Thursday, January 31, 2013

US Court Authorizes IRS to Obtain Swiss Bank Wegelin's Records of U.S. Depositors!

 A federal judge has authorized the IRS to seek records from UBS AG, of U.S. taxpayers suspected of hiding their income in accounts with Swiss bank Wegelin.

A US federal court has granted the Internal Revenue Service's request for a disclosure order against UBS, which acted as US correspondent bank for the now-defunct Swiss Bank Wegelin, handling funds for its American clients.

UBS must now disclose records of unidentified Americans who concealed assets at Wegelin and possibly other Swiss banks.

Undeclared Income from Swiss Bank Wegelin or another Swiss Bank?

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



Swiss to Accept Group Requests for Bank Information From Other Countries Starting Feb. 2013.

Switzerland will be able to provide banking and other details sought by other countries, that have concluded agreements with Switzerland on administrative assistance in tax matters to file “group”requests for information on their nationals suspected of tax evasion, even without their individual identification, provided the information has not been requested as part of some ‘fishing expedition’.

A new Tax Administrative Assistance Act will come into force February 1 and a resolution to this effect has been passed by the Switzerland’s Federal Council, a senior official in Swiss finance ministry said here.

With the new Tax Administrative Assistance Act (TAAA) coming into force next month, group requests in accordance with the international standards will now be possible as well.

Such requests would require a detailed description of the actions taken by any Swiss bank’s clients “to avoid taxation and must be clearly distinct from fishing expeditions,” the Swiss Federal Council has said in its resolution for the TAAA. This request can be made without requiring the authorities to first provide the names or personal data of the individuals targeted.

Fishing expedition is a term used for information requests without concrete indications of tax avoidance or other crimes and is generally undertaken with an aim to find something interesting.

The TAAA governs the execution of administrative assistance under double taxation agreements. The Act was approved by Swiss Parliament September 28, 2012, and a referendum for the same expired January 17, 2013, without a referendum being called.

The existing ordinance governing the implementation of double taxation agreements will be repealed when the TAAA comes into force February 1, 2013.

Undeclared Income from a Swiss Bank Account?

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


Monday, January 28, 2013

Significant Changes in Final FATCA Regulations

As we have reported on January 17th,  in our post IRS Issue Final Regulations to Combat Offshore Tax Evasion, the US Treasury Department published final rules governing enforcement of the Foreign Account Tax Compliance Act (FATCA). The Final Regulations make a number of changes to the extensive proposed regulations released last February, in particular:
  • All debt obligations outstanding on January 1, 2014, are exempt from FATCA.
  • Passive entities (such as trusts) that are not professionally managed will be treated as NFFEs, not FFIs.
  • The categories of "deemed compliant" FFIs and retirement funds that are considered exempt are expanded.
  • All pre-existing accounts held by individuals with balances of $50,000 or less are exempt from review. The threshold for review is raised to $250,000 for pre-existing accounts held by entities and for accounts that are cash value insurance or annuity contracts. Insurance contracts with a balance or value of $50,000 or less are not treated as "financial accounts."
  • A participating FFI can determine whether pre-existing accounts with a balance of $1 million or less are U.S. accounts based solely on a search of electronically searchable account information for certain U.S. indicia. In cases of pre-existing accounts held by passive NFFEs, a withholding agent may rely on its review conducted for anti-money laundering ("AML") purposes.
  • The ability of FFIs to rely on self-certification by entities holding accounts is expanded.
  • All accounts maintained by an FFI prior to January 1, 2014, are treated as pre-existing accounts.
  • The due date for the first information reporting by participating FFIs with respect to the 2013 and 2014 calendar years is modified to March 31, 2015.
  • Foreign pass-through payments and gross proceeds from sales or dispositions of property occurring before January 1, 2017, are exempt from withholding.
Are you a US Person with UNREPORTED INCOME from a Foreign Bank Account???

Have FATCA Problems???

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

Day Pitney


Thursday, January 24, 2013

CCM 201250020 - Use of Third-Party Return Information In Captive Insurance Audits

The Office of Chief Counsel, Internal Revenue Service, issued Chief Counsel Memorandum 201250020 on  Dec. 14, 2012 stating that:

"The Service may disclose the third party return information in the exams of the unrelated taxpayers to the extent the documents satisfy the “item test” of section 6103(h)(4)(B)."

The documents satisfy the “item test” if they directly relate to an issue in
the case, i.e. an element to be proved in the case, not just that other similarly situated taxpayers participated in similar transactions."

Need Experianced Representation for a Tax Audit?

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

Wednesday, January 23, 2013

2013 Mexican Tax Amnesty

As of 1 January 2013, Mexico is granting a tax amnesty for federal taxes, certain fees and penalties levied on the failure to fulfill tax obligations (different from payment obligations). The main requirement for the application of the tax amnesty is to pay the remaining portion of the unpaid tax, fee or penalty in one installment. Taxand Mexico takes a look at what the tax amnesty will involve.
The tax amnesty will be in force during 2013 and will apply to the following unpaid taxes, fees or penalties:
  • Unpaid federal taxes, certain fees and penalties on the failure to fulfill tax obligations (different from payment obligations) triggered before 1st January 2007
    • 80% of the updated unpaid taxes, fees or penalties.
    • 100% of surcharges and penalties derived from such unpaid taxes, fees or penalties.
    • 100% of the updated unpaid taxes, fees or penalties if the taxpayer was the subject of a tax audit during 2009, 2010 and 2011 and the tax authorities determined that the taxpayer complied correctly with the tax obligations.
  • Surcharges and penalties derived from certain unpaid fees and unpaid federal taxes (different from those that should have been withheld, transferred or collected), as well as penalties on the failure to fulfill tax obligations (different from payment obligations) triggered between 1st January 2007 and 31st December 2012
    • 100% of the aforementioned fees, taxes and penalties.
  • Penalties levied during 2012 and 2013 on the failure to fulfill tax obligations different from payment obligations (except for penalties for disclosing tax losses in excess)
    • 60% reduction of the aforementioned penalties.
    • The penalties must be paid within 30 days counted as from the date in which the taxpayer is notified.
The tax authorities will issue the rules for the application of the tax amnesty no later than March 2013.

For more information on this go to TaxAnd.

Mexican Tax Problems Keeping You Awake?

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



Thursday, January 17, 2013

IRS Issue Final Regulations to Combat Offshore Tax Evasion

The U.S. Department of the Treasury and the Internal Revenue Service (IRS) today issued comprehensive final regulations implementing the information reporting and withholding tax provisions commonly known as the Foreign Account Tax Compliance Act (FATCA). Enacted by Congress in 2010, these provisions target non-compliance by U.S. taxpayers using foreign accounts. The issuance of the final regulations marks a key step in establishing a common intergovernmental approach to combating tax evasion.

The final regulations:
  •  Build on intergovernmental agreements that foster international cooperation. The Treasury Department has collaborated with foreign governments to develop and sign intergovernmental agreements that facilitate the effective and efficient implementation of FATCA by eliminating legal barriers to participation, reducing administrative burdens, and ensuring the participation of all non-exempt financial institutions in a partner jurisdiction. In order to reduce administrative burdens for financial institutions with operations in multiple jurisdictions, the final regulations coordinate the obligations for financial institutions under the regulations and the intergovernmental agreements.
  • Phase in the timelines for due diligence, reporting and withholding and align them with the intergovernmental agreements. The final regulations phase in over an extended transition period to provide sufficient time for financial institutions to develop necessary systems. In addition, to avoid confusion and unnecessary duplicative procedures, the final regulations align the regulatory timelines with the timelines prescribed in the intergovernmental agreements.
  • Expand and clarify the scope of payments not subject to withholding. To limit market disruption, reduce administrative burdens, and establish certainty, the final regulations provide relief from withholding with respect to certain grandfathered obligations and certain payments made by non-financial entities.
  • Refine and clarify the treatment of investment entities. To better align the obligations under FATCA with the risks posed by certain entities, the final regulations: (1) expand and clarify the treatment of certain categories of low-risk institutions, such as governmental entities and retirement funds; (2) provide that certain investment entities may be subject to being reported on by the FFIs with which they hold accounts rather than being required to register as FFIs and report to the IRS; and (3) clarify the types of passive investment entities that must be identified and reported by financial institutions.
  • Clarify the compliance and verification obligations of FFIs. The final regulations provide more streamlined registration and compliance procedures for groups of financial institutions, including commonly managed investment funds, and provide additional detail regarding FFIs’ obligations to verify their compliance under FATCA.
Progress on International Coordination, Including Model Intergovernmental Agreements

Since the proposed regulations were published on February 15, 2012, Treasury has collaborated with foreign governments to develop two alternative model intergovernmental agreements that facilitate the effective and efficient implementation of FATCA.

These models serve as the basis for concluding bilateral agreements with interested jurisdictions and help implement the law in a manner that removes domestic legal impediments to compliance, secures wide-spread participation by every non-exempt financial institution in the partner jurisdiction, fulfills FATCA’s policy objectives, and further reduces burdens on FFIs located in partner jurisdictions. Seven countries have already signed or initialed these agreements.

Today, Treasury announced for the first time that Norway has joined the United Kingdom, Mexico, Denmark, Ireland, Switzerland, and Spain as countries that have signed or initialed model agreements. Treasury is engaged with more than 50 countries and jurisdictions to curtail offshore tax evasion, and more signed agreements are expected to follow in the near future.
Are you a US Person with UNREPORTED INCOME from a Foreign Bank Account???   

Have FATCA Problems??? 

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

Monday, January 14, 2013

The Long Arm of the IRS Reaches Israeli Shores - Oy Vey!

The Following Recent Articles about the IRS, FATCA and Israel, are proof that the IRS' Probe into Secret Offshore Bank Accounts is not just limited to Switzerland: 
  1. IRS ramps up audits of taxpayers in Israel
  2. FATCA, Stanley Fischer – complaint asks release of $250,000 seized of “US Person” by Israeli Bank HaPoalim
  3. Bank Leumi, the largest commercial bank in Israel, has urged U.S. clients to disclose information about their accounts to U.S. authorities, who are investigating Leumi and many other foreign banks over possible tax avoidance by Americans. Leumi and two other Israeli banks, Bank Hapoalim POLIO.UL and Mizrahi-Tefahot, are under investigation by the U.S. Justice Department in connection with offshore private banking services that may have enabled wealthy Americans to evade taxes.
Have unreported income from an Israili Bank? Oy Vey!
Contact the Tax Lawyers at Marini & Associates, P.A. for a FREE Tax Consultation at: or or Toll Free at 888-8TaxAid (888 882-9243).




Wednesday, January 9, 2013

Taxpayers Advocate's 2012 Annual Report Emphisises: Tax Reform, Identity Theft & Voluntary Disclosure Issues

National Taxpayer Advocate Nina E. Olson today released her 2012 annual report to Congress, identifying the need for tax reform as the overriding priority in tax administration.


The National Taxpayer Advocate’s annual report designates the complexity of the tax code as the #1 most serious problem facing taxpayers and recommends that Congress take significant steps to simplify it. “The existing tax code makes compliance difficult, requiring taxpayers to devote excessive time to preparing and filing their returns,” Olson wrote. “It obscures comprehension, leaving many taxpayers unaware how their taxes are computed and what rate of tax they pay; it facilitates tax avoidance by enabling sophisticated taxpayers to reduce their tax liabilities and provides criminals with opportunities to commit tax fraud; and it undermines trust in the system by creating an impression that many taxpayers are not compliant, thereby reducing the incentives that honest taxpayers feel to comply.”


The number of tax-related identity theft incidents has increased substantially in recent years. Within TAS, identity theft case receipts increased by more than 650 percent from FY 2008 to FY 2012. At the end of FY 2012, the IRS had almost 650,000 identity-theft cases in its inventory servicewide. The problem has grown worse as organized criminal actors have found ways to steal the Social Security numbers (SSNs) of taxpayers, file tax returns using those taxpayers’ names and SSNs, and obtain fraudulent tax refunds. Then, when the real taxpayer files a return claiming the refund, that return is rejected. The impact on victims is significant. More than 75 percent of taxpayers filing returns are due refunds, which average some $3,000 and are not paid until the IRS fully resolves a case.


Federal law requires the Advocate’s Annual Report to Congress to identify at least 20 of the “most serious problems” encountered by taxpayers and make administrative and legislative recommendations to mitigate those problems. Among the “most serious problems" addressed are the following:

  • The IRS’s Offshore Voluntary Disclosure programs and their failure to distinguish adequately between “bad actors” and “benign actors.” The IRS has sought to increase enforcement of Foreign Bank and Financial Accounts (FBAR) reporting requirements in recent years and has offered a series of voluntary disclosure programs designed to settle with taxpayers who had failed to file required FBAR forms. However, the report says, the programs generally applied a “one-size-fits-all” approach that required the payment of significant penalties and did not distinguish between “bad actors” and “benign actors.” By generally requiring taxpayers who make voluntary disclosures to “opt out” of the disclosure program and submit to comprehensive audits in order to avoid draconian penalties, the report argues that the program has caused excessive burden and fear for taxpayers who had reasonable cause for not filing FBAR forms or whose failure to file was inadvertent.
  • The IRS’s failure to provide tax refunds to victims of preparer fraud. When a taxpayer is victimized by a preparer who receives a fraudulent refund by paper check, the IRS will issue a replacement refund to the taxpayer. However, the IRS will not issue a replacement refund when a taxpayer is victimized by a preparer who receives the fraudulent refund by altering the bank routing number on a direct-deposit request, even though the IRS has received legal advice that it may do so. Olson says the taxpayer-victim is legally entitled to receive the refund, and the IRS has no legal basis for withholding it.
  • The IRS’s extraordinarily high audit rate of taxpayers who claim the adoption tax credit. Congress created the adoption tax credit to help low and middle income families afford the costs of an adoption, which are estimated to run as high as $40,000. Yet the IRS, partly using income-based rules, selected 69 percent of tax returns claiming the credit during the 2012 filing season for audit, compared with one percent of returns overall. These audits imposed significant burden on the affected taxpayers for several reasons, most notably because the median refund claim constituted nearly one-quarter of the taxpayers’ adjusted gross income for the year, and the audits on average took over four months. Despite the burden, the payoff was relatively small. The IRS denied only about 10 percent of the amounts claimed in tax year 2010, and as of mid-November had denied only about 1.5 percent of the amounts claimed in tax year 2011. The excessive focus on returns claiming the adoption credit burdened many taxpayers and could have the effect of negating Congress’s intent to encourage adoptions, the report says.
Related Items: 

IRS Audit Concerns?

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