Options Available for US Taxpayers With Offshore Accounts and/or Entities!

The IRS' focus on offshore enforcement efforts and related disclosure programs has raised awareness among many U.S. citizens about their tax filing and information reporting obligations. 

Situations of taxpayers with offshore compliance issues vary widely given the complexity of this area of tax law.  Taxpayers that recently learned of these tax requirements should also be advised of the many options that are available, outside of the normal filing process, to help them get current with their tax obligations.  

 

A number of the common situations and potential solutions are outlined below.

 

Situation	Compliance Option
Taxpayers who have properly reported all taxable income but recently learned that he/she should have been filing FBARs in prior years to report a personal foreign bank account or to report signature authority over bank accounts owned by an employer.	Taxpayers who reported, and paid tax on, all their taxable income for prior years but did not file FBARs, should file the delinquent FBAR reports according to the instructions (send to Department of Treasury, Post Office Box 32621, Detroit, MI 48232-0621) and attach a statement explaining why the reports are filed late.   The IRS will not impose a penalty for the failure to file the delinquent FBARs if there are no underreported tax liabilities and you have not previously been contacted regarding an income tax examination or a request for delinquent returns.
Taxpayers who only have certain delinquent information returns, but no tax due.	A taxpayer who has failed to file tax information returns, such as Form 5471 for controlled foreign corporations (CFCs) or Form 3520 for foreign trusts but who has reported, and paid tax on, all their taxable income with respect to all transactions related to the CFCs or foreign trusts, should file delinquent information returns with the appropriate service center according to the instructions for the form and attach a statement explaining why the information returns are filed late. (The Form 5471 should be submitted with an amended return showing no change to income or tax liability.)   The IRS will not impose a penalty for the failure to file the delinquent Forms 5471 and 3250 if there are no underreported tax liabilities and you have not previously been contacted regarding an income tax examination or a request for delinquent returns.
Non-resident U.S. taxpayers with delinquent returns with low risk factors (including tax owed less than $1,500/year).	Filing Compliance Procedures for Non-Resident U.S. TaxpayersNon-resident U.S. taxpayers should file delinquent tax returns, including delinquent information returns, for the past three years; delinquent FBARs for the past six years; and additional required information regarding compliance risk.  Payment of any federal tax and interest due must accompany the submission.
Taxpayers with undisclosed foreign accounts and unreported income.  Taxpayers seeking protection from criminal prosecution.	Offshore Voluntary Disclosure ProgramThe Offshore Voluntary Disclosure Program (OVDP) offers a civil settlement structure in which taxpayers pay an offshore penalty in lieu of a number of other penalties that may be assessed in cases of offshore noncompliance.  The OVDP also offers protection from criminal prosecution.  In order to participate in the OVDP, taxpayers must first request acceptance into the program.  Once they have been preliminarily accepted, taxpayers must submit certain information including eight years of amended tax returns, FBARs, and information returns as well as information about their offshore accounts.  In addition, taxpayers must submit full payment of the tax and interest due, and certain penalty amounts.   Taxpayers who have entered OVDP who disagree with the application of the offshore penalty given the facts and circumstances of their case may elect to opt out of the civil settlement structure of the program.  In such situations, the IRS will determine if penalty mitigation is appropriate.

The IRS reminds taxpayers to consult with their Professional Tax Advisor in determining which option is the most appropriate given their facts and circumstance.

Have Unreported Foreign Bank Accounts or Companies?

 

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 begin_of_the_skype_highlighting 888 882-9243 FREE  end_of_the_skype_highlighting).

Source

IRS

FATCA: Updates for Hong Kong, Philippines, New Zealand and Singapore.

Thomson Reuters Accelus Published 

FATCA IGA Updates for Asia 

As of September 2, 2013

 

 

HONG KONG

In August 19, 2013, the Hong Kong Monetary Authority (HKMA) released a circular directing financial institutions to ensure compliance by establishing the necessary processes and controls, if applicable. HKMA also suggested that the Hong Kong Association of Banks and the DTC Association offer appropriate assistance to facilitate the development of good practices for compliance with FATCA and other overseas tax regimes. There is no explicit mention of a potential IGA with the U.S. (Source: HKMA)

 

PHILIPPINES

Bangko Sentral ng Pilipinas (BSP), in a memorandum, reminds financial institutions – including commercial and investment banks – to evaluate if they are Foreign Financial Institutions (FFIs) subject to FATCA, to study the potential effects of FATCA on their businesses, and determine the steps to take to avoid the unfavorable consequences of non-compliance. And if they are subject to FATCA compliance, the institution must put in place a policy to comply. The BSP message states that any FATCA-related questions or concerns of banks should be provided to the Association of Bank Compliance Officers, Inc. (ABCOMP) which serves as the central repository of FATCA-related inquiries and collate such queries for a more systematic submission to the U.S. Government. There is no explicit mention of a potential IGA with the U.S. (Source: BSP)

 

SINGAPORE

In a media release last May 14th, Singapore has indicated its intent to enter into an intergovernmental agreement (IGA) with the U.S., a move which will help financial institutions operating in the city-state comply with the U.S. Foreign Account Tax Compliance Act (FATCA). (Source: IRAS)

 

NEW ZEALAND

The Government of New Zealand, in a release on 14 May 2013, stated the start of negotiations for an agreement with the United States, to allow for an exchange of financial information between the countries’ tax authorities, pursuant to the U.S. Foreign Account Tax Compliance Act (FATCA) legislation. (Source: Beehive.govt.nz)

Have Unreported Foreign

Asian Bank Income?
 

 

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).

 

OVDP Closed During The Government - IRS Shutdown.

 

We originally posted on Tuesday, October 1, 2013, "IRS Operations Limited During The Government Shut Down!" regarding that due to the current lapse in appropriations, IRS operations are limited. Now Anthony Parent has posted that he heard from a senior level OVDP examiner that all those additional IRS examiners that were going to be hired last year for the OVDP and all that press we've read about these hiring's; well they never happened because of Last Year's (2012) Budget cuts. Cuts that had nothing to do with this shutdown.

As of today, 17% of the Federal Government is currently  shutdown. Along with war memorials, scenic overlooks, the Amber alert system,  90% of the IRS is shut down as well and part of this 90% is the Offshore Voluntary Disclosure Program (OVDP) employees.

1. So any OVDP disclosure goes to three places—the gatekeeper is in Philadelphia, the place where preclearances are sent, questions are asked, etc. They get intake documentation and send out acceptance letters into the program.
2. Taxpayers them send their full submission, with returns, FBARs, consents, supporting statements, etc., to the Austin address where they are gathered and assigned to an examiner in one of many field offices.

From bottom to top, how your OVDP case will move through various OVDP departments until your 906 or opt-out

The shutdown means:

1. First and foremost that step 1 in Pennsylvania is shut down—the hotline itself is closed, with a message similar to all IRS lines (will reopen and start making calls as soon as possible). It also means that no one is processing pre-clearances or sending them out, processing intakes, or sending acceptance letters. And they may be backing up further and further right now.
2. Secondly, the Austin office isn’t assigning out submissions. This is already a slow part of the process, where our clients often wait six, nine, twelve months after full submission to be assigned to an examiner. The backlog seemed to be clearing up, but it is possible that this will strike a blow at any progress made. and
3. Finally, some individual examiners are currently working, but thus far I’ve only spoken to one—most have a message on their voice mail saying they are out until further notice and will deal with things as soon as they return.

We have yet to see how this affects the “deadlines” set by the program, which are generally unenforced in the best of times. The truth, which all participants know, is that the OVDP is backed up and getting more backed up by the day, more submissions than they can handle and not enough staff to deal with it. A senior revenue agent recently told Anthony Parent that they had been expecting a group of new hires to handle the volume and that has now been eliminated.

Add to that piles and piles of mail stacking up in Philadelphia, in Austin, in Florida, in New York, and it means that if you’re curious how this affects you, no matter where you’re at in the process, the answer is the same: It’s going to take a long, long time.  Ultimately we’re at the whims of the service, and as long as the doors are shuttered, deadlines march on, interest accrues, and cases will wait.

IRS Tax Procedures Got You Confused ?

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 begin_of_the_skype_highlightingEE end_of_the_skype_highlighting).

 

OVDP Streamline Program Requires Taxpayer's NOT Timely File Their 2012 Form 1040?

Where you have a client that you plan to put into the streamlined program, but do not have all the prior year returns prepared by October 15, 2012; you appear not to be able to qualify for the program.  If the taxpayer files their 2012 Form 1040 on time (by October 15), will this disqualify the taxpayer's from the program? 
 
The answer appears to me YES.
 
The Streamline Procedure includes a Questionnaire which must be submitted with the delinquent filings (See Streamlined Filing Compliance Procedures for Non-Resident, Non-Filer Taxpayers Questionnaire), which requires that the taxpayer has not filed a US return since 2009. 

 

Where the taxpayer files their 2012 return on time, they can no longer say that they haven’t filed since 2009.  That, in and of itself, would disqualify the client from the streamlined program. 

The questionnaire specifically asks “Have you filed a U.S. tax return for tax year 2009 or later?”  Then it says if you answered yes to question 2 (the one about filing returns), “any returns submitted through this program will not be eligible for the streamlined processing procedures and will be treated as high risk returns subject to an examination.”

To make matters worse, the questionnaire then asks “Did you rely on the advice of a tax professional for not filing required U.S. tax returns?”  Presumably, that would include 2012 if that return is not filed on time.  So if the Tax Advisor advises this client not to file the 2012 Form 1040, in order to qualify for the Streamline Program; they may be disqualified since they relied on advice from a tax professional for not filing 2012's return?

This appears to be a Systemic Error!

How are you handling this issue in your practices?

Tax Rules Have You Stumped?

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)

 

 

 

Suspension of Tax Court Operations During Government Shutdown

Cancellation of Tax Court Trial Sessions Scheduled to Begin October 7 and 8, 2013. United States Tax Court trial sessions scheduled to start on Monday, October 7, 2013, in Baltimore, Chicago, Dallas, Detroit, Miami, and New Orleans, and on Tuesday, October 8, 2013, in Pittsburgh have been cancelled due to a lapse in the Court's appropriation. 

 

Parties who were notified to report for trial in these cities on October 7 and 8 will in due course receive notification of a new trial date.

 

This notice describes the Tax Court's suspension of operations during the government shutdown.

Trial Sessions Beginning After October 1, 2013 
Notice of the cancellation of any trial session scheduled to begin after October 1, 2013,
will be posted on the Court’s Web site by 12 noon (Eastern time) on the preceding Friday. 

Court Operations in Washington, DC, and eFiling
Because of the government shutdown beginning on Tuesday, October 1, 2013:

1. No documents will be received by the Court until the shutdown is concluded or the Court posts other further notice on this Web site.
2. The Court will not receive submissions of documents for eFiling until further notice.
3. The Court will serve not serve any documents until further notice.

Information on the Court’s Web Site
Interested persons may visit the Court’s Web site at www.ustaxcourt.gov where notices
regarding the Court’s closure and resumption of operations will be posted and updated
throughout the period of any shutdown.

Due Dates Established by the Court
Because of the government shutdown beginning on Tuesday, October 1, 2013, due dates
previously set by Tax Court Rule or Order for filing a document or completing discovery or any
other act shall be extended. Specifically, all such due dates on or after October 1, 2013, shall be
extended by the number of days that Court operations are suspended, up to a maximum extension of 5 days from the date the Court resumes operations. If the extended due date falls on a Saturday, Sunday, or a “legal holiday” (as defined in I.R.C. section 7503), the due date shall then be the next succeeding day that is not a Saturday, Sunday, or a legal holiday.

For example, if before October 1, 2013, the Court has established a due date of Wednesday, October 9, 2013,and Court operations are suspended for 3 days due to a Government shutdown, the due date will be extended to Tuesday, October 15, 2013, since the extended due date otherwise would have fallen on a Saturday or legal holiday.

Statutory Filing Deadlines
The Court lacks authority to extend statutory filing deadlines imposed in the Internal
Revenue Code (I.R.C.). For example, I.R.C. section 6213(a) provides that a taxpayer must file a
petition with the Court to redetermine a deficiency within 90 days after the mailing of a notice of
deficiency, and I.R.C. section 6330(d)(1) provides that a taxpayer must file a petition to review
a determination involving a proposed lien or levy within 30 days after the mailing of the notice
of determination. Hand-delivery to the Courthouse is not available during the period the Court is
closed due to a Government shutdown. Taxpayers must comply with the statutory deadlines by
timely mailing a petition to the Court. Timeliness of mailing of the petition is determined by the
United States Postal Service’s postmark or the delivery certificate of an approved private express
delivery company.

Tax Problems Have You Shut Down?

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))) begin_of_the_skype_highlightihe_skype_highlighting

 

 

 

 

 

Source:

Tax Court

Are You One of the > 10,000 US Taxpayers Who Need To Enter the OVDP Program?

Numerous U.S. taxpayers with previously undisclosed interests in foreign financial accounts and assets continue to analyze and seek advice regarding the most appropriate methods of coming into compliance with their filing and reporting obligations.

Many are pursuing participation in the current IRS offshore voluntary disclosure program (the OVDP which began in 2012), modeled after similar programs in 2009 and 2011. Taxpayers participating in the ongoing 2012 OVDP generally agree:

1.      To file amended returns and file FBARs for eight tax years,

2.      Pay the appropriate taxes,

3.      Pay Interest on the taxes,

4.      Pay an accuracy related penalty equivalent to 20 percent of any income tax deficiency and

5.      Pay an “FBAR-related” penalty (in lieu of all other potentially applicable penalties associated with a foreign financial account or entity) of 27.5 percent of the highest account value that existed at any time during the prior eight tax years.

The 2012 OVDP is ongoing and does not have a stated expiration date but it can be terminated by the IRS at any time either entirely or as to specific classes of taxpayers.

Despite various potential risks of not coming into compliance through the OVDP, some taxpayers choose to disclose their offshore accounts outside the OVDP.  We first posted that on Wednesday, June 5, 2013 IRS Cracks Down on "Quiet Disclosures" which discussed that the IRS is cracking down on so-called soft or "Quiet Disclosures." Then we posted on June 19, 2013 "Quite Disclosure" Caught - DOJ Files To Collect 50% FBAR Penalty! which discussed that on June 11, 2013, the U.S. government filed a Complaint to collect multiple civil FBAR penalties in the amount of $3,488,609.33 previously assessed against Carl R. Zwerner of Coral Gables, Florida for his alleged failure to timely report his financial interest in  a foreign bank account, as required by 31 U.S.C. § 5314 and its implementing regulations. See United States v. Carl R. Zwerner, Case # 1:13-cv-22082-CMA (SD Florida, June 11, 2013).
 

Are you one of the more than 10,000 taxpayers who according to a recent the U.S. GovernmentAccountability Office (GAO) report, taxpayers showed signs of having avoided offshore penalties by making “Quiet Disclosures” of foreign bank accounts for tax years 2003 through 2008, a period for which the IRS has detected several hundred quiet disclosures.

The IRS stated has previously stated that they will audit Taxpayers who file amended or late return with income from Foreign Bank Accounts and in FAQ #16.

 

Have Un-Reported Income from a Foreign Bank?

Want to Get Right with the IRS? 

 

 
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:
Forbes
 


 

IRS Operations Limited During The Government Shut Down!

Due to the current lapse in appropriations, IRS operations are limited. However, the underlying tax law remains in effect, and all taxpayers should continue to meet their tax obligations as normal.

 

Individuals and businesses should keep filing their tax returns and making deposits with the IRS, as they are required to do so by law. The IRS will accept and process all tax returns with payments, but will be unable to issue refunds during this time. Taxpayers are urged to file electronically, because most of these returns will be processed automatically.

 

No live telephone customer service assistance will be available, however most automated toll-free telephone applications will remain operational. IRS walk-in taxpayer assistance centers will be closed. 

 

While the government is closed, people with appointments related to examinations (audits), collection, Appeals or Taxpayer Advocate cases should assume their meetings are cancelled. IRS personnel will reschedule those meetings at a later date. 

 

Automated IRS notices will continue to be mailed.  The IRS will not be working any paper correspondence during this period. Here are some basic steps for taxpayers to follow during this period.

 

 

How does this affect me? 

• You should continue to file and pay taxes as normal. Individuals who requested an extension of time to file should file their returns by Oct. 15, 2013.
• All other tax deadlines remain in effect, including those covering individuals, corporations, partnerships and employers. The regular payroll tax deadlines remain in effect as well.
• You can file your tax return electronically or on paper –– although the processing of paper returns will be delayed until full government operations resume. Payments accompanying paper tax returns will still be accepted as the IRS receives them.
• Tax refunds will not be issued until normal government operations resume.
• Tax software companies, tax practitioners and Free File will remain available to assist with taxes.

 

What IRS services will be available?

• For taxpayers seeking assistance, only the automated applications on the regular 800-829-1040 begin_of_the_skype_highlighting 800-829-1040 FREE  end_of_the_skype_highlighting telephone line will remain open.
• The IRS website, www.IRS.gov, will remain available, although some interactive features may not be available.
• The IRS Free File partners will continue to accept and file tax returns.
• Tax software companies will continue to accept and file tax returns.

IRS Tax Questions?

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 begin_of_the_skype_highlightingEE end_of_the_skype_highlighting)

 
 
 

Source: 

 

IRS