Rockefeller Intoduces Bill Targeting Cruise Lines

 

On Aug 01 2013, John D. (Jay) Rockefeller IV  introduced legislation to close a tax loophole, currently exploited by the cruise industry, that has given cruise lines the ability to avoid paying U.S. income tax.

 

For the past seven years, Carnival and Royal Caribbean – which represent 71 percent of the global cruise industry – paid an effective worldwide tax rate of just 1.3 percent on more than $17 billion in profits. Because this figure includes foreign taxes, the cruise industry’s effective U.S. tax rate is actually much lower than 1.3 percent.

 

Rockefeller’s legislation would eliminate this outrageous exemption by requiring cruise lines to pay their fair share of taxes and support the federal resources on which they heavily rely.

 

 Need Help Understanding the Shipping Exemption?

 

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Senate

Joint Filing Does Not Automatically Make a NRA Spouse a RA!

The Chief Counsel's Office release on 6/21/13, CCA 201325013 which addresses whether a nonresident alien who filed, possibly in error, Forms 1040 income tax returns jointly with his wife, who is a U.S. citizen, is now subject to the §6677 penalty for the failure to file information returns required under §6048 with respect to certain foreign trusts as a result of §6013(g).

 

The Chief Counsel's Office advised that if the nonresident alien did not make a proper election under §6013(g) to be treated as a resident alien for certain tax purposes, then the answer is no, and he is not subject to the §6677 penalty for the failure to file information returns required under §6048.
 

______________________________________________

From: -------------------------

Sent: Thursday, February 14, 2013 8:43 AM

To: ----------------------

Cc: ------------------------

Subject: Question Concerning the Interaction Between Sections 6013(g) and 6677--------------------------

--------

You asked for our opinion on whether a nonresident alien who filed a joint income tax return becomes subject to the section 6048 reporting requirements and section 6677(a) penalties as a result of section 6013(g). We specifically address the situation in which the nonresident alien and his spouse did not make a proper election under section 6013(g).

 

Section 6013(g) allows a nonresident alien individual who is married to a citizen or resident of the United States to elect to be treated as a resident of the United States for purposes of chapter 1 and 24 of the Internal Revenue Code. Sec. 6013(g)(1) and (2). The regulations require the nonresident alien and his spouse to make the election by attaching a statement to a joint return for the first taxable year for which the election is to be in effect. Treas. Reg. §1.6013-6(a)(4)(i). The statement must contain a declaration that the election is being made and that the requirements of Treas. Reg. §1.6013-6(a)(1) are met for the taxable year, it must contain the name, address, and TIN of each spouse, and it must be signed by both persons making the election. Treas. Reg. §1.6013-6(a)(4)(ii). Failure to make such an election renders section 6013(g) inoperative. See Kravetz v. Commissioner, T.C. Memo. 1985-486.

Because the nonresident alien and his spouse did not make a proper election, section 6013(g) is

inoperative and does not affect the taxpayer’s status as a nonresident alien for purposes of chapters 1 and 24 of the Internal Revenue Code. Although section 6048 is under jurisdiction, it is our understanding that a nonresident alien is not subject to section 6048 reporting requirements. See Treas. Reg. §§ 16.3-1, 404.6048-1.  

Please note that our answer may potentially be different if a proper section 6013(g) election was made or if the nonresident alien has since become a United States person. ______________________________________________

 

Have a US Taxpayer Spouse?  

 

Been Filing Jointly?

Wish That You Did Not? 

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Eight Tips for Taxpayers Who Owe Taxes

While most taxpayers get a refund from the IRS when they file their taxes, some do not. The IRS offers several Payment Options for those who owe taxes. Here are eight tips for those who owe federal taxes.

1. Tax bill payments.  If you get a bill from the IRS this summer, you should pay it as soon as possible to save money. You can pay by check, money order, cashier’s check or cash. If you cannot pay it all, consider getting a loan to pay the bill in full. The interest rate for a loan may be less than the interest and penalties the IRS must charge by law.
2. Electronic Funds Transfer.  It’s easy to pay your tax bill by electronic funds transfer. Just visit IRS.gov and use the Electronic Federal Tax Payment System. You may also use EFTPS to pay your taxes by phone at 800-555-4477.
3. Credit or debit card payments.  You can also pay your tax bill with a credit or debit card. Even though the card company may charge an extra fee for a tax payment, the costs of using a credit or debit card may be less than the cost of an IRS payment plan. To pay by credit or debit card, contact one of the processing companies listed at IRS.gov.
4. More time to pay.  You may qualify for a short-term agreement to pay your taxes. This may apply if you can fully pay your taxes in 120 days or less. You can request it through the Payment Agreement application at IRS.gov. You may also call the IRS at the number listed on the last notice you received. If you can’t find the notice, call 800-829-1040 for help. There is generally no set-up fee for a short-term agreement.
5. Installment Agreement.  If you can’t pay in full at one time and can’t get a loan, you may want to apply for a monthly payment plan. If you owe $50,000 or less, you can apply using the IRS Payment Agreement application. If approved, IRS will notify you immediately. You can arrange to make your payments by direct debit. This type of payment plan helps avoid missed payments and may help avoid a tax lien that would damage your credit.
   
   Taxpayers may also apply using IRS Form 9465, Installment Agreement Request. If you owe more than $50,000, you must also complete Form 433F, Collection Information Statement. For approved payment plans the one-time user fee is $105 for standard and payroll deduction agreements. The direct debit agreement fee is $52. The fee is $43 if your income is below a certain level.
6. Offer in Compromise.  The IRS Offer-in-Compromise program allows you to settle your tax debt for less than the full amount you owe. An OIC may be an option if you can't fully pay your taxes through an installment agreement or other payment alternative. The IRS may accept an OIC if the amount offered represents the most IRS can expect to collect within a reasonable time. Click here to see if you may be eligible before you apply. We will notify you of other options if an OIC is not right for you.
7. Fresh Start.  If you’re struggling to pay your taxes, the IRS Fresh Start initiative may help you. Fresh Start makes it easier for individual and small business taxpayers to pay back taxes and avoid tax liens.
8. Check withholding. You may be able to avoid owing taxes in future years by increasing the taxes your employer withholds from your pay. To do this, file a revised Form W-4, Employee’s Withholding Allowance Certificate, with your employer. The IRS Withholding Calculator tool at IRS.gov can help you fill out a new W-4. 

For more information on

 IRS's Fresh Start program...

 

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:
IRS

Liechtensteinische Landesbank Turned Over 200 Clients to US government.

We originally posted on Monday, July 22, 2013, Liechtensteinische Settlement with US is Imminent!  Now Vaduz-based bank Liechtensteinische Landesbank (LLB) has agreed to pay the US government more than USD23.8 million in return for the dropping of charges of helping American clients evade tax between 2001 and 2011.

The forfeiture comprises USD16.3 million of revenues earned by LLB from managing concealed bank accounts, plus USD7.5 million in taxes evaded by 200 US clients whose records were turned over to the US Department of Justice by the bank.  

Are You 1 of the 200 Names Turned Over to the Justice Department?

 

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:

DOJ

Forbes

Reuters

Florida's Sales Tax Holiday is This Weekend!

On Friday, July 26, 2013 we posted Are You Ready for Back-to-School Sales Tax Holidays? where we discussed that there are currently 17 states offering sales tax holidays where state sales tax chargesare temporarily dropped on back-to-school items such as clothing, footwear, classroom supplies, computers and certain other products.

This is to remind you that Florida's Sales Tax Holiday is this weekend from Aug. 2-4!

 

The following are exempt:

• clothing with a sales price of $75 or less per item and
• school supplies with a sales price of $15 or less per item; and
• personal computers and related accessories with a sales price of $750 or less purchased for noncommercial use.

The holiday exemption does not apply to sales of such items made within a theme park, entertainment complex, public lodging establishment or airport.

State Sales Tax Problems?

Contact the Tax Lawyers

at Marini & Associates, P.A.

 

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at www.TaxAid.us or www.TaxLaw.ms

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

Federal Courts Authorize John Doe Summonses Seeking Identities of Credit Card Use For Norweign Tax Authority!

Ten Lawsuits Initiated Pursuant to Tax Treaty Between United States and Norway; Seven Petitions Granted, Three Petitions Remain Pending

 

The Justice Department announced July 29, 2013 that federal courts in Minnesota, Texas, Pennsylvania, Oklahoma, Virginia and California have entered orders over the past week authorizing
the Internal Revenue Service (IRS) to serve John Doe summonses on certain U.S. banks and financial institutions, seeking information about persons who have used specific credit or debit cards in Norway. 

The summonses are referred to as “John Doe” summonses because the IRS does not know the identity of the person being investigated.  While orders have been entered in seven of these cases, the United States’ petitions in three additional cases remain pending. 

 

The lawsuits, filed on July 19 and 22, 2013, in nine federal districts, were initiated at the request of the Norwegian government under a treaty between Norway and the United States. 

 

The treaty allows the two countries to cooperate in exchanging information that is helpful in enforcing each country’s tax laws.  The United States is seeking the identities of persons who have used specific debit or credit cards issued by certain U.S. financial institutions so that Norway can determine if those persons have complied with Norwegian tax laws. A total of 18 U.S. financial institutions are identified in the government’s court filings. The filings do not allege that these financial institutions have violated any U.S. laws with respect to these accounts.

 

As alleged in court papers filed by the Justice Department, Norwegian authorities have reason to believe, based upon the use of payment cards in Norway that were issued by U.S. banks, that unidentified card holders may have failed to report financial account information or income on their Norwegian tax returns.  Court papers cite examples where individuals using non-Norwegian payment cards have claimed to be tax residents of other countries but were found to have resided in Norway for sufficient time to subject them to taxes in Norway.   

 

 “The Department of Justice and the IRS are committed to working with our treaty partners to fight tax evasion wherever it occurs,” said Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division. “All taxpayers should know that our efforts in this area are global, coordinated and will continue.”

 

  “These summonses reflect our continuing efforts to work with our international partners on offshore tax evasion,” said Douglas O’Donnell, IRS Assistant Deputy Commissioner, Large Business & International (LB&I). “By using effectively our existing network of bilateral agreements, countries can help one another put an end to the global practice of evading taxation by hiding assets abroad.”

 

The lawsuits are a part of ongoing international efforts to stop persons from using foreign financial accounts as a way to evade taxes.  Courts have previously approved John Doe summonses allowing the IRS to identify individuals using offshore accounts to evade their U. S tax obligations. 

 

In the present suits, the Justice Department is seeking the identities of persons who may be attempting to hide their Norwegian taxable income in U.S. financial accounts. 

 

Becoming A Believer That Fiscal Transparency Really Exists?

Have Undeclared Income from an Offshore 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).

 

 

 

Source:

 

DOJ

 

IRS Advice on Self Cancelling Note and The Associated Gift & Estate Tax Consequences.

On 7/26/2013 the Office of Chief Counsel issued Chief Counsel Advice (CCA) 201330033,  where the IRS has addressed:  

ISSUES:

1.      Does all or any portion of the Date 1 transfers of stock from the decedent to the grantor trusts in exchange for the notes with the self-cancelling feature constitute a gift?

2.      How should the fair market value of the notes with the self-cancelling feature be determined? 

3.      If the Date 1 transfers do not constitute a gift, what are the estate tax consequences of the cancellation of the notes with the self-cancelling feature upon the decedent’s death?

FACTS: 

Taxpayer transferred stock to a grantor trust in return for notes receivable. The notes had the following terms:

1.      The term of the notes was based on the taxpayer's life expectancy as determined in the Sec. 7520 tables.

2.      Each note required only payments of interest during the note term and the payment of principal to the note holder on the last day of the term.

3.      Each of the notes contained a self-cancelling feature. This feature relieved the issuer of the obligation to make any further payments on the note if the taxpayer died before all of the payments under the note came due.

4.      The total face value of one group of the notes was almost double the appraised value of the stock transferred for those notes. The higher value of the notes supposedly compensated the taxpayer for the risk that he would die before the end of the note term and thus not receive the full amount of interest or any of the principal.

5.      The total face value of the rest of the notes equaled the appraised value of the stock transferred for those notes. To account for the possibility that the self-cancelling feature would take effect, these notes contained an above-market interest rate.

The taxpayer was in very poor health at the time of the transfer and died less than six months after the transfer. He received neither the interest payments nor the principal due on the notes. 

CONCLUSIONS

1.      1. If the fair market value of the notes is less than the fair market value of the property transferred to the grantor trusts, the difference in value is a deemed gift.

2.      The notes should be valued based on a method that takes into account the willing-buyer willing seller standard of § 25.2512-8 and should also account for the decedent’s medical history on the date of the gift.

3.      In this case, we believe there is no estate tax consequence associated with the cancellation of the notes with the self-cancelling feature upon the decedent’s death.

 

Need Help With Estate or Gift Taxes?

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at Marini & Associates, P.A.

 

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

 

 

Source:

CCA 201330033