Friday, November 30, 2012

IRS Posts Updated ITIN Procedure!

 

The Internal Revenue Service has announced updated procedures to strengthen the Individual Taxpayer Identification Number (ITIN) program requirements. The new modifications and documentation standards further protect the integrity of the ITIN application process and strengthen the refund process while helping minimize burden for applicants.

ITINs play a key role in the tax administration process and assist with the collection of taxes from foreign nationals, nonresident aliens, and resident aliens who have filing or payment obligations under U.S. law. Designed specifically for tax administration purposes, ITINs are only issued to people who are not eligible to obtain a Social Security Number.

The updated procedures take effect Jan. 1, 2013 and build on interim procedures announced June 22, 2012 and Oct. 2, 2012 to safeguard the integrity of the tax identification number system, while improving the refund process. Based on an extensive review and feedback from a variety of stakeholders, updated procedures are being put in place that will strengthen controls over the ITIN process while providing applicants flexibility to accurately follow the application process. The interim procedures announced earlier this year remain in effect through 2012.

The IRS will maintain its stronger standard for issuing ITINs. Under the procedures, ITIN applications will continue to require original documentation or copies certified by the issuing agency.
To protect the integrity of the application process, notarized copies of documents or copies with an apostille are not acceptable for obtaining ITINs. Though most of the interim guidelines have been made permanent, others have been modified following feedback from key groups. The changes will provide additional flexibility for people seeking ITINs while continuing the stronger protections.
Final procedures are outlined below.

Individual Applicants
For those who are applying directly to the IRS for an ITIN, original documents or copies certified by the issuing agency are required. The IRS will continue to accept only original identification documents or certified copies of these documents from the issuing agency with the Form W-7 and federal tax return attached. The documentation list includes passports, national I.D. cards, visas issued by U.S. Department of State, U.S. or foreign military identification card, civil birth certificates, medical and school records, U.S. state or foreign driver’s licenses, U.S. state identification card, foreign voter’s registration card and U.S. Citizenship and Immigration Services photo identification. A full list of acceptable documents is available through the ITIN page on IRS.gov.

 Additional Options for Applicants
The IRS heard from stakeholders that it was difficult in some instances for individuals to be without documents such as passports for extended periods of time. As a result, the IRS determined that other outlets will be available to review original documentation. As part of this effort, while original documents or copies certified by the issuing agency are still required for most applicants, there will be more options and flexibility for people applying for an ITIN. These options provide alternatives to mailing passports and other original documents to the IRS.

The Certifying Acceptance Agent (CAA) program will remain but will be modified. CAAs will be required to review original identification documents or copies certified by the issuing agency from applicants, spouses, and dependents. CAAs will be able to certify and then forward proof to the IRS that they have verified the authenticity of the documents supporting the ITIN application for applicants and spouses. This means they will not need to mail original documents such as passports to the IRS, a step previously required under the interim procedures. However, ITIN applications for dependents submitted to the IRS by CAAs will continue to require original documents or copies certified by the issuing agency. There will also be new requirements for the CAA program that are described later in this document.

In addition to direct submission of documents to the IRS centralized site or use of CAAs, ITIN applicants will have several other avenues for verification of key documents. These options include some key IRS Taxpayer Assistance Centers (TACs), U.S. Tax Attachés in London, Paris, Beijing and Frankfurt, and at Low-Income Taxpayer Clinics (LITCs) and Volunteer Income Tax Assistance (VITA) Centers that use CAAs. The procedure announced Oct. 2, 2012 for foreign students at educational institutions to be certified through the Student and Exchange Visitor Program (SEVP) remains. The table below provides the full list of options for submitting ITIN documents.

The finalized procedures are effective Jan. 1, 2013 in time for the 2013 tax-filing season when many ITIN applications are submitted along with a taxpayer’s income tax return. Later in January, participating IRS Taxpayer Assistance Centers will be available to review and certify passports and national identification cards in person for primary, secondary and dependent applicants. The first set of TACs that will review and certify documents for ITINs are located in areas where past ITIN activity has been prevalent. Additional details on participating IRS locations will be available soon on IRS.gov.

ITINs Will Have An Expiration Date
For the first time, new ITINs will be issued for a five-year period rather than an indefinite period. This change will help ensure that ITINs are being used for legitimate tax purposes. Taxpayers who still need an ITIN will need to reapply at the end of the expiration period.

In addition, the IRS will engage with interested groups on options to deactivate or refresh information underlying previously issued ITINs. This step will provide additional safeguards to the ITIN program and help ensure only people with legitimate tax purposes are using the numbers.

Having Problems Getting an ITIN?

Contact the Tax Lawyers at Marini & Associates, P.A. for a FREE Tax Consultation at: www.TaxAid.us or www.TaxLaw.ms or Toll Free at 888-8TaxAid (888 882-9243).

Thursday, November 29, 2012

UK Press Exposes 'Sham' Companies Used To Shield The Identity of Wealthy Individuals.


The UK Press is running a series claiming to expose an 'extraordinary global network of sham company directors, most of them from the UK.


Nominee directors are exposed as operating thousands of offshore companies, some said to be helping UK residents avoid tax and conceal their assets.

They have published profiles of some wealthy individuals who have used offshore companies to conduct significant business and property transactions in the UK.
 
Have unreported income from a Foreign Bank Account???

Feeling Exposed??? Contact the Tax Lawyers at Marini & Associates, P.A. for a FREETax Consultation at: www.TaxAid.us orwww.TaxLaw.ms orToll Free at 888-8TaxAid (888 882-9243).

 




 

Mexican FATCA Agreement Requires New Reporting By BOTH Mexican & US Banks!


We first posted Mexico Becomes the 3rd Country to Sign a FATCAAgreement on Tuesday, November 27, 2012. The Treasury Department has now posted this agreement on its Website.
This agreement sets out each Parties’ Obligations to Obtain and Exchange Information with Respect to Reportable Accounts which includes :


A.     MEXICO REPORTING TO THE US

WITH RESPECT TO EACH U.S. REPORTABLE ACCOUNT OF EACH REPORTING MEXICAN FINANCIAL INSTITUTION:
 
(1) the name, address, and U.S. TIN of each Specified U.S. Person that is an Account Holder of such account and

(2) In the case of a Non-U.S. Entity that, after application of the due diligence procedures is identified as having one or more Controlling Persons that is a Specified U.S. Person, the name, address, and U.S. TIN (if any) of such entity and each such Specified U.S. Person;

(2) The account number (or functional equivalent in the absence of an account number);

(3) The name and identifying number of the Reporting Mexican Financial Institution;

(4) The average monthly account balance or value (including, in the case of a Cash Value Insurance Contract or Annuity Contract, the Cash Value or surrender value) during the relevant calendar year or other appropriate reporting period or, if the account was closed during such year, the average monthly balance for the calendar year up to the time of closure;  
(5) In the case of any Custodial Account:

(A) The total gross amount of interest, the total gross amount of dividends, and the total gross amount of other income generated with respect to the assets held in the account, in each case paid or credited to the account (or with respect to the account) during the calendar year or other appropriate reporting period; and

(B) The total gross proceeds from the sale or redemption of property paid or credited to the account during the calendar year or other appropriate reporting period with respect to which the Reporting Mexican Financial Institution acted as a custodian, broker, nominee, or otherwise as an agent for the Account Holder;

(6) In the case of any Depository Account, the total gross amount of interest paid or credited to the account during the calendar year or other appropriate reporting period; and

(7) In the case of any account not described in subparagraph (5) or (6) of this paragraph, the total gross amount paid or credited to the Account Holder with respect to the account during the calendar year or other appropriate reporting period with respect to which the Reporting Mexican Financial Institution is the obligor or debtor, including the aggregate amount of any redemption payments made to the Account Holder during the calendar year or other appropriate reporting period.

b) In the case of the United States, with respect to each Mexican Reportable Account of each Reporting U.S. Financial Institution:

(1)The name, address, and Mexican TIN of any person that is a resident of Mexico and is an Account Holder of the account;

(2) The account number (or the functional equivalent in the absence of an account number);

(3) The name and identifying number of the Reporting U.S. Financial Institution;

(4) The gross amount of interest paid on a Depository Account;

(5) The gross amount of U.S. source dividends paid or credited to the account; and

(6) The gross amount of other U.S. source income paid or credited to the account, to the extent subject to reporting under chapter 3 or 61 of subtitle A of the U.S. Internal Revenue Code. 

 
B.     US REPORTING TO MEXICO 

WITH RESPECT TO EACH MEXICAN REPORTABLE ACCOUNT OF EACH REPORTING US FINANCIAL INSTITUTION:



(1) the name, address, and Mexican TIN of any person that is a resident of Mexico and is an Account Holder of the account;

(2) the account number (or the functional equivalent in the absence of an account number);

(3) the name and identifying number of the Reporting U.S. Financial Institution;

(4) the gross amount of interest paid on a Depository Account;

(5) the gross amount of U.S. source dividends paid or credited to the account; and

(6) the gross amount of other U.S. source income paid or credited to the account, to the extent subject to reporting under chapter 3 or 61 of subtitle A of the U.S. Internal Revenue Code.
This will affect not only US taxpayers who have unreported Mexican bank income but it will equally adversely impact Mexicans who have unreported income from deposits with US Banks.
We discuss the adverse impact on US Banks in our post "Florida Banks Explain 2013 IRS Reporting Rule For Foreigners;" where we discuss that thse new reporting rules which go into effect Jan. 1, 2013 have raised privacy concerns among some international account holders which have cause many Foreign Depositors with US Banks, especially Banks in Florida,  to move several million dollars of Deposites to other jurisdictions, since the new regulation were passed in April.

Are you a US Person with a Foreign Bank Account???  


Are you a Mexican Person with a US Bank Account???
Have FATCA Problems???

Contact the Tax Lawyers at Marini & Associates, P.A. for a FREE Tax Consultation at: www.TaxAid.us or www.TaxLaw.ms or Toll Free at 888-8TaxAid (888 882-9243).


 

 

 

Tuesday, November 27, 2012

Pictet & Bank Frey Added to Widening U.S. Probe of 13 Swiss Banks.

We orginally posted on Tuesday, May 8, 2012, Swiss bank Pictet gave data to U.S. in tax probe regarding Swiss bank Pictet statement that it handed over bank account details to U.S. authorities probing cases of tax evasion, as a newspaper reported it had accepted funds from two former UBS clients suspected of having cheated on taxes.

Now Pictet & Cie., Switzerland’s biggest closely held bank, said its wealth-management business with American clients is the subject of a “general inquiry” by the U.S. Department of Justice. Pictet plans to cooperate “as fully as possible” with the U.S. authorities, the Geneva-based private bank said in a statement yesterday.
Pictet reported the DOJ inquiry after Der Sonntag newspaper yesterday said the wealth manager and Bank Frey have been added to a probe of 11 other Swiss financial firms.
Pictet, which manages 281 billion Swiss francs ($302 billion) for clients worldwide, said in May it wasn’t under investigation by the DOJ after an indictment of three Americans in Phoenix last year showed the bank was used to set up secret accounts not reported to the IRS.
The Swiss Financial Market Supervisory Authority, known as Finma, has communicated with Pictet and Bank Frey regarding data delivery to the U.S., according to Der Sonntag.

Unreported Income from Swiss or Other Foreign Banks?



Contact the Tax Lawyers at Marini & Associates, P.A. for a FREE Tax Consultation at www.TaxAid.us orwww.TaxLaw.ms or Toll Free at 888-8TaxAid (888 882-9243).

 

Source:

2013 Brings Increased IRS Scrutiny of Partnerships & Passthrough Entities


Partnerships and passthrough entities will receive much more attention by the IRS's Small Business/Self-Employed Division beginning in 2013.         

SB/SE is developing an enterprise-wide strategy, in conjunction with the Large Business and International Division, “to address the inherent risks that exist with these sorts of business structures,” Fink said at the Fall Tax Division Meeting of the American Institute for Certified Public Accountants.
        
IRS will lay the foundation next year for building the strategy through developmental stages, after which audit activity will increase in 2014, Fink said. That will mean a reduction in other types of returns that SB/SE handles, he added.
        
Over the first six to nine months of next year, IRS will pilot methods to better identify its workload by looking at the right kind of partnership entities and returns, Fink said. IRS will also focus on issue identification, such as looking at loss limitations or distributions, and make sure those issues feed into its workload identification strategy.
        
Fink also said IRS would work to provide additional training for its revenue agents, as the increased focus on partnerships will be done by field revenue agents.
        
Fink said he wanted to emphasize the point that the expanded focus on partnerships and passthrough entities does not mean IRS believes all partnerships are formed with the intention of avoiding payment of taxes. Rather, he said, IRS recognizes that more businesses are migrating to partnerships and away from traditional corporate structures.
        
This shift in priorities “makes good business sense,” Fink said, as IRS looks ahead to the types of business entities that are taking shape. The IRS will need feedback from practitioners, “as it does whenever it engages in an effort to shift direction to look at something more closely,” he said.

IRS Audit Concerns?

Contact the Tax Lawyers at Marini & Associates, P.A. for a FREE Tax Consultation at: www.TaxAid.us or www.TaxLaw.ms or Toll Free at 888-8TaxAid (888 882-9243).






Source:

Whitlock Canter LLC

 

Mexico Becomes the 3rd Country to Sign a FATCA Agreement.


The Mexican government recently signed a  Foreign Account Tax Compliance Act (FATCA) agreement with the United States thereby becoming the third country to do so.

On November 19, 2012, in Washington, the Mexican Undersecretary of Revenue, José Antonio González Anaya, and the United States Assistant Secretary for Tax Policy, Mark J. Mazur, signed a government-to-government agreement for the bilateral implementation of the Foreign Account Tax Compliance Act (FATCA).

A government-to-government agreement, as signed between the US and Mexico, does not contain any exemption from FATCA, but, instead, a model for information sharing is offered based on existing bilateral tax treaties and allowing FFIs to report the necessary information to their respective governments rather than to the Internal Revenue Service.

The FATCA agreement has taken two years to negotiate between the two governments, and, while a copy has not yet been released, is said to be a significant improvement in the mechanisms for the exchange of banking and other financial information between the two countries.

In addition, after the signing of the agreement, the Mexican government believes that it is placed amongst the countries with the best practices for the exchange of information, as driven by the Organization for Cooperation and Economic Development and the G20.

FATCA Problems???     Have a Foreign Bank Account??? 

Contact the Tax Lawyers at Marini & Associates, P.A. for a FREE Tax Consultation at: www.TaxAid.us or www.TaxLaw.ms or Toll Free at 888-8TaxAid (888 882-9243).







 

Monday, November 26, 2012

UK mini-FATCA Agreements Spells The End for UK Tax Haven Territories!


There are rumours that the UK government is about to reveal legislation imposing automatic client disclosure provisions on financial institutions in the Crown Dependencies and British Overseas Territories.

The journal International Tax Review claims to have seen draft UK legislation imposing client disclosure provisions on financial institutions in the Crown Dependencies and the British Overseas Territories.
The draft, described as a UK version of the US Foreign Account Tax Compliance Act (FATCA), is said to mandate the automatic reporting of financial and beneficial ownership information for each account of each offshore financial institution to the UK's HM Revenue and Customs.
A leaked government document seen by International Tax Review reveals that the UK is planning to impose its own version of the US Foreign Account Tax Compliance Act (FATCA) on its Crown Dependencies and Overseas Territories. The move will deal an almost-fatal blow to tax evasion through the UK's tax havens.

Responding to an International Development Committee report earlier this week, the government publicly rejected the need for a UK version of FATCA, which would require tax authorities to automatically exchange information relating to UK citizens or corporations.
In private, however, the government has already drafted FATCA legislation which it will impose on its Crown Dependencies and Overseas Territories. These include some of the world's most notorious tax havens such as the Cayman Islands, the Channel Islands and the Isle of Man.

The draft agreement, seen by International Tax Review, will require the automatic exchange of information for each reportable account of each reporting financial institution. That will include full details of all beneficial owners of the account, including those whose identities might otherwise be hidden by trusts or companies

It will also require the account number, name and identifying number of the reporting financial institution as provided when registering with the IRS for FATCA purposes, and the account balance or value as of the end of the relevant calendar year or other appropriate reporting period or, if the account was closed during such year, immediately before closure.

The UK Treasury declined to comment, but said that it is assisting the Crown Dependancies and Overseas Territories in their response to FATCA.

Quoting Tax Campaigner Richard Murphy, the Observer newspaper says the UK government will force other jurisdictions to comply by threatening to veto their own FATCA agreements with the US. Most international financial centres are anxious to comply with FATCA, because the US Treasury plans to impose a 30 per cent levy on all payments from US sources to non-compliant foreign financial institutions.
The evidence is now clear: the writing is on the wall for secrecy in the UK's tax havens. There are now two options for those hiding their funds in these locations. The first is to own up now. That's the wise option. It's the only safe option. The alternative is to flee. My suspicion is that it's already too late for that to work.

FATCA Problems??? Have a Foreign Bank Account??? 


Contact the Tax Lawyers at Marini & Associates, P.A. for a FREE Tax Consultation at: www.TaxAid.us or www.TaxLaw.ms or Toll Free at 888-8TaxAid (888 882-9243).

 



 


 

 

Sources