Thursday, March 21, 2013

Another Former British Colony Accepts Automatic Reporting to the UK & US through UK FATCA.

We originally posted UK mini-FATCA Agreements Spells The End for UK Tax Haven Territories! on Monday, November 26, 2012.  The UK and some other European countries have negotiating FATCA agreements with the US.

Jersey has now agreed to the automatic reporting of bank account information to the UK tax authorities. As with Guernsey and the Isle of Man, there will be a partial tax amnesty allowing UK residents to disclose previously undeclared Jersey accounts to HM Revenue and Customs, though immunity from prosecution is not warranted.

Jersey is particularly anxious that the UK's insistence on automatic reporting should be applied to other international financial centres, to ensure a level playing field.

The UK government is equally keen on the idea: it has just published an Offshore Evasion Strategy document setting out plans to negotiate bilateral automatic information exchange agreements with the British Overseas Territories and other high-priority jurisdictions. Which provides in part:

“While great progress has been made internationally to open up non-cooperative jurisdictions, more still needs to be done. The Government believes that there are two key elements to future bilateral agreements targeted at tackling tax evasion: 

1.      automatic exchange of information for the future: building on the historic agreement with the USA, the Government will look to conclude similar agreements with other jurisdictions, moving to a new standard of automatic information exchange in bilateral agreements
2.      measures to encourage those with hidden funds to come forward: HMRC will continue to seek agreements with other jurisdictions, including the Overseas Territories, building on the agreements reached with Liechtenstein, the Isle of Man, Guernsey and Jersey.”
The Cayman Islands has already signalled that it will accept automatic reporting to the UK, in a statement by Financial Services Minister Rolston Anglin to the jurisdiction's legislative assembly on 15 March. The Cayman government has also agreed to implement FATCA's reporting requirements for US-owned bank accounts.

The die has been cast and it appear to be only a matter of time before, most if not all, former British Territories will enter into UK - US information sharing FATCA agreements.

Are you a US Taxpayer
with Un-Reported Income?
With Accounts in : 
· Barbados 
· Bermuda
· Guyana
· Belize
· Cayman Islands
· Jersey
· Grenada
· Malta
· Nauru
Do you Value your Personal Freedom?
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Tuesday, March 19, 2013

Cyprus Rejects Bank Tax

Cyprus overwhelmingly rejected a proposed levy on bank deposits as a condition for a European bailout on Tuesday, throwing international efforts to rescue the latest casualty of the euro zone debt crisis into disarray.

The vote in the tiny legislature was a stunning setback for the 17-nation currency bloc, angering European partners and raising fears the crisis could spread; lawmakers in Greece, Portugal, Ireland, Spain and Italy have all accepted austerity measures over the last three years to secure European aid.

With hundreds of demonstrators outside the parliament, the ruling party abstained and 36 other lawmakers voted unanimously to reject the bill, bringing the Mediterranean island, one of the smallest European states, to the brink of financial meltdown.

Finance Minister Michael Sarris had already headed to Moscow, amid speculation Russia could offer assistance given the high level of Russian deposits in Cypriot banks.

EU countries had warned they would withhold 10 billion euros ($13 billion) in bailout loans unless depositors in Cyprus, including small savers, shared the cost of the rescue, an unprecedented step in the stubborn debt crisis.

But lawmakers said the levy on deposits crossed a red line.

International market reaction has been muted so far but that might change.

Banks in Cyprus are to remain shut on Wednesday to avoid a bank run. The island's stock exchange will also be closed on Wednesday.
Cypriot WorldWide Tax Structures Seem "Greek" to You?

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Professional Golfer Sergio Garcia "Whiffs" Tax Case regarding US Tax on "Image Rights"

The US Tax Court has ordered professional golfer Sergio Garcia to pay tax on endorsement income he had claimed was tax-free under the US-Switzerland tax treaty.

The court decided Garcia's contract with his sponsor TaylorMade had attributed too much of the money to royalty payments for image rights, which the treaty exempts from US tax.
Garcia entered into a seven-year endorsement agreement with sponsor TaylorMade Golf Co. (TaylorMade), allowing TaylorMade to use his image, name, and voice - "image rights" in advertising and marketing campaigns worldwide.

Garcia also agreed to perform personal services for TaylorMade including using its products in all his golf play, posing and acting for advertisements, and making personal appearances for the company.
In return for his services and use of his image rights, TaylorMade agreed to pay Garcia a base compensation of $7 million during the years at issue.

The original endorsement didn't specify the percentage of remuneration attributable to personal services or "image rights."

In a later amended agreement provide for 85% of the compensation to be allocated to royalties for his "image rights" and 15% to personal services.

Garcia paid no U.S. tax on the royalty payments and paid lower tax rates under Swiss law. He did, however, pay U.S. tax on the U.S.-source personal service payments, of which he reported a portion on Forms 1040-NR.

IRS challenged the 85%-15% allocation between royalty and personal service payments, claiming that the royalty portion was overstated and issued Notice of Deficiencies in the amount of $930,249 and $789,518 for tax years 2003 and 2004, respectively.

The court held that:

1. Compensation paid by TaylorMade under the endorsement agreement is allocated 65% to Royalties and 35% to Personal Services.

2. None of the Royaltycompensation is taxable to petitioner in the United States, but

3. All of the U.S. source Personal Service compensation is taxable to petitioner in the United States based on his failure to timely raise the issue of whether the golfer's U.S.-source personal service income was exempt from U.S. tax.

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Wednesday, March 13, 2013

Criminal Tax Investigations On The Rise!

Here we are in March and as many CPA's can tell you it is Tax Time.  That is right Tax Time. The time of year, when the vast majority of taxpayers are about to file their tax returns. 
It is also the same time of year that the IRS likes to announce the names and details of taxpayers (or more likely Non-Taxpayers), who were recently Criminally Prosecuted by the Goverment for not paying their taxes.  Coincidentally, there also is a noticeable uptick in criminal indictments and in convictions for tax crimes at this time of year.
On Wednesday, March 28,2012 we posted that the "IRS Releases FY 2011 Data Book." This data book, in addition to providing various other interesting information about the IRS, also contains a report of the IRS' Criminal Prosecutions for the 2011 & 2010.

The Data Book reported that in 2011: these

  • The IRS initiated 4,720 criminal investigations.
  • There were 3,410 referrals for prosecution
  • There were 2,350 convictions.
  • Of those sentenced, 81.7% were incarcerated (a term that includes imprisonment, home confinement, electronic monitoring, or a combination thereof).
By way of comparison, in FY 2010:
  •  the IRS initiated 4,706 criminal investigations
  • there were 3,034 referrals for prosecution, and
  • there were 2,184 convictions.
  • Of those sentenced, 81.5% were incarcerated.
More than 80% of criminal tax fraud cases resulted in jail time in 2012, which shows judges are willing to hand out stiffer penalties than probation.

So as you sit down to figure your taxes for 2012 and somehow you are thinking of underreporting your income or not filing at all, ask your self:

Do You Feel Lucky Punk?
Have Criminal Tax Problems?  

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for a FREE Tax Consultation at: or or
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Monday, March 11, 2013

US Court Orders Wegelin a Total Penalty of $74.3 MM!

A U.S. court on March 4, 2013 sentenced Wegelin & Co, the oldest Swiss private bank, to pay an additional $58 million after it admitted to helping wealthy Americans evade taxes. 

The amount was in addition to the $16.3 million in forfeitures already obtained by authorities after the federal government accused Wegelin of conspiring to assist U.S. taxpayers hide $1.2 billion in secret Swiss bank accounts; bring it’s total combined Penalty to $74.3 million. 

The case marked the first time U.S. authorities had indicted a foreign bank and subsequently obtained a guilty plea and sentence for facilitating tax evasion. 
The government previously obtained a $780 million settlement with UBS AG in 2009, and tax probes continue of other Swiss banks including Credit Suisse Group AG and Julius Baer.

Wegelin, which according to the indictment had $25 billion in assets at the end of 2010, said at the time of its guilty plea in January said it would close.

The Swiss Financial Market Supervisory Authority required Wegelin to reserve 100 million Swiss francs ($107 million) to resolve the U.S. investigation, in order for them to approve its sale of assets.
Secret Foreign Investments Keeping You Awake at Night?

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The IRS Revokes Amnesty to US Taxpayers With Israeli Bank Accounts...They Must be Feeling Faclept?

On Monday, January 14, 2013 we poste The Long Arm of the IRS Reaches Israeli Shores - Oy Vey! which discusses the IRS activity as it relates to US Taxpayers with Secret Israeli Bank Accounts. 

Now we have heard that the Internal Revenue Service this week sent faxes to tax attorneys nationwide informing them that clients who were previously accepted into its criminal amnesty program for those who disclose once-secret offshore accounts, have “upon further review” been disqualified. The faxes, signed by John R. Tafur, director of of Global Financial Crimes at the IRS’ Criminal Investigation division, affect dozens of American taxpayers who had undisclosed accounts at Bank Leumi le-Israel Ltd., Israel’s largest bank.

An IRS spokesman said in a statement: "There are a number of reasons why a taxpayer may be disqualified from participating in the IRS' offshore disclosure program." The spokesman said the IRS cannot comment on specific cases.

Maybe it is because Bank Leumi is believed to be cooperating now with U.S. prosecutors. On Monday March 11, 2013, Bank Leumi announced it will take a charge of 340 million shekels ($91 million) to cover the expense of investigations that are being conducted by the U.S. authorities concerning customers who are U.S. taxpayers.
Some clients of Israel's Mizrahi Tefahot Bank have also been disqualified from the program, as well.

A U.S. crackdown on Americans using offshore banks to avoid taxes began with Swiss banks, but has widened to Israel.
Failing to disclose a foreign account on a 1040 is a criminal offense. In January 2012, the IRS revived the voluntary disclosure program, which remains open which provides that in return for escaping criminal charges, taxpayers accepted into the current version of the OVDP must file eight years of amended tax returns, pay all back taxes, interest and penalties due (including a 20% accuracy penalty on offshore-related underpayments) and pay an FBAR penalty equal, in most cases, to 27.5% of the maximum held in the undisclosed offshore accounts during the eight year period.
If the IRS already has a taxpayer under audit, is investigating a taxpayer, or has his name on a list of taxpayers with secret accounts (for example, one obtained as a result of a John Doe summons to a foreign bank or a tax preparer), he isn’t eligible for the OVDP.
Criminal clearance letters are issued by the IRS’ Criminal Investigation division based on its checks of both criminal and civil proceedings. Many Israeli Bank Clients have already received their criminal clearance letter for the OVDP and are now being informed that they are invalid.
The IRS CI knows exactly what they are doing in rescinding the previously granted clearance. It appears to be part of a larger situation regarding the investigation of Bank Leumi, its representatives, etc. Many of the taxpayers not only gotten written criminal clearance letters as a result of  participating in the OVDP, but had also have proceeded to submit a complete disclosure including amended returns, FBARs, account information, etc.
Ironically, Bank Leumisent a letter to its U.S. account holders last December telling them about the OVDP and suggesting they consult with an attorney about participating in it.  
The IRS’ sudden Bank Leumi flip flop, could have profound consequences for the offshore disclosure program, making those with hidden accounts less willing to come forward.

Have unreported income from an Israeli Bank?
Felling a Bit Faclept?
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, March 7, 2013

The IRS realeased its Winter 2013 Statistic of Income Bulletin

Winter 2013 Statistics of Income Bulletin

IR-2013-26, March 6, 2013

WASHINGTON — The Internal Revenue Service today announced that the winter 2013 issue of the
Statistics of Income Bulletin is available at The winter 2013 issue features preliminary data from more than 145 million individual income tax returns for tax year 2011.

The Statistics of Income (SOI) Division produces the SOI Bulletin on a quarterly basis. Articles included in the publication provide the most recent data available from various tax and information returns filed by U.S. taxpayers. This issue of the SOI Bulletin also includes articles on the following topics:

  • Individual Income Tax Rates and Shares, 2010. Of the 142.9 million individual tax returns filed in tax year 2010, 84.5 million (59.1 percent) were classified as taxable returns or returns with a total income tax greater than $0. Adjusted gross income (AGI) for taxable returns was nearly $7.25 trillion, and total income tax was $952 billion.
  • Individual Noncash Charitable Contributions, 2010. More than 7. million individual taxpayers reported a total of $34.9 billion in deductions for noncash charitable contributions for tax year 2010.
  • Split-Interest Trusts, Filing Year 2011. Charitable remainder trusts, charitable lead trusts, and pooled income funds reported $9.7 billion in gross income and $118.1 billion in end-of-year assets.
  • Domestic Private Foundations and Related Excise Taxes, Tax Year 2009. For tax year 2009, domestic private foundations reported $588.5 billion in total assets and $52.2 billion in total revenue. These foundations distributed $40.9 billion in contributions, gifts, and grants to the charitable sector.
  • Controlled Foreign Corporations, 2008. For tax year 2008, foreign corporations controlled by U.S. multinational corporations held $14.5 trillion in assets and reported receipts of $6.0 trillion.
Don't Want to Become Just Another IRS Tax Statistic?
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The Time to Apply for Mexican Tax Amnesty is Quickly Running Out!

We first posted on January 23, 2013, 2013 Mexican Tax Amnesty regarding that 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.
This amnesty is probably in part motivated by the New Mexican FATCA agreement with the US, which provides for automatic information sharing from US banks regarding deposits from Mexican individuals which we originally posted on November 29, 2012 as Mexican FATCAAgreement Requires New Reporting By BOTH Mexican & US Banks! 
The Mexican Revenue Administration Service (SAT) has published the rules for the country's new tax amnesty program, which began on January 1, 2013. Taxpayers should note that:
  • they may request amnesty on up to 100% of outstanding tax and additions to tax (accessories)incurred for open years up to December 31, 2012
  • amnesty requests must be made by May 31, 2013
  • the amount of tax forgiven will not constitute taxable income for Mexican income tax purposes.

Because the deadline for applying to the new tax amnesty program is just over three months away, taxpayers should immediately assess the tax and legal effects of participating in the program.

Past Due Mexican Taxes Keeping You Awake at Night?
New US - Mexican Facta Information Causing you to Rethink Not Reporting Your Taxes Correctly in Mexico May Not Have Been Such a Good Idea?

Contact the Tax Lawyers at Marini & Associates, P.A.

for a FREE Tax Consultation at www.TaxAid.usor

or Toll Free at 888-8TaxAid (888 882-9243).