Fiscalía insiste en que Aníbal lo sabía
Domínguez dice que hay evidencia directa de que el Gobernador conocía la realidad de los supuestos donativos ilegales.
Por Miguel Díaz Román /
La fiscal federal María Domínguez dijo ayer que probará con evidencia directa y circunstancial que Aníbal Acevedo Vilá, Luisa Inclán Bird y Miguel Nazario sabían de los donativos ilegales que, según la Fiscalía, hizo el empresario Edwin Santana a la campaña del Gobernador.
“Acevedo Vilá instruyó personalmente a uno de sus ayudantes para que se le proveyera asistencia a Santana (el contribuyente 18) porque él lo ayudó en su campaña. De hecho, la única asistencia provista por Santana a la campaña de Acevedo Vilá fue la contribución ilegal de $250,000”, dijo Domínguez.
La fiscal hizo los planteamientos en una moción que presentó ayer ante el juez federal Paul J. Barbadoro. Así respondió a la solicitud de desestimación de Acevedo Vilá, Inclán Bird y Nazario Franco, acusados en la segunda ronda de cargos federales en el caso.
Domínguez declaró que la defensa de Acevedo Vilá ha puesto en práctica “una aparente estrategia que intenta nublar argumentos legales con retórica política y repitiendo lo suficiente acusaciones extravagantes para probar la noción de que cuando algo se repite lo suficiente es porque es cierto”.
La fiscal agregó que no será necesario probar que hubo un quid pro quo (dar algo a cambio de algo) como resultado de la presunta aportación de $250,000, que el empresario Santana hizo para pagar una deuda de la campaña de Acevedo Vilá en la compañía de publicidad Marketing & Media Motivations.
“El jurado debe saber que el funcionario público sabía que los regalos que le estaban dando tenían el objetivo de influenciar una acción oficial, que el funcionario aceptó unos regalos que intentaban influenciarlo y que el funcionario intentó engañar al público”, dijo.
Objetó la tesis de la defensa de que hay multiplicidad de cargos. Sostuvo que los acusados “tendrán un solo juicio”. Domínguez también rechazó que los cargos de fraude electrónico no se configuran porque los correos electrónicos no salieron de Puerto Rico.
“No es una condición para que haya jurisdicción federal, la ubicación de la computadora. Los correos electrónicos fueron transmitidos en el comercio interestatal y son suficientes para respaldar la jurisdicción federal”, señaló.
En otra moción, la Fiscalía respondió a la solicitud de la defensa de que se le entregue toda la información ofrecida al gran jurado “porque hay razones para pensar que la Fiscalía ocultó testimonios”.
Domínguez dijo que los fiscales tienen autoridad para decidir quién testifica ante el gran jurado y que el proceso se realiza bajo la presunción de que un pliego acusatorio no será desestimado porque no se presentó prueba exculpatoria.
http://www.elnuevodia.com/diario/noticia/politica/noticias/fiscalia_insiste_en_que_anibal_lo_sabia/469793
miércoles, 8 de octubre de 2008
jueves, 2 de octubre de 2008
Fiscalía detalla cargo de evasión contra AAV
Fiscalía detalla cargo de evasión contra AAVPor Melissa Correa Velázquez
EL VOCERO
02 de octubre de 2008
La Fiscalía Federal insistió en que el gobernador Aníbal Acevedo Vilá dejó de reportar en sus planillas contributivas estatal y federal de los años 2003 y 2004, los ingresos que recibió en la isla como Comisionado Residente en aproximadamente $71,709, lo que le permitió pagar menos contribuciones en Estados Unidos.
Así lo afirmó la fiscal María Domínguez en una moción suplementaria en la que intenta sustentar los cargos de evasión contributiva. El documento fue radicado en cumplimiento a una orden del juez Paul Barbadoro durante una vista de status del caso en la que le instruyó explicar por escrito el alcance de los cargos de evasión contributiva que se le imputan al Primer Ejecutivo.
“De acuerdo a la investigación durante los años fiscales 2003 y 2004, Acevedo Vilá recibió un ingreso que falló en reportar en su planilla de contribuciones en Puerto Rico. Asimismo, falló en divulgar este ingreso en su planilla federal en la sección 933 de ingresos exentos.
Específicamente en los años contributivos 2003 y 2004, Acevedo Vilá falló en reportar un ingreso obtenido en Puerto Rico en su planilla federal de aproximadamente $14,414 en el 2003 y $57,295 en el 2004. Este ingreso originario de Puerto Rico no divulgado dio lugar a una deducción más alta, lo que también reflejó una renta imponible más baja produciendo un pago más bajo”, expresa la moción.
Asimismo, la moción indica que el Primer Ejecutivo sólo pagó el 10% del impuesto Mínimo Alternativo, de acuerdo a la sección 59 del Código de Rentas Federal. “Una declaración sobre la renta federal correctamente sometida, revelaría una renta imponible más alta con un pago de impuesto más alto”, señala el documento.
Indica que como no reportó los ingresos de Puerto Rico, no limitó las deducciones que reclamaba en su planilla de ingresos. Afirma que como Acevedo Vilá tuvo ingresos en Puerto Rico y en Estados Unidos durante los años 2003 y 2004, debió modificar las deducciones contenidas en la parte A del formulario 1040 del Código Federal de Rentas Internas al utilizar la fórmula de deducción.
La Fiscal plantea que como resultado de fallar en reportar sus ingresos en Puerto Rico en la planilla federal, para propósitos de cómputo de las deducciones modificadas, Acevedo Vilá falló en adjudicar los ingresos foráneos e incorporar las limitaciones como resultado de la deducción.
De igual forma, argumenta que el Gobernador tenía que haber reportado los ingresos recibidos en Puerto Rico en su planilla federal. “Debido a que Acevedo Vilá no reportó sus ingresos en Puerto Rico en sus planillas federales, su ingreso foráneo no fue reportado en el formulario 1116 del formulario 1040 de impuestos en el 2003 y 2004”, expresa la moción.
Destaca que durante la pasada vista de status del caso, la defensa del Gobernador afirmó que este había sobre pagado su deuda impositiva. De otro lado, la defensa de Edwin Colón, ex sub tesorero de la campaña del gobernador Aníbal Acevedo Vilá, solicitó al juez Barbadoro que paute para el otoño del 2009 la fecha del inicio del juicio en su contra en el que se le imputan cargos de haberse apropiado de $61,607.48 de los fondos de la campaña del Comité Acevedo Vilá 2000.
Colón fue acusado por un Gran Jurado en un caso aparte el 7 de octubre de 2007 de cargos de apropiación de fondos, lavado de dinero, fraude electrónico y fraude bancario. En marzo pasado Colón fue acusado junto al Primer Ejecutivo y otras 11 personas por alegadas violaciones a las leyes electorales.
DELITO IMPUTADO:
“Específicamente en los años contributivos 2003 y 2004, Acevedo Vilá falló en reportar un ingreso obtenido en Puerto Rico en su planilla federal de aproximadamente $14,414 en el 2003 y $57,295 en el 2004. Este ingreso originario de Puerto Rico no divulgado dio lugar a una deducción más alta, lo que también reflejó una renta imponible más baja produciendo un pago más bajo”, expresa la moción.
http://www.vocero.com/noticia-3179-fiscala_detalla_cargo_de_evasin_contra_aav.html
Fiscalía: Acevedo Vilá no informó todos sus ingresos
Moción indica que no incluyó $71,709 devengados en la Isla en sus planillas.
Por Miguel Díaz Román /
El gobernador Aníbal Acevedo Vilá presuntamente dejó de declarar $71,709 en ingresos obtenidos en Puerto Rico en las planillas locales y federales en los años contributivos 2003 y 2004, lo que le permitió pagar menos contribuciones en Estados Unidos.
La información figura en una moción radicada ayer por la fiscal federal María Domínguez ante el juez federal Paul J. Balbadoro.
En la moción Domínguez indica que el entonces Comisionado Residente dejó de reportar en la planilla local y federal $14,414 en 2003 y $57,295 en el 2004. Presuntamente, estos ingresos se obtuvieron en Puerto Rico, pero en la moción no indica su origen.
Según la fiscal, "al no declarar esos ingresos en la planilla federal y sólo informar sus ingresos como Comisionado Residente, Acevedo Vilá pudo acceder a la deducción más alta que permite la planilla federal". También sostiene que si hubiera informado los ingresos obtenidos en la Isla "la deducción tendría que haber sido reducida".
Domínguez indica que como resultado de esta acción, el Primer Ejecutivo "sólo tuvo que pagar el 10% de la alternativa mínima contributiva, según lo dispone el Código Federal de Rentas Internas en la sección 59". La moción no menciona el monto del pago.
La moción pretende aclarar el alcance de los dos cargos imputados al Primer Ejecutivo de supuestamente presentar información falsa en las planillas contributivas, que figuran en la primera ronda de acusaciones.
Domínguez presentó la moción en cumplimiento con una orden emitida por el juez Barbadoro en la reciente vista oral celebrada en San Juan. El juez le solicitó a la fiscalía que presente un resumen de los eventos que provocan los cargos contributivos.
La moción señala, además, que la presunta desinformación cometida por Acevedo Vilá en la planilla federal provocó un efecto tipo "bola de nieve" porque se presentó información incorrecta y falsa en diversos encasillados y formularios de la planilla federal.
También indica que el Gobernador ubicó su lugar de residencia en Puerto Rico cuando era Comisionado Residente y pagó en Hacienda contribuciones por el ingreso obtenido en el Congreso en el 2003 y el 2004. A su vez, reclamó en la planilla federal lo que pagó en Hacienda a través de una disposición que permite obtener un crédito por los impuestos pagados en el extranjero.
La fiscal sostiene que "para reclamar el mencionado crédito el Primer Ejecutivo debió haber computado también las contribuciones pagadas por los ingresos obtenidos en Puerto Rico".
En la vista oral los abogados de Acevedo Vilá indicaron que se excedió en el pago de su responsabilidad contributiva federal en los años 2003 y 2004. "Esa alegación es matemáticamente imposible porque Acevedo Vilá obtuvo el máximo disponible para el crédito por los impuestos pagados en el extranjero", dijo Domínguez en la moción.
www.elnuevodia.com/diario/noticia/politica/.../fiscalia:_acevedo_vila_no_informo_todos_sus_ingresos/466697
1
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO
UNITED STATES OF AMERICA
Plaintiff, V. ANIBAL ACEVEDO VILA, et al. Defendants. Criminal No.: 08-036 (PJB)
SUPPLEMENTAL MOTION REGARDING COUNTS TWENTY-SIX AND TWENTY-SEVEN OF SUPERSEDING INDICTMENT PURSUANT TO COURT ORDER COMES NOW the United States of America, by and through the undersigned attorneys, and files this supplemental motion in connection with the substantive tax counts of the Superseding Indictment, pursuant to the Court’s ore tenus Order of September 23, 2008, which was later adopted in a written Order of September 24, 2008.
I. Interaction between Federal and Puerto Rico Tax Systems
The Commonwealth of Puerto Rico has its own separate system which operates independently of the tax system in the United States. Although the Puerto Rico system is modeled after the U.S. system, there are differences in law and tax rates. Federal employees residing in Puerto Rico will usually file returns both in Puerto Rico and in the United States. The income reported on each return depends on the residency status of the filer in Puerto Rico.
In order to qualify for certain Federal tax benefits, you must be a bona fide resident of one of the United States possessions (American Samoa, the CNMI, Guam, Puerto Rico, or the
USVI) for the entire tax year. Generally, a filer is considered to be a bona fide resident of one of these possessions if, during the tax year, he:
1. Meets the presence test,
2. Do not have a tax home outside the relevant possession, and
3. Do not have a closer connection to the United States or to a foreign country than to the possession.
In particular, the tax home test requires that the filer not have a tax home outside of Puerto Rico during any part of the tax year. A filer is considered to meet the tax home test if:
1. The filer’s tax home is his regular or main place of business, employment, or post of duty regardless of where he maintains his family home.
2. If the filer does not have a main place of business because of the nature of his work, then his tax home is the place where he regularly lives, or
3. If the filer does not fit into either of these categories, he is considered an itinerant and his tax home is wherever he works.1
1
Treasury Regulations 1.911-2 (b), IRC 911. 2 Acevedo Vilá declared Puerto Rico as his home tax state in his 2003 and 2004 tax returns. Even though this designation may be flawed, we have accepted the tax returns as filed for purposes of our analysis. There are some exceptions to this general rule. For example, the filer will be considered to have met the tax home test and can disregard the days spent outside of the tax home, if the tax payer was in the United States serving as an elected representative of Puerto Rico, or serving full time as an elected official or employee of the government of Puerto Rico.2 Bona fide residents of Puerto Rico will generally pay tax on their worldwide income in their Puerto Rico tax returns. A United States citizen that is a bona fide resident of Puerto Rico for the entire tax year must file:
1. A Puerto Rican tax return reporting income from worldwide sources. If the filer reports U.S. sourced income on his Puerto Rican tax return, he can claim a credit against his Puerto Rican tax, up to the amount allowable, for income taxes paid to the United States.
2. A U.S. tax return reporting income from worldwide sources, but excluding Puerto Rican sourced income.3
II. Puerto Rico Source Income (26 I.R.C. Sec. 933)
3 IRS Publication 570; http://www.irs.gov/pub/irs-pdf/p570.pdf
4 IRS Publication 1321 Rev. Sept. 2007 (http://www.irs.gov/pub/irs-pdf/p1321.pdf)
In general, section 933 of the U.S. Internal Revenue Code requires that U.S. citizens who are bona fide residents of Puerto Rico during the entire taxable year, but who receive income from sources outside Puerto Rico and/or receive income as a civilian or military employee of the U.S. Government in Puerto Rico, must file a U.S. Federal income tax return. The income the filer receives from Puerto Rican sources is not subject to Federal taxation. Because some of the income is exempt (under Code section 933), a part of the itemized deductions or a part of the standard deduction claimed on the U.S. return must be allocated to that exempt income. This computation must be made before you can determine if you must file a U.S. tax return, because the minimum income level at which you must file a return is based, in part, on the standard deduction for your particular filing status.4
A. Puerto Rico Sourced Income is Exempt from Federal Taxation
Puerto Rico residents are exempt from Federal taxation on income derived from sources within the commonwealth of Puerto Rico. This exemption was explained by the Senate Finance Committee in 1950, when recommending enactment of the statutory predecessor of the Internal Revenue Code (IRC) Section 933, as follows:
IRS Publication 570; http://www.irs.gov/pub/irs-pdf/p570.pdf
IRS Publication 1321 Rev. Sept. 2007 (http://www.irs.gov/pub/irs-pdf/p1321.pdf
Puerto Rican residents are singled out in this fashion because Puerto Rico is in a unique position. It is neither a foreign country nor an integral part of the United States. Moreover, it differs from all other possessions in that it has its own income tax law which takes the place of the federal income tax law. For these reasons the committee believes it is desirable in the case of Puerto Rican residents, bona-fide residents, to apply the United States tax only to income derived from sources outside of Puerto Rico; for income from sources within Puerto Rico the Puerto Rican income tax takes the place of the United States income tax. S. REP. 81-2375, S. Rep. No. 2375, 81ST Cong., 2ND Sess. 1950, 1950 U.S.C.C.A.N. 3053, 3103-04, 1950 WL 1782 (Leg. Hist.) Puerto Rico residents, even though they are citizens of the United States, do not have a legal right to participate in the election of the President of the United Sates, and the Congressman from Puerto Rico (Resident Commissioner) is a non-voting member of Congress. This anomaly creates the dilemma of taxation without representation. In order to guard against this potential, Internal Revenue Code, Section 933 exempts income from sources within Puerto Rico from taxation to the United States. However, any income from sources outside the United States will be taxable in both jurisdictions.
B. Internal Revenue Code Section 933-1 Generally
Internal Revenue Service code section 1.933-1 Exclusion of certain income from sources within Puerto Rico,5 provides in pertinent part: 5 26 I.R.C. § 933-1. (a). General Rule. An individual (whether a United States citizen or an alien), who is a bona fide resident of Puerto Rico during the entire taxable year, shall exclude from his gross income the income derived from sources within Puerto Rico, except amounts received for services performed as an employee of the United States or any agency thereof. Whether the individual is a bona fide resident of Puerto Rico shall be determined in general by applying to the facts and
circumstances in each case the principles of §§ 1.871-2, 1.871-3, 1.871-4, and 1.871-5, relating to what constitutes residence or non residence, as the case may be, in the United States in the case of an alien individual. Once bona fide residence in Puerto Rico has been established, temporary absence there from in the United States or elsewhere on vacation or business trips will not necessary deprive an individual of his status as a bona fide resident of Puerto Rico. An individual taking up residence in Puerto Rico during the course of the taxable year is not entitled for such year to the exclusion provided in section 933. (c). Deductions. In any case in which any amount otherwise constituting gross income is excluded from gross income under the provisions of section 933, there shall not be allowed as a deduction from gross income any items of expenses or losses or other deductions (except the deduction under section 151, relating to personal exemptions) properly allocable to, or chargeable against, the amounts so excluded from gross income.
The exemption contemplated by Internal Revenue Code Section 933 does not exclude services performed as an employee of the United States or an agency thereof as reportable income. However, any other income from sources within Puerto Rico is covered by this section. If the filer is excluding any Puerto Rico sourced income on his U.S. tax return, he will not be allowed any deductions or credits that are directly or indirectly allocable to exempt income. If all of the filer’s income is from Puerto Rican sources, he is not required to file a U.S. tax return. However, wages and cost-of-living allowances paid by the U.S. Government for filers who worked in Puerto Rico are subject to Puerto Rican tax. The cost-of-living allowances are excluded from Puerto Rican gross income up to the amount exempt from U.S. tax. In order to claim this exclusion, the filer must:
1. Include evidence with the Puerto Rican tax return to show the amount received during the year, and
2. Be in full compliance with Puerto Rican tax responsibilities.
6
6
IRS Publication 570; http://www.irs.gov/pub/irs-pdf/p570.pdf 7 IRS Publication 570; http://www.irs.gov/pub/irs-pdf/p570.pdf 8 Example. In 2003, a filer and his spouse are both under 65 and U.S. citizens who are bona fide residents of Puerto Rico during the entire tax year. They file a joint income tax return. During 2003, the husband earned $15,000 from Puerto Rican sources (excluded from U.S. gross income) and his spouse earned $45,000 from a U.S. Government salary. The filers have $16,000 in itemized deductions that do not apply to any specific type of income. They are medical expenses of $4,000, real estate taxes of $5,000, home mortgage interest of $6,000, and a charitable contribution of $1,000 (cash contributions). The amount of each deduction that the filers can claim on their Schedule A (Form 1040) can be determined by multiplying the deduction by the fraction shown under Figuring the deduction. Medical Expenses $45,000 X $4,000 = $3,000 (allowable portion of deduction) $60,000 Real Estate Taxes $45,000 X $5,000 = $3,750 (allowable portion of deduction) $60,000 These wages are also subject to Federal taxation, but the cost-of-living allowances are excludable. A foreign tax credit is available in order to avoid double taxation.
III. U. S. Individual Income Tax Return
A. Itemized deduction on the Form 1040
Itemized deductions can be divided into three categories:7
1. Those that apply specifically to exclude income, such as employee business expenses, are not deductible.
2. Those that apply specifically to income subject to U.S. income tax, which might also be employee business expenses, are fully allowable under the instructions for Schedule A (Form 1040).
3. Those that do not apply to specific income must be allocated between your gross income subject U.S. income tax and your total gross income from all sources.8
Home Mortgage Interest $45,000 X $6,000 = $4,500 (allowable portion of deduction) $60,000 Charitable Contribution (cash contribution) $45,000 X $1,000 = $750 (allowable portion of deduction) $60,000 On Schedule A (Form 1040) should be enter only the allowable portion of each deduction. 9 IRS Publication 570; http://www.irs.gov/pub/irs-pdf/p570.pdf A taxpayer should use Schedule A on Form 1040 to figure the itemized deductions. Deductions and credits that specifically apply to exempt Puerto Rican income are not allowable on your U.S. income tax return. The taxpayer has to allocate the allowable deductions by multiplying the deduction by the fraction of gross income subject to Federal tax and gross income from all sources (including exempt Puerto Rican income).
A. Form 6251- Alternative Minimum Tax (AMT)
The Alternative Minimum Tax (AMT) applies to taxpayers who have certain types of income that receive special treatment, or who qualify for certain special deductions, under the Federal tax law. Because of these special benefits, some taxpayers with substantial income can significantly reduce their regular tax. The AMT ensures that these taxpayers pay at least a minimum amount of tax.9 If a filer has a foreign tax credit, he can use a separate AMT Form 1116 for each separate limitation category specified at the top of the Form 1116. The taxpayer will use the applicable AMT rate instead of the regular tax rate to determine if any income is “high-taxed”.
For purposes of computing the AMT, certain items of income and deductions receive a different tax treatment than they do in the computation of the regular tax. Therefore, the taxpayer needs to refigure items for the AMT that were already figured for the regular tax calculation.
B. Form 1116- Foreign Tax Credit
A taxpayer can claim a foreign tax credit for income taxes paid to Puerto Rico from his U.S. sourced income. However, he cannot claim a foreign tax credit for taxes paid on Puerto Rico income that is exempt on his U.S. tax return. The foreign tax credit is generally figured on Form 1116.10 For example when a filer has income, such as U.S. government wages, (not excludable from the U.S. tax return), and the filer also has Puerto Rico sourced income that is excludable, he must figure the credit by reducing the foreign taxes paid or accrued by the taxes based on the excluded income. This reduction is made for each separate income category. To find the amount of this reduction a formula11 is used for each income category. 10 IRS Publication 514; http://www.irs.gov/pub/irs-pdf/p514.pdf 11 Excluded Puerto Rico sourced income less deductible expenses based on that income, divided by, total income subject to Puerto Rico tax, less deductible expenses based on that income. This amount multiplied by the tax paid to Puerto Rico. This equals the reduction in foreign taxes allowable on Form 1116. C. Internal Revenue Code Section 901-1
Internal Revenue Code Section 1.901-1 Allowance of Credit for Taxes, provides in pertinent part:
(a) In general. Citizens of the United States, domestic corporations, and certain alien residents in the United States or Puerto Rico may choose to claim a credit, as provided in section 901, against the tax imposed by chapter 1 of the Code for taxes paid or accrued to foreign countries and possessions of the United States, subject to the conditions prescribed in the following subparagraphs:
(3) Alien resident of the United States or Puerto Rico. An alien resident of the United States, or an alien individual who is a bona fide resident of Puerto Rico during the taxable year, may claim a credit. This section is intended to avoid situations where a taxpayer may be subject to double taxation. In other words, the taxpayer will not pay taxes for the same income in two different jurisdictions. If the filer is a U.S. citizen, he is taxed by the United States on his worldwide income regardless of where he lives. Filers are normally entitled to take a credit for foreign taxes they pay or accrue. Bona fide resident of Puerto Rico come under these same rules. A credit can be claimed only for foreign taxes that are imposed by a foreign country or U.S. possession. For foreign tax purposes, all qualified taxes paid to Puerto Rico are considered foreign taxes. If a filer has income from Puerto Rican sources that is not taxable, he must reduce his foreign taxes paid by the taxes allocated to the exempt income. The taxpayer is required to file Form 1116 in order to claim the foreign tax credit if the filer is an individual, estate or trust, and he paid or accrued certain foreign taxes to a foreign country or U.S. Possession. A reduction of the foreign credit applies if the filer has Puerto Rico sourced income that is not taxable on the U.S. tax return. To figure the credit, reduce the foreign taxes paid or accrued by the amount of the tax allocated to the exempt income. The filer can claim a foreign tax credit only for foreign taxes on income, war profits, or excess profits, or taxes in lieu of those taxes. In addition there is a limit on the amount of the credit that can be properly claimed. The credit is the amount of foreign tax paid or if smaller, the limit imposed by IRC section 904.
IV. Title 26, United States Code, Section 7206
Title 26, United States Code, Section 7206, Fraud and False Statements, provides in pertinent part: Any person who-
(1) Declaration under penalties of perjury. Willfully makes and subscribes any returns, statement, or other document, which contains or is verified by a written declaration that it is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter; or
(2) Aid or assistance. Willfully aids or assists in, or procures, counsels, or advises the preparation or presentation under, or in connection with any matter arising under, the internal revenue laws, of a return, affidavit, claim, or other document, which is fraudulent or is false as to any material matter, whether or not such falsity or fraud is with the knowledge or consent of the person authorized or required to present such return, affidavit, claim, or document.12
12 26 U.S.C. § 7206. 13 United States v. Bishop, 412 U.S. 346 (1972). Under the voluntary tax system in the United States, taxpayers are responsible for fully and accurately reporting and paying the amount of taxes owed. Voluntary tax compliance is reinforced through various programs including the document matching program, Internal Revenue Service (IRS) civil audits, and criminal prosecution. The Criminal Investigation (CI) division of the IRS is responsible for enforcing the criminal statutes.
To prove a Section 7206 violation, the government must establish the following elements: (l) that the defendant made and subscribed a return that was false as to a material matter; (2) the return contained a written declaration that it was made under the penalties of perjury; (3) that the defendant did not believe the return to be true and correct as to every material matter; and (4) that the defendant acted willfully.13
Both "making," i.e., filing, and "signing" must be charged. The gist of the offense is the false statements in the return. The signing and filing of the return provides the jurisdictional element.14 In this circuit materiality has been a question of law for the court, rather than a question of fact for the jury.15 Presumably, materiality is now a question of fact for the jury to decide under United States v. Gaudin, ___ U.S. ___, 115 S. Ct. 2310 (1995). The test of materiality in a false return case is "whether a particular item must be reported in order that the taxpayer estimate and compute his tax correctly.”16 Matters held to be material include false statements relating to gross income, United States v. Engle, 458 F.2d at 1019-20; United States v. Hedman, 630 F.2d 1184, 1196 (7th Cir. 1980), cert. denied, 450 U.S. 965 (1981); personal deductions, United States v. Warden, 545 F.2d 32, 37 (7th Cir. 1976); and business loss deductions, United States v. Bliss, 735 F.2d 294, 301 (8th Cir. 1984). Under the statute, the taxpayer is the one who "makes" a return even if he has hired an accountant to prepare the return. United States v. Badwan, 624 F.2d 1228, 1232 (4th Cir. 1980), cert. denied, 449 U.S. 1124 (1981). There is a rebuttable statutory presumption that if an individual's name is signed on a return, then the return was actually signed by that person. 26 U.S.C. § 6064. This presumption applies in criminal cases. United States v. Cashio, 420 F.2d 1132, 1135 (5th Cir. 1969), cert. denied, 397 U.S. 1007 (1970). See also Committee Comments, Instruction 4.13, supra, regarding statutory presumptions. 14United States v. Duncan, 850 F.2d 1104, 1111-12 (6th Cir. 1988). See also United States v. Shortt Accountancy Corp., 785 F.2d 1448, 1453-54 (9th Cir. 1986). 15 United States v. Holecek, 739 F.2d 331, 337 (8th Cir. 1984), cert. denied, 469 U.S. 1218 (1985). 16 United States v. Warden, 545 F.2d 32, 37 (7th Cir. 1976) (quoting United States v. Null, 415 F.2d 1178, 1181 (4th Cir. 1969)). The defendant's conduct must have been willful. The term "willfully" as used in the criminal sections of the Internal Revenue Code is a "voluntary, intentional violation of a known
14United States v. Duncan, 850 F.2d 1104, 1111-12 (6th Cir. 1988). See also United States v. Shortt Accountancy Corp., 785 F.2d 1448, 1453-54 (9th Cir. 1986). 15 United States v. Holecek, 739 F.2d 331, 337 (8th Cir. 1984), cert. denied, 469 U.S. 1218 (1985). 16 United States v. Warden, 545 F.2d 32, 37 (7th Cir. 1976) (quoting United States v. Null, 415 F.2d 1178, 1181 (4th Cir. 1969)).
legal duty." United States v. Pomponio, 429 U.S. 10, 12 (1976). The Supreme Court defined a willful act as one done "voluntarily and intentionally with specific intent to do something which the law forbids." Willfulness is a question of fact that is to be determined based on the facts and circumstances shown by the evidence. Id.; United States v. Miller, 634 F.2d 1134, 1135 (8th Cir. 1980), cert. denied, 451 U.S. 942 (1981). An intent to evade income taxes is not an element of section 7206(l). United States v. Engle, 458 F.2d at 1019.
V. Aníbal Acevedo Vilá’s 2003 and 2004 Federal Income Tax Returns 17
A. Acevedo Vilá was Required to File Federal Income Tax Returns
17 Pursuant to the Court’s Order, the two (2) Income Tax Returns for the years 2003 and 2004, are being filed under seal at the Clerk’s Office. Anibal Acevedo Vilá was elected as Resident Commissioner for the Commonwealth of Puerto Rico in November 2000. He served as Resident Commissioner from January 2001 through January 2005. The Resident Commissioner of Puerto Rico is a non-voting member of the United States House of Representatives elected by the voters of the Commonwealth of Puerto Rico every four years. The Commissioner is allowed to serve on Congressional committees, and functions in every respect as a Representative, except that he is not permitted to vote on the final disposition of legislation (a “floor vote”). The Resident Commissioner is a federally elected position, and its incumbents are federal employees. As a federal employee Acevedo Vilá was required to file federal income tax returns during the years he occupied the position of Resident Commissioner.
During his tenure as Resident Commissioner, Acevedo Vilá maintained his tax home in Puerto Rico, although his primary office was in the United States Congress in Washington D.C. During his congressional term, Acevedo Vilá worked both in the United States and in Puerto Rico. He was a federal employee like any Congressman from of any other state during his tenure as Resident Commissioner. Acevedo Vilá filed a federal income tax return Form 1040 and paid Federal taxes for the tax years 2003 and 2004. Acevedo Vilá also filed Puerto Rico income tax returns during these years. Acevedo Vilá reported his Congressional salary as his sole source of income on his federal tax returns during tax periods 2003 and 2004. Acevedo Vilá also reported the U.S. Government wages as his only source of income on his Puerto Rico income tax returns. During 2003 and 2004, in connection with his Federal returns, Acevedo Vilá filed Form 1116 together with his Form 1040, and took a full foreign tax credit for the taxes paid to the government of Puerto Rico. Acevedo Vilá attached a copy of his Puerto Rico tax returns to the federal tax returns Form 1040, which did not report any Puerto Rico sourced income.
According to the investigation, during the taxable years 2003 and 2004, Acevedo Vilá received Puerto Rico sourced income which he failed to report in his Puerto Rico tax returns. He also failed to disclose this income on his federal tax returns as section 933 exempted income. Specifically, for taxable years 2003 and 2004 Acevedo Vilá failed to report Puerto Rican sourced income on his federal income tax returns in the approximately amount of $14,414 (2003) and $57,295 (2004). This unreported Puerto Rican sourced income resulted in a higher itemized deduction which also reflected a lower taxable income producing a lower tax paid.18 18 Moreover, Acevedo Vilá’s 2003 and 2004 federal tax returns reveal that he only paid 10% of the total Alternative Minimum Tax due according to IRC Section 59(a)(2)(A) for those taxable years. A correctly filed federal income tax return would reveal a higher taxable income with a higher tax due. B. Itemized Deductions Acevedo Vilá had both Puerto Rico and U.S. sourced income during the taxable years 2003 and 2004. He did not report his Puerto Rican sourced income on either his federal income tax returns or on his Puerto Rico income tax returns for those years. Acevedo Vilá only reported
his U.S. sourced Congressional salary as income on both his federal and Puerto Rico tax returns. Acevedo Vilá took the full allowable itemized deduction on his 2003 and 2004 Federal tax returns, because his only reported income was U.S. sourced income. He did not report any Puerto Rico sourced income, and therefore, did not limit the itemized deductions he was claiming on his Federal return.
Since Acevedo Vilá had both U.S. and Puerto Rico sourced income during taxable years 2003 and 2004, he should have allocated the modified itemized deduction on schedule A of Form 1040 by utilizing the modified itemized deduction formula.19 As a result of his failure to report his Puerto Rican sourced income on his federal income tax return, for purposes of computing the modified itemized deduction, Acevedo Vilá failed to allocate the foreign sourced income, and incorporate the resulting limitations to his itemized deduction. Had the unreported Puerto Rico sourced income been included on Acevedo Vilá’s Form 1116, this inclusion would have reduced the itemized deductions available to Acevedo Vilá, altering the figures included on lines 37 and 38 (2003 Form 1040) and lines 39 and 40 (2004 Form 1040). 19 Modified Itemized deduction = Gross income subject to U.S. tax / Gross income from all sources (including exempt Puerto Rican income) C. Taxable Income
Additionally, a snowball effect is created by Acevedo Vilá’s failure to report Puerto Rico source income on his Federal return. The cumulative effect of the non-reporting was that the taxable income in line 40 (2003 Form 1040) and 42 (2004 Form 1040) was underreported in a way that is significant and material to the correct assessment by the IRS.
1. Alternative Minimum Tax
As part of the continuing snowball effect, the non-reporting of Puerto Rico sourced income resulted in an inflated itemized deduction, which in turn had the effect of yielding a false base number used to compute the Alternative Minimum Tax on Form 6251. The allocation and modification of the itemized deduction directly altered Acevedo Vilá’s alternative minimum taxable income, rendering line 28 on the Alternative Minimum Tax Form 6251 false. The underreporting of the alternative minimum taxable income resulted in a lower Alternative Minimum Tax, making line 35 on Form 6251 (2003 and 2004) false. This error is carried over to line 42 (2003) and 44 (2004) on Form 1040, which are false.
2. Foreign Tax Credit
Acevedo Vila took full credit on Form 1116 for the taxes paid on this U.S. sourced income to the Puerto Rico tax authorities in 2003 and 2004. He was required to report Puerto Rico sourced income on his Federal tax return. He claimed a foreign tax credit as to income taxes paid in Puerto Rico on his U.S. sourced income. Acevedo Vila earned U.S. government wages, which were not excludable from the Federal tax return. Acevedo Vilá also had Puerto Rico sourced income, which he failed to report. Therefore, he should have figured the credit by reducing his taxes paid to Puerto Rico based on the Puerto Rico sourced income. Since Acevedo Vilá did not report his Puerto Rico sourced income on his Federal returns, his gross foreign sourced income was underreported on Form 1116 of his Form 1040 for tax years 2003 and 2004. Even though Acevedo Vilá was allowed to take a foreign tax credit (Form 1116) from his taxes paid in Puerto Rico on his Congressional salary, the income from foreign sources (exempt income) would have to be adjusted to reflect a reduction in foreign taxes on his federal tax return. This would make lines 12 and 13 on Form 1116 false.
3. Effect of the Under-reporting of Puerto Rico Sourced Income
During oral argument on the defendants’ motions to dismiss the tax counts, counsel for Acevedo Vilá suggested that Acevedo Vilá had actually overpaid his Federal tax liability. This allegation is a mathematical impossibility since Acevedo Vilá took the maximum allowable foreign tax credit for tax years 2003 and 2004, based on Section 904 of the Internal Revenue Code. WHEREFORE, the United States of America respectfully requests that the Honorable Court take notice of its compliance with the Court’s order directing the parties to file a supplemental brief regarding the substantive tax counts. Respectfully submitted, in San Juan, Puerto Rico, this 30th day of September, 2008. ROSA EMILIA RODRÍGUEZ-VÉLEZ UNITED STATES ATTORNEY s / María A. Domínguez Maria A. Dominguez First Assistant United States Attorney USDC No. 210908 Torre Chardon, Room 1201 350 Chardon Ave. Hato Rey, Puerto Rico 00918 Phone (787) 766-5656, Fax (787) 766-5632 s / Ernesto G. López-Soltero Ernesto G. López-Soltero Assistant United States Attorney USDC No. 208806 Public Integrity Section United States Department of Justice Peter Koski Trial Attorney Ethan Levinson Trial Attorney
CERTIFICATE OF SERV ICE I HEREBY CERTIFY that on this date I electronically filed the foregoing with the Clerk of the Court using the CM/ECF system, which will send notification of such filing to the attorneys of record. At San Juan, Puerto Rico, this 30th day of September, 2008. s / María A. Domínguez María A. Domínguez First Assistant United States Attorney
http://www.elnuevodia.com/XStatic/endi/docs/editor/Mocion%20Suplementaria.pdf
EL VOCERO
02 de octubre de 2008
La Fiscalía Federal insistió en que el gobernador Aníbal Acevedo Vilá dejó de reportar en sus planillas contributivas estatal y federal de los años 2003 y 2004, los ingresos que recibió en la isla como Comisionado Residente en aproximadamente $71,709, lo que le permitió pagar menos contribuciones en Estados Unidos.
Así lo afirmó la fiscal María Domínguez en una moción suplementaria en la que intenta sustentar los cargos de evasión contributiva. El documento fue radicado en cumplimiento a una orden del juez Paul Barbadoro durante una vista de status del caso en la que le instruyó explicar por escrito el alcance de los cargos de evasión contributiva que se le imputan al Primer Ejecutivo.
“De acuerdo a la investigación durante los años fiscales 2003 y 2004, Acevedo Vilá recibió un ingreso que falló en reportar en su planilla de contribuciones en Puerto Rico. Asimismo, falló en divulgar este ingreso en su planilla federal en la sección 933 de ingresos exentos.
Específicamente en los años contributivos 2003 y 2004, Acevedo Vilá falló en reportar un ingreso obtenido en Puerto Rico en su planilla federal de aproximadamente $14,414 en el 2003 y $57,295 en el 2004. Este ingreso originario de Puerto Rico no divulgado dio lugar a una deducción más alta, lo que también reflejó una renta imponible más baja produciendo un pago más bajo”, expresa la moción.
Asimismo, la moción indica que el Primer Ejecutivo sólo pagó el 10% del impuesto Mínimo Alternativo, de acuerdo a la sección 59 del Código de Rentas Federal. “Una declaración sobre la renta federal correctamente sometida, revelaría una renta imponible más alta con un pago de impuesto más alto”, señala el documento.
Indica que como no reportó los ingresos de Puerto Rico, no limitó las deducciones que reclamaba en su planilla de ingresos. Afirma que como Acevedo Vilá tuvo ingresos en Puerto Rico y en Estados Unidos durante los años 2003 y 2004, debió modificar las deducciones contenidas en la parte A del formulario 1040 del Código Federal de Rentas Internas al utilizar la fórmula de deducción.
La Fiscal plantea que como resultado de fallar en reportar sus ingresos en Puerto Rico en la planilla federal, para propósitos de cómputo de las deducciones modificadas, Acevedo Vilá falló en adjudicar los ingresos foráneos e incorporar las limitaciones como resultado de la deducción.
De igual forma, argumenta que el Gobernador tenía que haber reportado los ingresos recibidos en Puerto Rico en su planilla federal. “Debido a que Acevedo Vilá no reportó sus ingresos en Puerto Rico en sus planillas federales, su ingreso foráneo no fue reportado en el formulario 1116 del formulario 1040 de impuestos en el 2003 y 2004”, expresa la moción.
Destaca que durante la pasada vista de status del caso, la defensa del Gobernador afirmó que este había sobre pagado su deuda impositiva. De otro lado, la defensa de Edwin Colón, ex sub tesorero de la campaña del gobernador Aníbal Acevedo Vilá, solicitó al juez Barbadoro que paute para el otoño del 2009 la fecha del inicio del juicio en su contra en el que se le imputan cargos de haberse apropiado de $61,607.48 de los fondos de la campaña del Comité Acevedo Vilá 2000.
Colón fue acusado por un Gran Jurado en un caso aparte el 7 de octubre de 2007 de cargos de apropiación de fondos, lavado de dinero, fraude electrónico y fraude bancario. En marzo pasado Colón fue acusado junto al Primer Ejecutivo y otras 11 personas por alegadas violaciones a las leyes electorales.
DELITO IMPUTADO:
“Específicamente en los años contributivos 2003 y 2004, Acevedo Vilá falló en reportar un ingreso obtenido en Puerto Rico en su planilla federal de aproximadamente $14,414 en el 2003 y $57,295 en el 2004. Este ingreso originario de Puerto Rico no divulgado dio lugar a una deducción más alta, lo que también reflejó una renta imponible más baja produciendo un pago más bajo”, expresa la moción.
http://www.vocero.com/noticia-3179-fiscala_detalla_cargo_de_evasin_contra_aav.html
Fiscalía: Acevedo Vilá no informó todos sus ingresos
Moción indica que no incluyó $71,709 devengados en la Isla en sus planillas.
Por Miguel Díaz Román /
El gobernador Aníbal Acevedo Vilá presuntamente dejó de declarar $71,709 en ingresos obtenidos en Puerto Rico en las planillas locales y federales en los años contributivos 2003 y 2004, lo que le permitió pagar menos contribuciones en Estados Unidos.
La información figura en una moción radicada ayer por la fiscal federal María Domínguez ante el juez federal Paul J. Balbadoro.
En la moción Domínguez indica que el entonces Comisionado Residente dejó de reportar en la planilla local y federal $14,414 en 2003 y $57,295 en el 2004. Presuntamente, estos ingresos se obtuvieron en Puerto Rico, pero en la moción no indica su origen.
Según la fiscal, "al no declarar esos ingresos en la planilla federal y sólo informar sus ingresos como Comisionado Residente, Acevedo Vilá pudo acceder a la deducción más alta que permite la planilla federal". También sostiene que si hubiera informado los ingresos obtenidos en la Isla "la deducción tendría que haber sido reducida".
Domínguez indica que como resultado de esta acción, el Primer Ejecutivo "sólo tuvo que pagar el 10% de la alternativa mínima contributiva, según lo dispone el Código Federal de Rentas Internas en la sección 59". La moción no menciona el monto del pago.
La moción pretende aclarar el alcance de los dos cargos imputados al Primer Ejecutivo de supuestamente presentar información falsa en las planillas contributivas, que figuran en la primera ronda de acusaciones.
Domínguez presentó la moción en cumplimiento con una orden emitida por el juez Barbadoro en la reciente vista oral celebrada en San Juan. El juez le solicitó a la fiscalía que presente un resumen de los eventos que provocan los cargos contributivos.
La moción señala, además, que la presunta desinformación cometida por Acevedo Vilá en la planilla federal provocó un efecto tipo "bola de nieve" porque se presentó información incorrecta y falsa en diversos encasillados y formularios de la planilla federal.
También indica que el Gobernador ubicó su lugar de residencia en Puerto Rico cuando era Comisionado Residente y pagó en Hacienda contribuciones por el ingreso obtenido en el Congreso en el 2003 y el 2004. A su vez, reclamó en la planilla federal lo que pagó en Hacienda a través de una disposición que permite obtener un crédito por los impuestos pagados en el extranjero.
La fiscal sostiene que "para reclamar el mencionado crédito el Primer Ejecutivo debió haber computado también las contribuciones pagadas por los ingresos obtenidos en Puerto Rico".
En la vista oral los abogados de Acevedo Vilá indicaron que se excedió en el pago de su responsabilidad contributiva federal en los años 2003 y 2004. "Esa alegación es matemáticamente imposible porque Acevedo Vilá obtuvo el máximo disponible para el crédito por los impuestos pagados en el extranjero", dijo Domínguez en la moción.
www.elnuevodia.com/diario/noticia/politica/.../fiscalia:_acevedo_vila_no_informo_todos_sus_ingresos/466697
1
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO
UNITED STATES OF AMERICA
Plaintiff, V. ANIBAL ACEVEDO VILA, et al. Defendants. Criminal No.: 08-036 (PJB)
SUPPLEMENTAL MOTION REGARDING COUNTS TWENTY-SIX AND TWENTY-SEVEN OF SUPERSEDING INDICTMENT PURSUANT TO COURT ORDER COMES NOW the United States of America, by and through the undersigned attorneys, and files this supplemental motion in connection with the substantive tax counts of the Superseding Indictment, pursuant to the Court’s ore tenus Order of September 23, 2008, which was later adopted in a written Order of September 24, 2008.
I. Interaction between Federal and Puerto Rico Tax Systems
The Commonwealth of Puerto Rico has its own separate system which operates independently of the tax system in the United States. Although the Puerto Rico system is modeled after the U.S. system, there are differences in law and tax rates. Federal employees residing in Puerto Rico will usually file returns both in Puerto Rico and in the United States. The income reported on each return depends on the residency status of the filer in Puerto Rico.
In order to qualify for certain Federal tax benefits, you must be a bona fide resident of one of the United States possessions (American Samoa, the CNMI, Guam, Puerto Rico, or the
USVI) for the entire tax year. Generally, a filer is considered to be a bona fide resident of one of these possessions if, during the tax year, he:
1. Meets the presence test,
2. Do not have a tax home outside the relevant possession, and
3. Do not have a closer connection to the United States or to a foreign country than to the possession.
In particular, the tax home test requires that the filer not have a tax home outside of Puerto Rico during any part of the tax year. A filer is considered to meet the tax home test if:
1. The filer’s tax home is his regular or main place of business, employment, or post of duty regardless of where he maintains his family home.
2. If the filer does not have a main place of business because of the nature of his work, then his tax home is the place where he regularly lives, or
3. If the filer does not fit into either of these categories, he is considered an itinerant and his tax home is wherever he works.1
1
Treasury Regulations 1.911-2 (b), IRC 911. 2 Acevedo Vilá declared Puerto Rico as his home tax state in his 2003 and 2004 tax returns. Even though this designation may be flawed, we have accepted the tax returns as filed for purposes of our analysis. There are some exceptions to this general rule. For example, the filer will be considered to have met the tax home test and can disregard the days spent outside of the tax home, if the tax payer was in the United States serving as an elected representative of Puerto Rico, or serving full time as an elected official or employee of the government of Puerto Rico.2 Bona fide residents of Puerto Rico will generally pay tax on their worldwide income in their Puerto Rico tax returns. A United States citizen that is a bona fide resident of Puerto Rico for the entire tax year must file:
1. A Puerto Rican tax return reporting income from worldwide sources. If the filer reports U.S. sourced income on his Puerto Rican tax return, he can claim a credit against his Puerto Rican tax, up to the amount allowable, for income taxes paid to the United States.
2. A U.S. tax return reporting income from worldwide sources, but excluding Puerto Rican sourced income.3
II. Puerto Rico Source Income (26 I.R.C. Sec. 933)
3 IRS Publication 570; http://www.irs.gov/pub/irs-pdf/p570.pdf
4 IRS Publication 1321 Rev. Sept. 2007 (http://www.irs.gov/pub/irs-pdf/p1321.pdf)
In general, section 933 of the U.S. Internal Revenue Code requires that U.S. citizens who are bona fide residents of Puerto Rico during the entire taxable year, but who receive income from sources outside Puerto Rico and/or receive income as a civilian or military employee of the U.S. Government in Puerto Rico, must file a U.S. Federal income tax return. The income the filer receives from Puerto Rican sources is not subject to Federal taxation. Because some of the income is exempt (under Code section 933), a part of the itemized deductions or a part of the standard deduction claimed on the U.S. return must be allocated to that exempt income. This computation must be made before you can determine if you must file a U.S. tax return, because the minimum income level at which you must file a return is based, in part, on the standard deduction for your particular filing status.4
A. Puerto Rico Sourced Income is Exempt from Federal Taxation
Puerto Rico residents are exempt from Federal taxation on income derived from sources within the commonwealth of Puerto Rico. This exemption was explained by the Senate Finance Committee in 1950, when recommending enactment of the statutory predecessor of the Internal Revenue Code (IRC) Section 933, as follows:
IRS Publication 570; http://www.irs.gov/pub/irs-pdf/p570.pdf
IRS Publication 1321 Rev. Sept. 2007 (http://www.irs.gov/pub/irs-pdf/p1321.pdf
Puerto Rican residents are singled out in this fashion because Puerto Rico is in a unique position. It is neither a foreign country nor an integral part of the United States. Moreover, it differs from all other possessions in that it has its own income tax law which takes the place of the federal income tax law. For these reasons the committee believes it is desirable in the case of Puerto Rican residents, bona-fide residents, to apply the United States tax only to income derived from sources outside of Puerto Rico; for income from sources within Puerto Rico the Puerto Rican income tax takes the place of the United States income tax. S. REP. 81-2375, S. Rep. No. 2375, 81ST Cong., 2ND Sess. 1950, 1950 U.S.C.C.A.N. 3053, 3103-04, 1950 WL 1782 (Leg. Hist.) Puerto Rico residents, even though they are citizens of the United States, do not have a legal right to participate in the election of the President of the United Sates, and the Congressman from Puerto Rico (Resident Commissioner) is a non-voting member of Congress. This anomaly creates the dilemma of taxation without representation. In order to guard against this potential, Internal Revenue Code, Section 933 exempts income from sources within Puerto Rico from taxation to the United States. However, any income from sources outside the United States will be taxable in both jurisdictions.
B. Internal Revenue Code Section 933-1 Generally
Internal Revenue Service code section 1.933-1 Exclusion of certain income from sources within Puerto Rico,5 provides in pertinent part: 5 26 I.R.C. § 933-1. (a). General Rule. An individual (whether a United States citizen or an alien), who is a bona fide resident of Puerto Rico during the entire taxable year, shall exclude from his gross income the income derived from sources within Puerto Rico, except amounts received for services performed as an employee of the United States or any agency thereof. Whether the individual is a bona fide resident of Puerto Rico shall be determined in general by applying to the facts and
circumstances in each case the principles of §§ 1.871-2, 1.871-3, 1.871-4, and 1.871-5, relating to what constitutes residence or non residence, as the case may be, in the United States in the case of an alien individual. Once bona fide residence in Puerto Rico has been established, temporary absence there from in the United States or elsewhere on vacation or business trips will not necessary deprive an individual of his status as a bona fide resident of Puerto Rico. An individual taking up residence in Puerto Rico during the course of the taxable year is not entitled for such year to the exclusion provided in section 933. (c). Deductions. In any case in which any amount otherwise constituting gross income is excluded from gross income under the provisions of section 933, there shall not be allowed as a deduction from gross income any items of expenses or losses or other deductions (except the deduction under section 151, relating to personal exemptions) properly allocable to, or chargeable against, the amounts so excluded from gross income.
The exemption contemplated by Internal Revenue Code Section 933 does not exclude services performed as an employee of the United States or an agency thereof as reportable income. However, any other income from sources within Puerto Rico is covered by this section. If the filer is excluding any Puerto Rico sourced income on his U.S. tax return, he will not be allowed any deductions or credits that are directly or indirectly allocable to exempt income. If all of the filer’s income is from Puerto Rican sources, he is not required to file a U.S. tax return. However, wages and cost-of-living allowances paid by the U.S. Government for filers who worked in Puerto Rico are subject to Puerto Rican tax. The cost-of-living allowances are excluded from Puerto Rican gross income up to the amount exempt from U.S. tax. In order to claim this exclusion, the filer must:
1. Include evidence with the Puerto Rican tax return to show the amount received during the year, and
2. Be in full compliance with Puerto Rican tax responsibilities.
6
6
IRS Publication 570; http://www.irs.gov/pub/irs-pdf/p570.pdf 7 IRS Publication 570; http://www.irs.gov/pub/irs-pdf/p570.pdf 8 Example. In 2003, a filer and his spouse are both under 65 and U.S. citizens who are bona fide residents of Puerto Rico during the entire tax year. They file a joint income tax return. During 2003, the husband earned $15,000 from Puerto Rican sources (excluded from U.S. gross income) and his spouse earned $45,000 from a U.S. Government salary. The filers have $16,000 in itemized deductions that do not apply to any specific type of income. They are medical expenses of $4,000, real estate taxes of $5,000, home mortgage interest of $6,000, and a charitable contribution of $1,000 (cash contributions). The amount of each deduction that the filers can claim on their Schedule A (Form 1040) can be determined by multiplying the deduction by the fraction shown under Figuring the deduction. Medical Expenses $45,000 X $4,000 = $3,000 (allowable portion of deduction) $60,000 Real Estate Taxes $45,000 X $5,000 = $3,750 (allowable portion of deduction) $60,000 These wages are also subject to Federal taxation, but the cost-of-living allowances are excludable. A foreign tax credit is available in order to avoid double taxation.
III. U. S. Individual Income Tax Return
A. Itemized deduction on the Form 1040
Itemized deductions can be divided into three categories:7
1. Those that apply specifically to exclude income, such as employee business expenses, are not deductible.
2. Those that apply specifically to income subject to U.S. income tax, which might also be employee business expenses, are fully allowable under the instructions for Schedule A (Form 1040).
3. Those that do not apply to specific income must be allocated between your gross income subject U.S. income tax and your total gross income from all sources.8
Home Mortgage Interest $45,000 X $6,000 = $4,500 (allowable portion of deduction) $60,000 Charitable Contribution (cash contribution) $45,000 X $1,000 = $750 (allowable portion of deduction) $60,000 On Schedule A (Form 1040) should be enter only the allowable portion of each deduction. 9 IRS Publication 570; http://www.irs.gov/pub/irs-pdf/p570.pdf A taxpayer should use Schedule A on Form 1040 to figure the itemized deductions. Deductions and credits that specifically apply to exempt Puerto Rican income are not allowable on your U.S. income tax return. The taxpayer has to allocate the allowable deductions by multiplying the deduction by the fraction of gross income subject to Federal tax and gross income from all sources (including exempt Puerto Rican income).
A. Form 6251- Alternative Minimum Tax (AMT)
The Alternative Minimum Tax (AMT) applies to taxpayers who have certain types of income that receive special treatment, or who qualify for certain special deductions, under the Federal tax law. Because of these special benefits, some taxpayers with substantial income can significantly reduce their regular tax. The AMT ensures that these taxpayers pay at least a minimum amount of tax.9 If a filer has a foreign tax credit, he can use a separate AMT Form 1116 for each separate limitation category specified at the top of the Form 1116. The taxpayer will use the applicable AMT rate instead of the regular tax rate to determine if any income is “high-taxed”.
For purposes of computing the AMT, certain items of income and deductions receive a different tax treatment than they do in the computation of the regular tax. Therefore, the taxpayer needs to refigure items for the AMT that were already figured for the regular tax calculation.
B. Form 1116- Foreign Tax Credit
A taxpayer can claim a foreign tax credit for income taxes paid to Puerto Rico from his U.S. sourced income. However, he cannot claim a foreign tax credit for taxes paid on Puerto Rico income that is exempt on his U.S. tax return. The foreign tax credit is generally figured on Form 1116.10 For example when a filer has income, such as U.S. government wages, (not excludable from the U.S. tax return), and the filer also has Puerto Rico sourced income that is excludable, he must figure the credit by reducing the foreign taxes paid or accrued by the taxes based on the excluded income. This reduction is made for each separate income category. To find the amount of this reduction a formula11 is used for each income category. 10 IRS Publication 514; http://www.irs.gov/pub/irs-pdf/p514.pdf 11 Excluded Puerto Rico sourced income less deductible expenses based on that income, divided by, total income subject to Puerto Rico tax, less deductible expenses based on that income. This amount multiplied by the tax paid to Puerto Rico. This equals the reduction in foreign taxes allowable on Form 1116. C. Internal Revenue Code Section 901-1
Internal Revenue Code Section 1.901-1 Allowance of Credit for Taxes, provides in pertinent part:
(a) In general. Citizens of the United States, domestic corporations, and certain alien residents in the United States or Puerto Rico may choose to claim a credit, as provided in section 901, against the tax imposed by chapter 1 of the Code for taxes paid or accrued to foreign countries and possessions of the United States, subject to the conditions prescribed in the following subparagraphs:
(3) Alien resident of the United States or Puerto Rico. An alien resident of the United States, or an alien individual who is a bona fide resident of Puerto Rico during the taxable year, may claim a credit. This section is intended to avoid situations where a taxpayer may be subject to double taxation. In other words, the taxpayer will not pay taxes for the same income in two different jurisdictions. If the filer is a U.S. citizen, he is taxed by the United States on his worldwide income regardless of where he lives. Filers are normally entitled to take a credit for foreign taxes they pay or accrue. Bona fide resident of Puerto Rico come under these same rules. A credit can be claimed only for foreign taxes that are imposed by a foreign country or U.S. possession. For foreign tax purposes, all qualified taxes paid to Puerto Rico are considered foreign taxes. If a filer has income from Puerto Rican sources that is not taxable, he must reduce his foreign taxes paid by the taxes allocated to the exempt income. The taxpayer is required to file Form 1116 in order to claim the foreign tax credit if the filer is an individual, estate or trust, and he paid or accrued certain foreign taxes to a foreign country or U.S. Possession. A reduction of the foreign credit applies if the filer has Puerto Rico sourced income that is not taxable on the U.S. tax return. To figure the credit, reduce the foreign taxes paid or accrued by the amount of the tax allocated to the exempt income. The filer can claim a foreign tax credit only for foreign taxes on income, war profits, or excess profits, or taxes in lieu of those taxes. In addition there is a limit on the amount of the credit that can be properly claimed. The credit is the amount of foreign tax paid or if smaller, the limit imposed by IRC section 904.
IV. Title 26, United States Code, Section 7206
Title 26, United States Code, Section 7206, Fraud and False Statements, provides in pertinent part: Any person who-
(1) Declaration under penalties of perjury. Willfully makes and subscribes any returns, statement, or other document, which contains or is verified by a written declaration that it is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter; or
(2) Aid or assistance. Willfully aids or assists in, or procures, counsels, or advises the preparation or presentation under, or in connection with any matter arising under, the internal revenue laws, of a return, affidavit, claim, or other document, which is fraudulent or is false as to any material matter, whether or not such falsity or fraud is with the knowledge or consent of the person authorized or required to present such return, affidavit, claim, or document.12
12 26 U.S.C. § 7206. 13 United States v. Bishop, 412 U.S. 346 (1972). Under the voluntary tax system in the United States, taxpayers are responsible for fully and accurately reporting and paying the amount of taxes owed. Voluntary tax compliance is reinforced through various programs including the document matching program, Internal Revenue Service (IRS) civil audits, and criminal prosecution. The Criminal Investigation (CI) division of the IRS is responsible for enforcing the criminal statutes.
To prove a Section 7206 violation, the government must establish the following elements: (l) that the defendant made and subscribed a return that was false as to a material matter; (2) the return contained a written declaration that it was made under the penalties of perjury; (3) that the defendant did not believe the return to be true and correct as to every material matter; and (4) that the defendant acted willfully.13
Both "making," i.e., filing, and "signing" must be charged. The gist of the offense is the false statements in the return. The signing and filing of the return provides the jurisdictional element.14 In this circuit materiality has been a question of law for the court, rather than a question of fact for the jury.15 Presumably, materiality is now a question of fact for the jury to decide under United States v. Gaudin, ___ U.S. ___, 115 S. Ct. 2310 (1995). The test of materiality in a false return case is "whether a particular item must be reported in order that the taxpayer estimate and compute his tax correctly.”16 Matters held to be material include false statements relating to gross income, United States v. Engle, 458 F.2d at 1019-20; United States v. Hedman, 630 F.2d 1184, 1196 (7th Cir. 1980), cert. denied, 450 U.S. 965 (1981); personal deductions, United States v. Warden, 545 F.2d 32, 37 (7th Cir. 1976); and business loss deductions, United States v. Bliss, 735 F.2d 294, 301 (8th Cir. 1984). Under the statute, the taxpayer is the one who "makes" a return even if he has hired an accountant to prepare the return. United States v. Badwan, 624 F.2d 1228, 1232 (4th Cir. 1980), cert. denied, 449 U.S. 1124 (1981). There is a rebuttable statutory presumption that if an individual's name is signed on a return, then the return was actually signed by that person. 26 U.S.C. § 6064. This presumption applies in criminal cases. United States v. Cashio, 420 F.2d 1132, 1135 (5th Cir. 1969), cert. denied, 397 U.S. 1007 (1970). See also Committee Comments, Instruction 4.13, supra, regarding statutory presumptions. 14United States v. Duncan, 850 F.2d 1104, 1111-12 (6th Cir. 1988). See also United States v. Shortt Accountancy Corp., 785 F.2d 1448, 1453-54 (9th Cir. 1986). 15 United States v. Holecek, 739 F.2d 331, 337 (8th Cir. 1984), cert. denied, 469 U.S. 1218 (1985). 16 United States v. Warden, 545 F.2d 32, 37 (7th Cir. 1976) (quoting United States v. Null, 415 F.2d 1178, 1181 (4th Cir. 1969)). The defendant's conduct must have been willful. The term "willfully" as used in the criminal sections of the Internal Revenue Code is a "voluntary, intentional violation of a known
14United States v. Duncan, 850 F.2d 1104, 1111-12 (6th Cir. 1988). See also United States v. Shortt Accountancy Corp., 785 F.2d 1448, 1453-54 (9th Cir. 1986). 15 United States v. Holecek, 739 F.2d 331, 337 (8th Cir. 1984), cert. denied, 469 U.S. 1218 (1985). 16 United States v. Warden, 545 F.2d 32, 37 (7th Cir. 1976) (quoting United States v. Null, 415 F.2d 1178, 1181 (4th Cir. 1969)).
legal duty." United States v. Pomponio, 429 U.S. 10, 12 (1976). The Supreme Court defined a willful act as one done "voluntarily and intentionally with specific intent to do something which the law forbids." Willfulness is a question of fact that is to be determined based on the facts and circumstances shown by the evidence. Id.; United States v. Miller, 634 F.2d 1134, 1135 (8th Cir. 1980), cert. denied, 451 U.S. 942 (1981). An intent to evade income taxes is not an element of section 7206(l). United States v. Engle, 458 F.2d at 1019.
V. Aníbal Acevedo Vilá’s 2003 and 2004 Federal Income Tax Returns 17
A. Acevedo Vilá was Required to File Federal Income Tax Returns
17 Pursuant to the Court’s Order, the two (2) Income Tax Returns for the years 2003 and 2004, are being filed under seal at the Clerk’s Office. Anibal Acevedo Vilá was elected as Resident Commissioner for the Commonwealth of Puerto Rico in November 2000. He served as Resident Commissioner from January 2001 through January 2005. The Resident Commissioner of Puerto Rico is a non-voting member of the United States House of Representatives elected by the voters of the Commonwealth of Puerto Rico every four years. The Commissioner is allowed to serve on Congressional committees, and functions in every respect as a Representative, except that he is not permitted to vote on the final disposition of legislation (a “floor vote”). The Resident Commissioner is a federally elected position, and its incumbents are federal employees. As a federal employee Acevedo Vilá was required to file federal income tax returns during the years he occupied the position of Resident Commissioner.
During his tenure as Resident Commissioner, Acevedo Vilá maintained his tax home in Puerto Rico, although his primary office was in the United States Congress in Washington D.C. During his congressional term, Acevedo Vilá worked both in the United States and in Puerto Rico. He was a federal employee like any Congressman from of any other state during his tenure as Resident Commissioner. Acevedo Vilá filed a federal income tax return Form 1040 and paid Federal taxes for the tax years 2003 and 2004. Acevedo Vilá also filed Puerto Rico income tax returns during these years. Acevedo Vilá reported his Congressional salary as his sole source of income on his federal tax returns during tax periods 2003 and 2004. Acevedo Vilá also reported the U.S. Government wages as his only source of income on his Puerto Rico income tax returns. During 2003 and 2004, in connection with his Federal returns, Acevedo Vilá filed Form 1116 together with his Form 1040, and took a full foreign tax credit for the taxes paid to the government of Puerto Rico. Acevedo Vilá attached a copy of his Puerto Rico tax returns to the federal tax returns Form 1040, which did not report any Puerto Rico sourced income.
According to the investigation, during the taxable years 2003 and 2004, Acevedo Vilá received Puerto Rico sourced income which he failed to report in his Puerto Rico tax returns. He also failed to disclose this income on his federal tax returns as section 933 exempted income. Specifically, for taxable years 2003 and 2004 Acevedo Vilá failed to report Puerto Rican sourced income on his federal income tax returns in the approximately amount of $14,414 (2003) and $57,295 (2004). This unreported Puerto Rican sourced income resulted in a higher itemized deduction which also reflected a lower taxable income producing a lower tax paid.18 18 Moreover, Acevedo Vilá’s 2003 and 2004 federal tax returns reveal that he only paid 10% of the total Alternative Minimum Tax due according to IRC Section 59(a)(2)(A) for those taxable years. A correctly filed federal income tax return would reveal a higher taxable income with a higher tax due. B. Itemized Deductions Acevedo Vilá had both Puerto Rico and U.S. sourced income during the taxable years 2003 and 2004. He did not report his Puerto Rican sourced income on either his federal income tax returns or on his Puerto Rico income tax returns for those years. Acevedo Vilá only reported
his U.S. sourced Congressional salary as income on both his federal and Puerto Rico tax returns. Acevedo Vilá took the full allowable itemized deduction on his 2003 and 2004 Federal tax returns, because his only reported income was U.S. sourced income. He did not report any Puerto Rico sourced income, and therefore, did not limit the itemized deductions he was claiming on his Federal return.
Since Acevedo Vilá had both U.S. and Puerto Rico sourced income during taxable years 2003 and 2004, he should have allocated the modified itemized deduction on schedule A of Form 1040 by utilizing the modified itemized deduction formula.19 As a result of his failure to report his Puerto Rican sourced income on his federal income tax return, for purposes of computing the modified itemized deduction, Acevedo Vilá failed to allocate the foreign sourced income, and incorporate the resulting limitations to his itemized deduction. Had the unreported Puerto Rico sourced income been included on Acevedo Vilá’s Form 1116, this inclusion would have reduced the itemized deductions available to Acevedo Vilá, altering the figures included on lines 37 and 38 (2003 Form 1040) and lines 39 and 40 (2004 Form 1040). 19 Modified Itemized deduction = Gross income subject to U.S. tax / Gross income from all sources (including exempt Puerto Rican income) C. Taxable Income
Additionally, a snowball effect is created by Acevedo Vilá’s failure to report Puerto Rico source income on his Federal return. The cumulative effect of the non-reporting was that the taxable income in line 40 (2003 Form 1040) and 42 (2004 Form 1040) was underreported in a way that is significant and material to the correct assessment by the IRS.
1. Alternative Minimum Tax
As part of the continuing snowball effect, the non-reporting of Puerto Rico sourced income resulted in an inflated itemized deduction, which in turn had the effect of yielding a false base number used to compute the Alternative Minimum Tax on Form 6251. The allocation and modification of the itemized deduction directly altered Acevedo Vilá’s alternative minimum taxable income, rendering line 28 on the Alternative Minimum Tax Form 6251 false. The underreporting of the alternative minimum taxable income resulted in a lower Alternative Minimum Tax, making line 35 on Form 6251 (2003 and 2004) false. This error is carried over to line 42 (2003) and 44 (2004) on Form 1040, which are false.
2. Foreign Tax Credit
Acevedo Vila took full credit on Form 1116 for the taxes paid on this U.S. sourced income to the Puerto Rico tax authorities in 2003 and 2004. He was required to report Puerto Rico sourced income on his Federal tax return. He claimed a foreign tax credit as to income taxes paid in Puerto Rico on his U.S. sourced income. Acevedo Vila earned U.S. government wages, which were not excludable from the Federal tax return. Acevedo Vilá also had Puerto Rico sourced income, which he failed to report. Therefore, he should have figured the credit by reducing his taxes paid to Puerto Rico based on the Puerto Rico sourced income. Since Acevedo Vilá did not report his Puerto Rico sourced income on his Federal returns, his gross foreign sourced income was underreported on Form 1116 of his Form 1040 for tax years 2003 and 2004. Even though Acevedo Vilá was allowed to take a foreign tax credit (Form 1116) from his taxes paid in Puerto Rico on his Congressional salary, the income from foreign sources (exempt income) would have to be adjusted to reflect a reduction in foreign taxes on his federal tax return. This would make lines 12 and 13 on Form 1116 false.
3. Effect of the Under-reporting of Puerto Rico Sourced Income
During oral argument on the defendants’ motions to dismiss the tax counts, counsel for Acevedo Vilá suggested that Acevedo Vilá had actually overpaid his Federal tax liability. This allegation is a mathematical impossibility since Acevedo Vilá took the maximum allowable foreign tax credit for tax years 2003 and 2004, based on Section 904 of the Internal Revenue Code. WHEREFORE, the United States of America respectfully requests that the Honorable Court take notice of its compliance with the Court’s order directing the parties to file a supplemental brief regarding the substantive tax counts. Respectfully submitted, in San Juan, Puerto Rico, this 30th day of September, 2008. ROSA EMILIA RODRÍGUEZ-VÉLEZ UNITED STATES ATTORNEY s / María A. Domínguez Maria A. Dominguez First Assistant United States Attorney USDC No. 210908 Torre Chardon, Room 1201 350 Chardon Ave. Hato Rey, Puerto Rico 00918 Phone (787) 766-5656, Fax (787) 766-5632 s / Ernesto G. López-Soltero Ernesto G. López-Soltero Assistant United States Attorney USDC No. 208806 Public Integrity Section United States Department of Justice Peter Koski Trial Attorney Ethan Levinson Trial Attorney
CERTIFICATE OF SERV ICE I HEREBY CERTIFY that on this date I electronically filed the foregoing with the Clerk of the Court using the CM/ECF system, which will send notification of such filing to the attorneys of record. At San Juan, Puerto Rico, this 30th day of September, 2008. s / María A. Domínguez María A. Domínguez First Assistant United States Attorney
http://www.elnuevodia.com/XStatic/endi/docs/editor/Mocion%20Suplementaria.pdf
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