H. Jacob Lager

Archive for October, 2012|Monthly archive page

Too soon to catch Olympic Fever?

In Foreign taxes, International tax laws on October 18, 2012 at 12:23 pm

For Brazilian business, it’s right on time.

Photo by eduhalls

Last week, Brazil published MEDIDA PROVISÓRIA No 584 (“Provisional Measure 584/2012”), granting a number of tax incentives for businesses supporting the Rio de Janeiro 2016 Summer Olympic and Paralympic Games.

The measure includes tax breaks for:

  • Imports of tangible goods and services used and consumed in Olympic-related activities;
  • IOC activities occurring in Brazil and supporting activities carried out by its related (foreign and Brazil) entities;
  • The activities undertaken by the Local Organization Committee (“RIO 2016”);
  • Relief from certain Brazilian social security taxes for individuals who support IOC (and related) activities; and
  • Relief for the local sales of goods and services related to the Olympic Games.

Tax-minded Olympic fans (surely I’m not the only one) will recognize that last item.  A similar exemption in London turned the Olympic Village into the world’s tiniest temporary tax haven for international vendors.  To their credit, many such sponsors (like McDonalds, Coca-Cola, GE, and Visa) politely declined the tax breaks this summer.

However, the same “tax vacation” will no doubt boost revenues for small and mid-sized local businesses.  Indeed, Brazil is no stranger to coupling tax breaks with international sporting competition.  The perks described in Provisional Measure 584/2012 are very similar to those granted to FIFA’s 2013 Soccer Confederations Cup and 2014 World Cup to be hosted in Brazil.

Local firms need not even wait till 2016 to claim the tax breaks.  The exemptions will apply to transactions carried out between January 1, 2013, and December 31, 2017.

Feliz Ano Novo, Brasilia!

If your Portuguese is up to snuff, you can find the text of Provisional Measure 584/2012 here.

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Iraq reconstruction legacy: Kickback conspiracies and tax crimes

In Court decisions, Tax Crime on October 12, 2012 at 7:49 am

This past Wednesday, Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney for the Northern District of Alabama Joyce White Vance announced the sentencing of two former Parsons Company employees for their participation in a kickback conspiracy in Iraq and related tax crimes.

According to court documents, Gaines R. Newell Jr and Billy Joe Hunt worked for Parsons in Iraq as program managers to support the U.S. Army Corps of Engineers in its efforts to keep abandoned munitions from insurgents and unfriendly forces.  In their plea agreements, the Defendants admitted to taking over $1 million in kickbacks from certain (shall we say “more friendly”) subcontractors, in return for awarding them valuable munitions clearance program contracts.

Newell and Hunt also admitted to filing false federal income tax returns by not disclosing the kickback income.  If that last part sounds familiar to you – yes, “that’s how they got Capone.”

In what’s becoming a tax crime tradition here at TSF, lets run down what $1 million of illegal income cost our perps:

Billy Joe Hunt (age 57) received:

  • 15 months in prison:
  • 3 years of supervised release;
  • A tax restitution bill for $66,212; and
  • Forfeiture of $236,472.

Gaines R. Newell Jr. (age 53) received:

  • 27 months in prison;
  • 3 years of supervised release;
  • A tax restitution bill for $241,088; and
  • Forfeiture of $861,027 to the U.S. Army Corps of Engineers.

I would ever advise a client to engage in an illegal business activity. BUT, I would advise him to, at the very least, pay his taxes on the income.

Read the official presser here.

Flag image provided by cudmore.