Beware Of USFIA: Review

The IRS’s ongoing receivership issues are holding up distribution payments to USFIA victims.

The IRS and the USFIA Receivership are at odds because the IRS fears that the Receivership may be held accountable if it makes distribution payments due to outstanding tax problems.

USFIA Receiver’s 24th Interim Report dated March 14th notes the following:

“There have been several attempts by the Receiver and lawyers to get an expedited review of the case by the IRS.

Recoveries for victims have been a top priority for the Receiver, his staff, and his attorneys”.

The IRS has resolved that a $29,000 tax penalty has been paid; however, this does not alleviate any outstanding tax debts.

According to reports filed during Receivership, the IRS has no claims relating to the receivership period, but the Receiver has yet to clarify this with the IRS.

Additionally, the $29,000 fine is not set in stone and can be altered.”

“The IRS Los Angeles Insolvency Department has just told the Receiver’s counsel that the IRS claim may be amended.”

If the Receivership makes a claim while these tax issues are being resolved, it is specifically stated that:

“The IRS may pursue recovery from the Receiver based on personal responsibility if it alters its claim after the receivership funds have been disbursed,” said the IRS.

Because of this, if the IRS later modifies its claim for a larger amount, the Receiver may be held personally liable for any distributions he makes from the estate’s funds.

There may be personal liability for the Receiver if they knew or should have known about federal obligations, including tax claims.

Taxes owing to the IRS have been determined to be nonexistent, yet the IRS has refused to “operate with [the] Receiver on any settlements pre and post-receivership.”

Therefore, the Receiver is unable to release any of the $63 million that it now has in its possession.

The timing of the IRS’s response to USFIA’s tax issues is uncertain (potential or realized).

As of December 2020, there are $80.7 million in pending claims.

As early as July 2020, problems arose between the IRS and the USFIA Receivership that needed to be addressed.

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