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Washington DC Tax Law Blog

Corporate inversion to reduce tax obligations under fire

There are a number of legal ways to reduce tax obligations. Some of these methods are common, known to anyone that has filed taxes. Basic deductions like charitable donations are a common example. Other maneuvers are more specialized.

One such method, referred to as a corporate inversion, is under scrutiny by the federal government.

Department of Justice investigates Swiss Life for tax evasion

The Swiss insurance industry is now under close scrutiny by the United States Department of Justice (DOJ). One insurance provider in the nation, Swiss Life, recently announced that it is under investigation by the DOJ.

Why would the DOJ dig into insurance companies for wrongdoing? A recent publication on discusses the move. It notes that the federal agency found Swiss banks guilty of maintaining undeclared accounts for United States clients in the guise of insurance policies. Basically, the funds were hidden in something referred to as an insurance wrapper. 

IRS attempts to investigate Coinbase users for tax fraud

The Internal Revenue Service (IRS) is in the midst of a lawsuit against cryptocurrency provider Coinbase. The agency is attempting to gain information about those who use Coinbase, claiming that there is a high likelihood that these users are guilty of various tax crimes.

What is the basis for these allegations? The agency supports these allegations by pointing to the numbers. According to the IRS, they simple do not add up. As noted in a publication by Coindesk, a source that focuses on news relating to digital currency and also a part owner of Coinbase, the federal agency requested information about Coinbase users for 2013, 2014 and 2015. 

IRS announces International Tax Enforcement Group initiative

The fact that the Internal Revenue Service (IRS) is cracking down on offshore accounts and foreign tax compliance issues is not a new one. Media outlets have been covering this story for months. However, the agency recently took a big step that will push these efforts to the next level.

What was the big step? The agency recently stated that it will move forward with a new criminal investigation group that will specialize in international tax issues. The Criminal Investigation Division (CID) of the IRS clarified, noting the group will focus on enforcement of international tax issues.

Will the Supreme Court hear a battle over the FATCA?

The Foreign Account Tax Compliance Act (FATCA) has faced serious opposition. It was signed into law in 2010 by President Obama and is currently part of a a lawsuit that alleges the law causes harm to a number of individuals.  

Who is bringing this lawsuit? The lawsuit, as noted in a recent piece in International Investment, was brought by a group referred to as the Republican Overseas Action group. It includes members like Kentucky Republican senator Rand Paul as well as expat United States citizens that span both parties. 

Expats: Avoid these common tax mistakes

Even expats have certain tax obligations. A failure to meet these obligations can result in a range of penalties. Depending on the details of the issue, penalties can include fines or even criminal charges and revocation of your U.S. passport.

Examples of common mistakes: Due to the severity of penalties tied to tax issues, expats can benefit from a basic understanding of the most common tax missteps. One of the most common is a failure to file a U.S. return at all. Tax returns are generally required, even when living abroad. 

Injured Spouse Relief

When a joint return is filed and only one spouse owes a past-due amount, the other spouse can be considered an injured spouse. An injured spouse claim is different from an innocent spouse claim, since it uses Form 8379 to request an allocation of the tax overpayment attributed to each spouse, whereas an innocent spouse claim uses Form 8857 to request relief from joint liability for items of the other spouse (or former spouse) that were reported incorrectly on the joint return.

What is an International Boycott Report?

U.S. companies and their oversea affiliates are prohibited from certain interactions with countries that are listed as boycotted. In some cases, the United States Government may sanction a request. An understanding of the potential tax implications of these dealings is beneficial for any business operating in qualifying countries.

What exactly is a qualifying boycott activity? This type of activity includes agreeing to contracts conditions that may include refraining from doing business in or hiring individuals from certain countries.

Will Foreign Financial Institutions renew their FATCAs in time?

Foreign financial institutions that provide financial accounts to U.S. taxpayers or foreign entities that have a substantial ownership interest by a U.S. taxpayer are generally required to report information to the IRS. In some cases, this requires completion of an FFI agreement.

The Internal Revenue Service (IRS) recently posted a reminder that foreign financial institutions are expected to renew their Foreign Accounts Tax Compliance Act (FATCA) Foreign Financial Institution (FFI) agreements by today, July 31, 2017.

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