption which in effect allows businesses with less than $500,000.00 in previous annual sales to continue to make sales without charging sales tax if they can do so under present rules.  This could give small businesses an advantage over “big box stores” and other large sellers.

In Illinois, collections of Illinois Sales Tax, Retailers Occupation Tax (ROT), Use Tax (UT), Motor Fuels Tax, Service Use Tax (SUT) and Service Occupation Tax (SOT) are enforced by the Illinois Department of Revenue through Sales Tax Audits and Illinois Department of Revenue Collection Acts which could include Levy of bank accounts, levies on other property, revoke suspend, or hold a business certificate, and revoke a sales tax business certificate.

For more information on online sales tax, the Illinois Department of Revenue, or other civil or criminal tax law concerns, contact Horowitz & Weinsein.

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For quite a few taxpayers, filing their yearly tax returns doesn’t go much beyond the trusty old Form 1040.  There are of course many other forms for reporting to the IRS and one that is especially worth noting is Form 3520, a return for reporting transactions with foreign trusts and the receipt of foreign gifts.

For 2010, foreign trust and gift reporting was changed primarily by the HIRE Act.  Specifically a number of penalties for failure to report foreign trusts and gifts have been modified and new penalties have been introduced.  In addition, the scope of individuals who are required to file Form 3520 has been expanded.  The penalties for failing to file can be severe, in general amounting to $10,000 or a percentage of the assets in questions (usually 35%), whichever is greater.

The specific requirements and nuances of foreign gift and trust reporting and compliance are complex and of course the best course of action is to consult a tax professional.  Here are the basics.

You have to file Form 3520 for a tax year if you received a gift from a foreign (meaning non-US) source of $100,000 or more from an individual or $14,165 or more from a corporation or partnership.  You must file if you are a U.S. person who received a distribution from a foreign trust.  You must also under certain conditions file if you are the owner or part owner of certain foreign assets.

For more information on foreign gift reporting, foreign trust compliance, or for help with other tax related legal concerns, contact Horowitz & Weinstein.

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Within the last 18 months the Illinois grand juries have indicted 14 gas station operators, charging they withheld a portion of the sales tax they owed to the state.  Attorney General Lisa Madigan has said more than one-fourth of Illinois gas station operators have underreported their fuel taxes.  Along with the Illinois Department of Revenue, Madigan is now investigating the state’s gas stations as well as tax preparers involved in the cases.

Last year’s tax amnesty program saw many gas station operators coming forward.  With the program now over, those who could have participated but did not will now face doubled fines and interest.

In addition to the owed taxes, those the state has indicted face penalties for tax evasion and interest on their unpaid taxes.

For more information on sales tax audits, tax evasion cases, or other tax law concerns, contact the Chicago tax lawyers at Horowitz & Weinstein.

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Last week President Obama presented The American Jobs Act to a joint session of Congress.  The Act includes a number of measures, all billed at helping the still reeling economy and in particular the job market.  In addition to allocating money to schools, for projects to improve infrastructure and modifications to unemployment insurance, the Act contains a number of tax provisions.

The Act calls for payroll taxes to be cut in half on the first $5 million in payroll.  The White House says this will cover 98% of businesses in the country.  The Act also calls for an elimination of the payroll tax for firms that increase their payroll by adding staff.  This measure is currently capped at $50 million in payroll increases.

The 100% expensing measure passed as part of the extension of the Bush Tax Cuts last winter would be extended through 2012.  The Act also contains a number of additional reforms and regulatory reductions to help entrepreneurs and small businesses.

For workers, the Act will cut payroll taxes in half for 160 million workers in 2012, extending the payroll tax cut passed last winter.

As with any legislation, the American Jobs Act is likely to change before (and if) it becomes law.

For more information on the American Jobs Act, payroll taxes, or other tax related legal concerns, contact the Chicago tax lawyers at Horowitz & Weinstein.

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The IRS has since clarified the situation.  Failure to report reportable transactions means failing to include any information required by the Internal Revenue Code when submitting a return or other statement.

The new regulations the IRS released have clarified several issues such as the window for leniency on failure to file and the penalty amount for failure to file, but the IRS has not yet clarified other issues such as how exactly those penalties are computed.

For more information on failure to report cases or other IRS and tax related legal concerns, contact the Chicago Tax Lawyers at Horowitz & Weinstein.

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The OVDI is a tax amnesty initiative by which taxpayers with undisclosed offshore or foreign tax liabilities receive reduced penalties in exchange for coming clean with the IRS.

For more information on the current OVDI or for other offshore and foreign tax concerns, contact Horowitz & Weinstein.

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In 2008, New York passed a first of its kind law that expanded the definition of nexus to include companies with affiliate ties to that state.  The statute stated that if a company received business through referrals from New York affiliates, then that company had sufficient presence within the state to be charged sales tax.  Since 2008, eight states have passed their own versions of New York’s law, Rhode Island, North Carolina, Colorado, Illinois, Arkansas, Hawaii, Connecticut and California.  For the most part in these states, e-retailers like Amazon have responded by discontinuing their affiliate programs rather than charging sales tax.

Currently Vermont, New Mexico, Massachusetts, Missouri and Minnesota are all considering affiliate tax bills of their own.  Meanwhile South Carolina and Texas have given Amazon in particular, the online retailer that has become somewhat of the flagship in this debate (they have sued to have the New York law declared unconstitutional and are sponsoring a ballot measure to repeal California’s law) special protections against sales tax to encourage the company to build facilities within their states and bring jobs.

The 1992 Supreme Court ruling left open the possibility for Congress to pass new laws, to set new rules for interstate commerce, thus allowing mail order and online retailers to be required to collect sales tax.  For several years now a proposal for this has waxed and waned in popularity and exposure, something called the Streamlined Sales Tax Agreement.  The idea is that states join the Agreement and agree to abide by some common rules for sales tax in exchange for the ability to collect sales tax on out of state retailers.  The biggest push in support for this measure has come most recently from Senator Dick Durbin (D-IL) who has introduced the Main Street Fairness Act into the Senate.  It would provide official Congressional support for the SSTA and would allow it to go into effect once 10 states approved it.

Perhaps most importantly, online retailers like Amazon and Overstock.com have put their support behind Senator Durbin’s initiative, arguing it is the fairest resolution to the current debate.

For more information on the affiliate tax, other sales or use tax issues, or for assistance with any tax law concern, contact Horowitz & Weinstein.

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