NY Tax Attorney Allegedly Used Abusive Tax Shelters, Cost IRS $129 Million – Los Angeles Income Tax Planning & Income Tax Litigation Attorney Bruce Givner

by Bruce Givner on August 21, 2014

On June 4, the US government filed a civil complaint in the US District Court for the Southern District of New York alleging that Henry Levine, a New York tax attorney, promoted, implemented, or joined in at least 90 unlawful tax avoidance shelters from 2005 through 2010. The complaint also sought an injunction that would bar Levine from organizing, promoting, or selling abusive tax shelters in the future.

According to the complaint, Levine used tax shelters based on an intermediary-type transaction or state tax credits to reduce or eliminate future tax liabilities of his clients. Levine served as a partner and head of the tax practice group of the law firm Herrick Feinstein LLP, before moving to another New York law firm, Moritt Hock & Hamroff LLP, in 2012.

Levine allegedly used two different types of tax shelters. Ninety of the shelter transactions alleged by the government included “intermediary transactions,” or transactions which illegally avoid corporate income taxes on gains received from sales of corporate assets. The other type of shelter allegedly used by Levine involved “state tax credit transactions,” in which a real estate owner avoids taxes on gains from the sale of the transferable state tax credits it earns or receives. According to the government, Levine formed or used five corporations, called “promoter entities,” to acquire the asset-selling corporations and use phony losses to eliminate their capital gains tax. Furthermore, according to the complaint, Levine knowingly lied, or caused the corporations involved to lie, about the supposed tax benefits of the transactions to disguise their illegitimacy.

Unfortunately for the government, it seems that the nearly $130 million in lost income taxes may now be irretrievable. The government said that the lack of assets remaining in the tax-avoiding corporations may render the tax loss uncollectible, not including penalties and interest.

Notably, Levine cannot feign ignorance on this particular matter because, according to the government, he was familiar with IRS Notices 2001-16 and 2008-111 which provided guidance on abusive shelter transactions.

Givner & Kaye focuses on sophisticated income tax planning and compliance, tax litigation and procedure, estate planning, and asset protection plans for individuals and businesses in Beverly Hills, Calabasas, West Los Angeles, Hollywood, and other areas of Los Angeles, Orange, Ventura, San Bernardino, Riverside and Santa Barbara Counties. Call Los Angeles Estate Planning and Asset Protection Plan Attorneys Givner & Kaye at (310) 207-8008 today.


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