Offshore Employee Leasing Deal Acquittal

Practical and Practice issues for Professionals who practice in the area of taxation. Moral, social and economic issues relating to taxes, including international issues, the U.S. Internal Revenue Code, state tax issues, etc. Not for "tax protestor" issues, which should be posted in the "tax protestor" forum above. The advice or opinion given herein should not be relied on for any purpose whatsoever. Also examines cookie-cutter deals that have no economic substance but exist only to generate losses, as marketed by everybody from solo practitioner tax lawyers to the major accounting firms.
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Joey Smith
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Offshore Employee Leasing Deal Acquittal

Post by Joey Smith » Mon Nov 08, 2010 2:52 am

IRS Rebuked in Case Involving Listed Transaction; Attorneys Anthony Gasaway and Paul Harris Lead Victorious Legal Team

BECKLEY, W.Va., Nov. 6, 2010 /PRNewswire/ -- Following a 7-year IRS investigation, a jury in Beckley, West Virginia has acquitted Dr. Randy M. Brodnik and Mr. Anthony I. Kritt of all 14 counts of an indictment for alleged tax evasion, conspiracy to commit tax evasion, and obstruction of justice. The indictment stemmed from their participation in an offshore employee leasing transaction. In 2003, the Internal Revenue Service classified the transaction as a "listed transaction" and abusive tax-shelter. Furthermore, the IRS included the offshore employee leasing transaction as a member of the "Dirty Dozen"—a list of transactions that the IRS would devote substantial resources to contesting.
Attorney Anthony Gasaway zealously advocated that the offshore employee leasing transaction follows the black letter of the law, and the IRS failed to provide adequate notice to taxpayers concerning the alleged illegality of the transaction. Attorney Gasaway was assisted in representing Dr. Brodnik by local counsel, Attorney Michael Gibson, of Princeton, West Virginia. Dr. Brodnik was formerly represented by Attorney Robert Stientjes who stepped-down as lead attorney to testify as a key witness for the defense in this case.
The acquittal of both defendants emphasizes that transactions are not illegal simply because such transactions involve offshore business transactions. Furthermore, the decision of the jury recognizes the validity of offshore transactions that comply with U.S. tax laws and treaties. Attorney Gasaway emphasized during the trial that there is nothing wrong with maintaining a foreign bank account where proper tax reporting requirements are met.
During the trial, which lasted nearly four weeks, the IRS unsuccessfully alleged that Dr. Brodnik and Mr. Kritt diverted over six-million dollars to foreign accounts in violation of U.S. tax law. In addition, the IRS unsuccessfully alleged that Mr. Kritt masterminded a scheme with the intent to defraud the U.S. In IRS Notice 2003-22, the IRS classified similar transactions as abusive taxshelters. Mr. Kritt, represented by Attorneys Paul Harris and Joseph Wallace, maintained that he properly approved the transaction pursuant to U.S. tax law. The attorneys for both defendants also maintained that any tax liability was wholly paid by Dr. Brodnik pursuant to changes in the U.S. tax law that became effective in 2007.
In 2003, the IRS raided Dr. Brodnik's home and business, as well as the home and business of Mr. Kritt. During the raids, the IRS seized approximately twentythousand documents, of which less than 100 were presented at trial. The evidence at trial showed that a witness for the prosecution had illegally accessed Dr. Brodnik's email account in order to produce information to the IRS. However, several former IRS attorneys testified on behalf of the defendants and opined that no tax laws had been broken by the defendants.
Although the trial lasted three weeks, the jury was able to reach a unanimous verdict in less than five hours. "We have nothing but praise for the jury and the judge who participated in this case," stated Attorney Gasaway after the verdict was read. "While Dr. Brodnik has nothing but respect for those who enforce our tax laws, clearly, the truth came out at trial; and the truth established that Dr. Brodnik complied with U.S. tax laws & paid his tax liability in a timely manner."
United States v. Randy M. Brodnik, case no. 1:09-cr-00067
United States District Court for the Eastern District of West Virginia
Attorneys Anthony Gasaway and Robert Stientjes represent clients in various criminal and civil tax liability cases throughout the United States. Both are former IRS attorneys who left the Office of Chief Counsel to the IRS to defend criminal and civil tax issues before the Department of Justice and the IRS. Paul Harris and Joseph Wallace are criminal defense attorneys in Wheeling, West Virginia. Michael Gibson specializes in civil and criminal litigation.
Robert Stientjes
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Re: Offshore Employee Leasing Deal Acquittal

Post by jcolvin2 » Fri Nov 12, 2010 10:56 pm