Wednesday, October 30, 2013

IRS Pronouncements Make Offers in Compromise Less Available.

The IRS issued memorandum SBSE-05-1013-0076 to its Collection employees who are working Offer in Compromise cases, providing them guidance on when Offers should be rejected under "Not in the Best Interest of the Government" or "Public Policy" basis.

This guidance supplements the procedures found in Internal Revenue Manual (IRM), Rejection; IRM, Not in the Best Interest of the Government Rejection; and IRM, Public Policy Rejection, and will be incorporated into the next revision of the IRM.

While these provisions may be well-intentioned, they most probably will result in a Subjective Exception to an otherwise, long-standing, objective measurable criteria of Doubt as to Collectibility (DATC). 

This may result in allowing Collection employees to reject an Offer based solely on their Subjective Dislike of a particular Taxpayer or of the Taxpayer’s previous lifestyle (including but not limited to, having owned exotic cars, boats, etc.).

Situations that may warrant rejection as
“Not Being in the Best Interest of the Government"

1.      The taxpayer's offer meets processability criteria. However, the taxpayer has an egregious history of past noncompliance, as evidenced by the taxpayer's failure to voluntarily file correct returns. NOTE: Future collection potential and the ability to secure a collateral agreement should be considerations prior to recommending an offer for rejection under NIBIG.   

2.      An in-business taxpayer compromising employment taxes, where financial analysis indicates the business does not have the ability to fund the offer, remain current with future tax obligations, and meet the business’ normal operating expenses.   

3.      Any offer involving deferred payment where financial analysis indicates the taxpayer cannot fund the offer and an acceptable explanation as to where the additional funds may be secured is not provided.  

4.      The taxpayer is the primary responsible party for a related entity, i.e. corporation, partnership, etc., that is not in compliance with its filing and paying requirements.  

5.      The offer is from an ongoing business that appears to be insolvent, will remain insolvent, even if the offer is accepted, and it appears that the government’s position would be better protected through a formal insolvency proceeding. Refer to IRM, Consideration of a Potential Bankruptcy Filing on the Calculation of RCP in an OIC Investigation 

6.      The taxpayer does not have the ability to fully pay the liability via an installment agreement, yet based on the evaluation of the taxpayer's financial situation, the amount potentially received through a PPIA approximates the outstanding balance. Refer to IRM 

In each of the situations listed, a review of the taxpayer's financial situation should be completed prior to a final determination that a rejection under NIBIG is the appropriate course of action.

In circumstances where the potential for a fraud referral exists, the financial evaluation conducted and verified should be based on the facts and circumstances of the case.   

Situations That May Warrant Rejection
Based on a “Public Policy Decision” 

1.      The taxpayer has in the past, and continues to openly encourage30 se30 sec others to refuse to comply with the tax laws.

2.      Indicators exist showing that the financial benefits of a criminal activity are concealed or the criminal activity is continuing.

3.      The taxpayer engaged in a pattern of conduct suggesting intentional dissipation of assets.


The taxpayer, a payroll service provider, has received from its clients payments of employment taxes in the amount of $10 million.
  • The taxpayer remits to the Service an amount equal to the trust fund portion of the employment taxes and designates the payment for application to the trust fund portion of the tax.
  • The taxpayer pays no more of the employment tax. 
  • Meanwhile, the taxpayer dissipates all of its remaining assets, reducing its reasonable collection potential to $0. 
  • The taxpayer then submits an OIC for $10,000. 
  • Because the OIC exceeds reasonable collection potential, the taxpayer would qualify for the OIC on the grounds of doubt as to collectability. 
 Nevertheless, the OIC should be rejected on public policy grounds.

Taxpayers may now have to resort to bankruptcy filings, in order to obtain a discharge based upon Doubt as to Collectibility (DATC).
Can’t Pay All of Your IRS Debt?

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

for a FREE Tax Consultation
at or
or Toll Free at 888-8TaxAid (888 882-9243)



Tuesday, October 29, 2013

IRS Releases 50 Pages of FATCA Guidance!

The IRS released today October 29, 2013 Notice 2013-69 which provides guidance for foreign financial institutions (FFIs) entering into an FFI agreement with the IRS to be treated as a participating FFI or Reporting Model 2 FFI under the provisions commonly referred to as FATCA.
This notice includes a draft copy of the FFI agreement, which will be finalized before December 31, 2013.   
  1. This notice provides guidance to foreign financial institutions (FFIs) entering into an FFI agreement with the Internal Revenue Service (IRS) to be treated as participating FFIs.
  2. This notice also provides guidance to FFIs and branches of FFIs treated as reporting financial institutions under an applicable Model 2 intergovernmental agreement (IGA) on complying with the terms of an FFI agreement, as modified by the IGA.
  3. Section II of this notice provides background on the statutory and regulatory requirements for FFIs to be exempt from withholding under chapter 4 of the Internal Revenue Code (Code).
  4. Section III of this notice provides a description of the general responsibilities of participating FFIs and reporting Model 2 FFIs and some of the intended updates to the regulations and related forms.
  5. Section IV of this notice describes the procedures for FFIs to register for participating FFI or reporting Model 2 FFI status.
  6. Section V of this notice provides the draft FFI agreement, which substantially incorporates the provisions set forth in §1.1471-4. The FFI agreement will be finalized by December 31, 2013.

In cases in which foreign law would prevent an FFI from complying with the terms of an FFI agreement, the Treasury Department has collaborated with other governments to develop two alternative model intergovernmental agreements (IGAs) that facilitate FATCA implementation and further reduce burdens on FFIs in partner jurisdictions.
  1. Under a Model 1 IGA, reporting financial institutions under an applicable Model 1 IGA (reporting Model 1 FFIs) would satisfy their chapter 4 requirements by reporting specified information about U.S. accounts to their government, followed by the automatic exchange of that information on a government-to-government basis with the United States.
  2. Under a Model 2 IGA, reporting Model 2 FFIs would report specified information about U.S. accounts directly to the IRS in a manner consistent with the final regulations (as modified by the applicable Model 2 IGA), supplemented by a government-to-government exchange of information on request. Accordingly, an FFI, or branch of an FFI, that is a reporting Model 2 FFI will apply §1.1471-4, as well as the terms of the FFI agreement, as modified by the applicable Model 2 IGA.
Covered Entities.
  • An FFI that has one or more branches (including its home office or a U.S. branch) that can comply with the terms of the FFI agreement is eligible to enter into an FFI agreement.
  • A branch of such an FFI that cannot, under the laws of the jurisdiction in which such branch is located, satisfy all of the terms of the FFI agreement will be treated as a limited branch (as defined in the FFI agreement) and will be subject to withholding under section 1471 as a nonparticipating FFI. A reporting 4
  • Model 1 or 2 FFI that has a branch located outside of a Model 1 or 2 IGA jurisdiction may enter into an FFI agreement with respect to such branch in order for the branch to be treated as a participating FFI.
  • A reporting Model 2 FFI that registers with the IRS to obtain a global intermediary identification number (GIIN) and complies with the terms of the FFI agreement, as modified by the applicable Model 2 IGA, will be treated as complying with the requirements of, and not subject to withholding under, section 1471. The FFI agreement provided in section V of this notice incorporates the modifications to the terms of the FFI agreement that are applicable to a reporting Model 2 FFI.
  • The qualified intermediary (QI), withholding foreign partnership (WP), and withholding foreign trust (WT) agreements are being modified to address new requirements under chapter 4 in addition to chapter 3, and these requirements will be incorporated into all QI, WP, and WT agreements that are in effect on or after June 30, 2014.
  • The updated QI agreement will incorporate by reference the requirements of the FFI agreement (including the modifications to the terms of the FFI agreement that are applicable to a reporting Model 2 FFI) and shall apply to any foreign branch of the QI that is treated as a participating FFI or reporting Model 2 FFI. In the case of an FFI that is a participating FFI or reporting Model 2 FFI and is also a WP or WT, the updated WP or WT agreement, as applicable, will incorporate by reference the requirements of the FFI agreement (including the modifications to the terms of the FFI agreement that are applicable to a reporting Model 2 FFI).
  • In general, the FFI agreement does not apply to a reporting Model 1 FFI, or any branch of such an FFI, unless the reporting Model 1 FFI has a branch located outside of a Model 1 IGA jurisdiction that is treated as a participating FFI or reporting Model 2 FFI. In such a case, the terms of an FFI agreement apply to the operations of the branch treated as a participating FFI or reporting Model 2 FFI.
Notice 2013-69 will be published in Internal Revenue Bulletin 2013-46 on November 12, 2013.

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

Friday, October 25, 2013

Another Swiss Bank Bites The Dust!

Bank Frey has become the second of Switzerland's smaller banks to announce it is ceasing operations as a result of the US government's drive against cross-border tax evasion.

The organisation, founded in 2000, says it is solvent and will not be liquidated. It has merely decided that the costs associated with the US tax dispute, together with 'increasingly difficult market conditions, ever-growing regulations and the unsustainable requirements' have become too high to justify its banking operations.

Frey & Co.'s Executive Board, together with shareholders, came to the decision last week. Frey & Co. is currently the subject of a DoJ investigation, meaning that it is unable to take advantage of a settlement deal offered by the DoJ to Swiss "Category 1" banks.

In August, the DoJ and the Swiss Federal Department of Finance unveiled a scheme designed to encourage Swiss banks to cooperate in the DoJ's investigations into the use of foreign bank accounts to commit tax evasion. (See Swiss Banks Agree to Plan to End Past US Tax Evasion Issues! ).

Under the program, participating banks are:
  1. Required to make a complete disclosure of their cross-border activities,
  2. Provide detailed information on accounts in which US taxpayers have a direct or indirect interest,
  3. Agree to pay substantial penalties. and
  4. Must also agree to close the accounts of holders who fail to comply with US reporting obligations.
In addition Banks that held accounts as of August 1, 2008, must pay a fine equal to 20% of the top dollar value of all non-disclosed accounts. That goes up to 30% for secret accounts opened after August 1, 2008 but before March 2009. The highest tier of penalties is 50% for accounts opened after that.

The investigation into Bank Frey’s activities showed that the bank had increased the number of its American clients by 300% between March 2009 and February 2012. As of September 2012, 44% of the institution’s managed assets came from American clients.

Are You One of the > 7 MM Americans
with Unreported Foreign Bank Income?
Contact the Tax Lawyers at 
Marini & Associates, P.A.  
for a FREE Tax Consultation
Toll Free at 888-8TaxAid (888 882-9243).


Wednesday, October 23, 2013

IRS Collected $5.5 Billion From OVDI, But According to GAO, May Be Missing Billions More?

The Internal Revenue Service may be missing potential tax dodgers who report their foreign accounts but who avoid paying penalties by not reporting previous years' returns. The Government Accountability Office released Offshore Tax Evasion: IRS Has Collected Billions of Dollars, but May be Missing Continued Evasion (GAO-13-318): 
Tax evasion by individuals with unreported offshore financial accounts was estimated by one IRS commissioner to be several tens of billions of dollars, but no precise figure exists. IRS has operated four offshore programs since 2003 that offered incentives for taxpayers to disclose their offshore accounts and pay delinquent taxes, interest, and penalties. GAO was asked to review IRS’s second offshore program, the 2009 OVDP. This report (1) describes the nature of the noncompliance of 2009 OVDP participants, (2) determines the extent IRS used the 2009 OVDP to prevent noncompliance, and (3) assesses IRS’s efforts to detect taxpayers trying to circumvent taxes, interests, and penalties that would otherwise be owed. 

IRS has detected some taxpayers with previously undisclosed offshore accounts attempting to circumvent paying the taxes, interest, and penalties that would otherwise be owed, but based on  GAO reviews of IRS data, IRS may be missing attempts by other taxpayers attempting to do so. GAO analyzed amended returns filed for tax year 2003 through tax year 2008, matched them to other information available to IRS about taxpayers' possible offshore activities, and found many more potential quiet disclosures than IRS detected.  

Moreover, IRS has not researched whether sharp increases in taxpayers reporting offshore accounts for the first time is due to efforts to circumvent monies owed, thereby missing opportunities to help ensure compliance. From tax year 2007 through tax year 2010, IRS estimates that the number of taxpayers reporting foreign accounts nearly doubled to 516,000. Taxpayer attempts to circumvent taxes, interest, and penalties by not participating in an offshore program, but instead simply amending past returns or reporting on current returns previously unreported offshore accounts, result in lost revenues and undermine the programs' effectiveness.


Going to a tax planning seminar in Panama?

 posts - Why you really really might not want ever speak, or even be in the same room as San Diego Tax Attorney Christopher Rusch!

In yesterday’s post about Chris Rusch, a self-claimed tax attorney mastermind who will be meeting potential tax clients in Panama shortly, I wrote:

So in case you missed it: On October 14, 2013, Kathleen Peddicord of sent out emails claiming that the #1 tax attorney [Chirs Rusch] for offshore tax issues is:
  • someone who just lost his license to practice law,
  • someone who has been convicted of conspiracy to defraud the United States government, and failing to file an FBAR
  • someone who has turned evidence against his own clients.
tax attorney, chris rushc, live and invest overseas
Are you going to a tax planning seminar in Panama soon? Be sure someone named Chris Rusch will NOT be in attendance.

But there is more to the story.

The Tax Lawyers  

of Marini & Associates, P.A.

 for a FREE Tax Consultation
or Toll Free at 888-8TaxAid (888 882-9243 begin_of_the_skype_highlighting) 


Tuesday, October 22, 2013

2014 Tax Season to Start Later Following Government Shutdown

The Internal Revenue Service today announced a delay of approximately
one to two weeks to the start of the 2014 filing season to allow adequate time to program and test tax processing systems following the 16-day federal government closure. 
The IRS is exploring options to shorten the expected delay and will announce a final decision on the start of the 2014 filing season in December, Acting IRS Commissioner Danny Werfel said. The original start date of the 2014 filing season was Jan. 21, and with a one- to two-week delay, the IRS would start accepting and processing 2013 individual tax returns no earlier than Jan. 28 and no later than Feb. 4. 
The government closure came during the peak period for preparing IRS systems for the 2014 filing season. Programming, testing and deployment of more than 50 IRS systems is needed to handle processing of nearly 150 million tax returns. Updating these core systems is a complex, year-round process with the majority of the work beginning in the fall of each year.

The IRS will not process paper tax returns before the start date, which will be announced in December. There is no advantage to filing on paper before the opening date, and taxpayers will receive their tax refunds much faster by using e-file with direct deposit. The April 15 tax deadline is set by statute and will remain in place. However, the IRS reminds taxpayers that anyone can request an automatic six-month extension to file their tax return. The request is easily done with Form 4868, which can be filed electronically or on paper.

During the closure, the IRS received 400,000 pieces of correspondence, on top of the 1 million items already being processed before the shutdown.

Having Trouble Contacting the IRS?
Contact the Tax Lawyers at
Marini & Associates, P.A.

for a FREE Tax Consultation Contact US at or
or Toll Free at 888-8TaxAidhighlighting (888 882-9243).



Was Raoul Weil the Ex-UBS Banker Your Banker?...You May Want to Contact M&A Immediately!

An Italian judge ruled on Tuesday, October 22, 2013, that Raoul Weil, the ex-UBS banker wanted in the United States over allegations of helping Americans dodge taxes, must remain in custody while awaiting possible extradition to the US.

The decision was handed down by a judge of the Court of Appeal in Bologna, where Weil, a Swiss citizen and former head of UBS's global wealth management business, was arrested by Italian police on Saturday. The 53 year-old banker was escorted in handcuffs into the court building by police officers to attend a closed-door hearing.

Weil was charged in the United States in November 2008 for conspiring to help 17,000 Americans hide assets worth $20 billion in Swiss bank accounts and declared a fugitive a few months later after failing to surrender to authorities.

As we discussed in our post
Bradley Birkenfeld awarded $104 million (13% ) as UBS tax case whistleblower, another Ex-UBS Banker, Bradley Birkenfeld later became a whistleblower for the IRS.  He said he learned in 2005 that the UBS’s advice to clients was illegal, and after reporting it to the UBS compliance office to no avail, he decided to become a US government informant.

In February 2009, as a result of the information he gave U.S. authorities, the DOJ announced it had reached a deferred prosecution agreement with UBS that resulted in a $780 million fine and the release of previously privileged information on American tax evaders.  

To settle the SEC’s complaint that it violated the Securities Exchange Act of 1934 and the Investment Advisers Act of 1940, UBS agreed to disgorge $200 million in profits and promised to end its cross-border business in the U.S. in accordance with the DPA. 

On 11 September 2012, the IRS Whistleblower Office paid Birkenfeld a $104 million award for acting as a corporate whistleblower. 

Weil, who is the subject of an international arrest warrant, checked in with his wife at the 'I Portici' hotel in central Bologna on Friday. The hotel, as is customary in Italy, passed on Weil's identity details to the local police, triggering an alert and prompting the police to arrest him early on Saturday.
The United States now has 40 days to send the Italian judiciary a formal request for Weil's extradition. If the United States makes the request Italian judges at the Court of Appeal will assess whether Weil must be sent to the United States to face trial.

Italy has cooperated with the United States in the past except over crimes that carry the death penalty, which is banned in Italy. Under U.S. law a conviction for tax evasion may result in fines and imprisonment.

A UBS spokesman said on Monday Weil, who became the head of its global wealth management business in 2007 and sat on the bank's board, was discharged from his duties when he was indicted. He joined Reuss Private Group in 2010 as a consultant and became chief executive at the beginning of this year.
You can be certain, that once Raoul Weil is extradited to the United States, that as part of a plea deal, he will turn over:
  • all of the names 
  • all of the associated details
  • of Every US Taxpayer

who he helped avoid pay US Taxes; while he was at UBS or at Reuss Private Group!

Was Raoul Weil Your Banker?

...You May Want to Contact M&A Immediately!

Contact the Tax Lawyers

of Marini & Associates, P.A.

 for a FREE Tax Consultation
or Toll Free at 888-8TaxAid (888 882-9243)




Monday, October 21, 2013

The Foreign Account Tax Compliance Act (FATCA) Its Impact on Corporate Agents and Trustee Services

The US has in recent years stepped up its initiatives to counter tax evasion and as part of this effort has introduced the FATCA statute. Although the primary purpose of FATCA is prevention and detection of tax evasion by US persons, it will have a significant impact across financial markets and affect non-US companies and individuals. 
In particular, FATCA will require that financial institutions, investment funds and global providers of corporate and trustee services continuously screen their client databases for US beneficial ownership as well as to classify and document clients’ entities as to their FATCA status.

FATCA establishes various procedures for validation of beneficial ownership which should be complied with by participants in the global financial markets. In many cases, these procedures have been further developed by inter-governmental agreements (“IGAs”) that the USA has entered into with foreign countries.

As a practical matter, FATCA will require Corporate Trustees, in addition to their robust client acceptance processes, to introduce specific new compliance procedures dedicated to identifying US persons within its client base, to classify client entities as to their FATCA status and to annually report findings of US persons.

This will have a significant impact on all international clients even if they are not US persons or not investing in the US. Whether you are an individual, shareholder/director of a corporation, beneficiary of a trust, a US or non-US person, a fund, a wealth manager, a bank, an insurance company etc., FATCA requires substantial information and documentation to be gathered as part of its registration, identification and reporting processes. 

FATCA will require that Corporate Trustees to identify and document all US beneficial owners of accounts as well as recipients of US source payments.

If the Corporate Agent provides only registered office services to client companies, the Corporate Agent will not be contacting the client in relation to FATCA. However, those clients will have their own responsibility to be FATCA compliant.  

Failure to perform the proper checks and submit the necessary documentation that FATCA requires will result in a 30% withholding tax being imposed on US source income.

The implementation and expansion of FATCA means that Corporate Agents will require new documentation from their clientele worldwide. This new information will allow them to properly assist with the registration and reporting of each applicable structure/situation.  

In the upcoming months, Corporate Agents/ Trustees will reach out to clients to highlight the specific information that is required for FATCA.

Need FATCA Help?

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