FATCA Compliance (Notice 2011-53) and QIs

Qualified Intermediaries that need to renew their QI agreements during the period January to June 2012 were granted a postponement under Notice 2011-53 to accomplish their registration as Participating Foreign Financial Institutions (PFFI) for compliance with the Foreign Asset Tax Compliance Act.

QI’s must register and receive a QI/PFFI agreement in order to retain their QI status.

The “What’s New” section of the QI home page contains Notice 2011-53 and QI’s should pay particular attention to Parts II and IV of the Notice. Once the registration portal is online all Qualified Intermediaries, Withholding Foreign Partnerships and Withholding Foreign Trusts must register on the portal and receive a PFFI agreement to continue in good standing.

Puerto Rico Offers Income Tax Holiday to New Resident Investors

Puerto Rico recently approved Legislation, which grants substantial income tax benefits to individual investors not previously resident of Puerto Rico.

These individuals can benefit from total income tax exemption through year 2035 on their worldwide income consisting of interest and dividends, including dividends from qualifying registered investment companies, and interest, finance charges, dividends and partnership profits from entities under the Puerto Rico International Banking Center Act.

In addition, long-term appreciation in the value of securities occurring prior to establishing Puerto Rico residency, if recognized after ten years of Puerto Rico residency and before January 1, 2036, is subject to a five percent tax. Moreover, long-term appreciation in the value of securities occurring after establishing Puerto Rico residency is totally exempt from tax, if recognized before January 1, 2036.

This only applies to an individual who is domiciled in Puerto Rico, who has been present in Puerto Rico for a period of 183 days during the calendar year and who has not been resident of Puerto Rico for the last fifteen years and become resident no later than December 31, 2035.

Adviser Convicted of Using Fake Financial Instruments to Pay Taxes

A Massachusetts financial adviser who allegedly submitted more than $2.2 million in fake financial instruments called “bills of exchange” and checks drawn on a closed bank account to pay his tax bills is convicted by a jury in federal court on 17 counts of tax crimes and contempt.

The DOJ reported on their website January 25,2012 that a jury convicted Attleboro, Mass., licensed stockbroker, insurance agent and financial advisor Kevin P. Mahoney today on tax and contempt of court charges, the Justice Department and Internal Revenue Service (IRS) announced. Trial began on Jan. 23, 2012, before U.S. District Judge Joseph Tauro, sitting in Boston. Mahoney was charged with one count of corruptly endeavoring to obstruct the administration of the Internal Revenue laws, eight counts of contempt of court and eight counts of filing false tax returns. He was convicted of all counts.

The evidence at trial showed that Mahoney had failed to pay all of his taxes for the years 1996 through 2001, leading the IRS to assess Mahoney for taxes, interest and penalties for some of those years. Mahoney had attempted to pay these tax-related debts by submitting to the IRS more than $2.2 million in fake financial instruments called Bills of Exchange and checks drawn on a closed bank account.

In addition, after filing for bankruptcy, Mahoney caused a worthless promissory note made by another individual to be submitted to the IRS as purported payment for approximately $805,000 in taxes that Mahoney owed to the IRS.

Just when I thought that I had heard it all?

IRS Doubles Threshold for Automatic Installment Payment Plans!

The IRS released SBSE Memorandum (SBSE-05-0112-013), Streamlined Installment Agreements (IA), on January 20, 2012. It provides interim guidance memorandum and is issued to Collection Field function employees to implement policy changes to Streamlined Installment Agreements. These changes are effective immediately and will be placed into the next revisions of the IRMs 5.14.5 and 5.14.10.

The primary changes to the Streamlined IA criteria are:

·       The dollar threshold increases from $25,000 to $50,000 aggregate unpaid balance of assessment(SUMRY balance); and,

·       The timeframe to full pay increases from 60 months to 72 months.

Based on these new criteria, when working accounts where the aggregate unpaid balance of assessment (SUMRY balance) is $25,000 or less, the ONLY criterion that changes is that the taxpayer now has 72 months instead of 60 months to full pay.

·        All of the other criteria remain the same:

o   CSED protected

o   Type of Entity

IMF

Out of Business BMF

BMF Income Tax ONLY (Form 1120)

o   No lien determination required

o   No managerial approval required

o   No CIS required

However, when working accounts where the aggregate unpaid balance of assessment (SUMRY balance) is $25,001 - $50,000, the streamlined IA criteria become more specific.

The criteria for these accounts are:

o   Payable within 72 months

o   CSED protected

o   No lien determination or managerial approval required

•        Type of Entity

•        IMF

•        Out of Business Sole- Proprietors

o   Agreement must be established as a Direct Debit Installment Agreement (DDIA); and

o   Ability to pay verified by securing a Collection Information Statement (CIS) per IRM 5.1.10.3.2 and IRM 5.15.1 or use of the Streamlined IA Calculator (SLIAC).

Streamlined IAs may not be granted where the first payment on the agreement is a lump sum payment that is made to pay down the balance to meet the $50,000 or less aggregate unpaid balance of assessment (SUMRY balance) threshold.

Taxpayers must meet the $50,000 aggregate unpaid balance of assessment (SUMRY balance) threshold at the time the Streamlined IA is granted. However, for a Streamlined IA, taxpayers with a liability greater than $50,000 can be considered if they pay down the liability to $50,000 or less prior to the agreement being granted.

If you have IRS tax liabilities of $50,000 or less and would like an Installment Payment Plan contact us for a FREE confidential consultation regarding your options please call Marini & Associates, P.A. at 888-8-TAXAID or go to our website www.TaxLaw.ms.

Swiss Bank Clariden Leu to Turn in Its U.S. Clients

 Switzerland's oldest private bank Clariden Leu has informed some of its U.S. clients that it has been ordered to turn over their names, and offshore bank account information to the IRS.
Clariden Leu posted a notice on its website dated Nov. 29, 2011 to that effect.

This is bad news for U.S. offshore account owners who have not previously made a voluntary disclosure to the IRS. Such individuals run the risk of the IRS filing criminal tax fraud charges against them, or criminal charges related to willful FBAR violations. Alternatively, only civil tax fraud or other penalties may be involved, but the FBAR penalties alone could far exceed the balances in the offshore accounts.

The notice refers to a U.S. treaty request apparently covering U.S. beneficial owners of beneficial accounts at Credit Suisse AG, Neue Aargauer Bank AG, and Clariden Leu.

In November Credit Suisse announced that it is in the process of integrating Clariden Leu's operations into Credit Suisse. The treaty request appears to be limited to U.S. account holders who hold their accounts through "domiciliary companies."

The notice also points out that although the account holders have appeal rights to the SFTA (Swiss Federal Tax Authority) attempts to block the turnover of information to the IRS may require compliance with 18 USC Section 3506. That section provides that:

"...any national or resident of the United States who submits, or causes to be submitted, a pleading or other document to a court or other authority in a foreign country in opposition to an official request for evidence of an offense shall serve such pleading or other document on the Attorney General at the time such pleading or other document is submitted."

The notice correctly observes that anyone in this situation should consult with a qualified attorney concerning any obligations under Section 3506.

If you have undisclosed offshore financial accounts, and would like a FREE confidential consultation regarding your options please call Marini & Associates, P.A. at 888-8-TAXAID or go to our website www.TaxLaw.ms.

Swiss deal with United States?

"We hope to conclude the negotiations in 2012," Eveline Widmer-Schlumpf journalists after talks with U.S. Treasury Secretary Timothy Geithner at the World Economic Forum.

Widmer-Schlumpf said Switzerland was already discussing possible fines its banking industry will have to secure a global civil settlement with U.S. authorities.

It is also trying to get the U.S. Department of Justice to drop criminal probes of 11 banks, including Credit Suisse and Julius Baer.

 

 

White House Tax Plan Designed to Keep Companies in U.S.

A White House proposal that would require U.S. multinational corporations to pay a minimum tax on their overseas profits is designed to make the corporate system fairer and discourage companies from moving to lower-tax jurisdictions.

The new tax would be designed to prevent other countries from attracting American businesses through low tax rates and the savings would be invested in cutting taxes in the United States, according to a fact sheet released by the White House.

The plan also will include a revenue-neutral package of measures that officials say will support manufacturing while discouraging outsourcing and encouraging“insourcing.”

The provisions include:

1.     Ending the tax deduction for moving expenses for companies that move overseas 

2.     Support to cover moving expenses for companies that close production overseas and bring jobs back to the United States

3.     Reinstating the expired Section 48C Advanced Energy Manufacturing Tax Credit

4.     Closing a loophole that allows companies to shift profits overseas (raises $23 billion): Corporations right now can abuse the tax system by inappropriately shifting profits overseas from intangible property created in the United States.

5.     Making companies pay a minimum tax for profits and jobs overseas through eliminating tax incentives to ship jobs offshore by ensuring that all American companies pay a minimum tax on their overseas profits. (possibly a minimum tax on foreign Trade or Business Income?) and

6.     Cracking down on overseas tax avoidance and loopholes, includes signing into law the Foreign Account Tax Compliance Act (FATCA), which targets tax evasion by U.S. citizens holding investments in foreign accounts, as well as measures to crack down on abuse of foreign tax credits through games that allowed multinational companies to inappropriately reduce the amount of taxes they paid here at home.

For a text of the fact sheet released by the White House go to BNA: http://op.bna.com/dt.nsf/id/emcy-8qupfa.