Why Do Celebrities Have Tax Problems?

What do Marion Barry, Rob Lowe, Wyclef Jean, Vera Wang and Lindsay Lohan have in common? IRS trouble!

No matter how famous, talented or connected, whether actor, designer, politician or musician, in the eyes of the Internal Revenue Service they are simply “taxpayers.”  

The average taxpayer who chooses a withholding status and then turns tax collection over to the HR department for payroll withdrawal often scratches his or her head at the very wealthy who can’t seem to get a handle on paying their taxes.

Keep in mind that many of these famous tax delinquents are independent contractors or self-employed, making their taxes quite a bit more challenging; not to mention the difficulty of correctly reporting income earned in a variety of states. And while many in high income brackets employ a business manager, not all of those managers have tax expertise, especially when they are spouses or other family members.

 

Many celebs that are getting good tax advice to form a corporation in order to shield themselves from personal liability, and to protect personal assets from corporate creditors. In addition to lowering risk, there are numerous tax advantages to incorporation.

But it’s probably safe to say that most celebrities prefer not to spend a lot of time thinking about taxes (not unlike the majority of the American public).

Celebrities and non-celebrities alike should contact a licensed tax practitioner or Tax Attorney to ensure they don’t wind up paying more than they need to or find themselves sharing a cell with Wesley Snipes! 

Need Tax Advice?

 

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

NAEA

 

IRS Statistics - Who Filed Uncertain Tax Positions in 2011?

 

The IRS has released their statistics on Uncertain Tax Position (UTP) filings by taxpayers for the 2011 tax year.

The Schedule UTP asks for information about tax positions that affect the U.S. federal income tax liabilities of certain corporations that issue or are included in audited financial statements and have assets that equal or exceed $50 million.  

The Schedule UTP requires the reporting of each U.S. federal income tax position taken by an applicable corporation on its U.S. federal income tax return for which two conditions are satisfied:

 

1.       The corporation has taken a tax position on its U.S. federal income tax return for the current tax year or for a prior tax year. 

2.       Either the corporation or a related party has recorded a reserve with respect to that tax position for U.S. federal income tax in audited financial statements, or the corporation or related party did not record a reserve for that tax position because the corporation expects to litigate the position. 

 

A tax position for which a reserve was recorded (or for which no reserve was recorded because of an expectation to litigate) must be reported regardless of whether the audited financial statements are prepared.

 The statistics show that:

Schedule UTP TY2011 Filing Statistics (as of December 2012)

• 1,783 taxpayers filed Schedule UTP for TY2011. (This compares to 1,761 taxpayers at the same time last year. Total returns filed and number of issues disclosed will increase as late year filters and other returns are filed)
• 83% of all returns filed with Schedule UTP were filed by IC taxpayers.
• 4,120 tax positions have been disclosed on Schedule UTPs for TY 2011.
• Returns filed by CIC taxpayers with a Schedule UTP averaged 3.8 uncertain tax positions per Schedule, while returns filed by IC taxpayers with a Schedule UTP averaged 2.0 positions per Schedule.
  • Note that beginning with TY2011, corporations are required to report tax positions taken in the prior year on Part II of Schedule UTP if that position was not reported on the prior year Schedule. As such, we expect a slight increase in the average number of total positions reported per taxpayer. We will at a later date begin to break out the total number of positions reported between current year and prior year positions.
• 47% of all Schedule UTP returns filed included only one uncertain tax position.
• IRS is still compiling the data regarding the top code sections reported with the TY2011 filings, although we do not expect much variation from TY2010. That information will be posted as soon as it becomes available.

For comparison, the TY2010 stats were: Schedule UTP TY2010 Filing Statistics

• 2,356 taxpayers filed Schedule UTP for TY2010.
• 79% of all returns filed with Schedule UTP were filed by IC taxpayers.
• 4,712 tax positions were disclosed on Schedule UTPs for TY 2010.
• Returns filed by CIC taxpayers with a Schedule UTP averaged 3.1 uncertain tax positions per Schedule, while returns filed by IC taxpayers with a Schedule UTP averaged 1.9 positions per Schedule.
• 49% of all Schedule UTP returns filed included only one uncertain tax position.
• The top three code sections reported by UTP filers are IRC 41, 482 and 162. Analysis of UTP filers’ concise descriptions revealed that the third highest primary IRC section is actually IRC 263 capitalization.
• Transfer Pricing and Research Credit comprise 43% of all disclosed uncertain tax positions.

Have and Uncertain Tax Possission?

Not Sure if you Have to Report it?

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).

 

How to Report Your Tribal Trust Settlement to the IRS?

The IRS announces the publication of Notice 2013-1, which updates and supersedes Notice 2012-60. Notice 2013-1 provides guidance concerning the federal income tax treatment of per capita payments that a member of an Indian tribe receives from the proceeds of certain settlements of tribal trust accounting and mismanagement cases between the United States and that Indian tribe.  

The notice also updates the list of tribes that have settled litigation against the United States that alleges the Interior and the Treasury departments mismanaged monetary assets and natural resources held in trust for the benefit of the tribes.

Notice 2013-1 supersedes Notice 2012-60, published in September, adding 6 additional Indian Tribes to the list of tribes in the appendix that have settled litigation against the United States.

Need Tax Help the Tax Treatment of Tribal Trust Settlement Proceeds?

 

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).

 

Swiss Sign FATCA Deal With US to Crack Down on US Tax Dodgers.

Switzerland and the United States have signed a controversial deal aimed at cracking down on wealthy American tax dodgers.

The accord further undermines Switzerland’s tradition of banking secrecy. The Foreign Account Tax Compliance Act (Fatca) obliges foreign firms to report offshore accounts by US tax payers that amount to more than $50,000.

The signing on Thursday came the day after Finance Minister Eveline Widmer-Schlumpf told a news conference that Switzerland had decided to agree to a bilateral deal with the Internal Revenue Service (IRS) which allows for certain exceptions, notably for the Swiss insurance sector, pension funds and the Swiss National Bank.

Switzerland is only the second state after Japan to opt for this type of agreement; most other nations are reportedly willing to sign a standard agreement.

Swiss banks active in international financial markets have no choice but to apply the US rules, according to Widmer-Schlumpf.

The Swiss Bankers Association said it welcomed the signing of the agreement although the banks continue to view Fatca "critically" due to the costs it incurs and the administrative burden it creates.

Widmer-Schlumpf said negotiations with Washington on a global settlement for outstanding tax issues were still under way but she refused to elaborate.

The finance minister added the US authorities had given assurances that acceptance of the Fatca deal would be considered beneficial to speed up a global deal for Switzerland’s financial sector.

The government has been trying to strike a deal for about a dozen Swiss banks which risk court proceedings in the US over illegal tax practices.

“Today’s announcement marks a significant step forward in our efforts to work collaboratively to combat offshore tax evasion,” said Acting Secretary of the Treasury Neal S. Wolin. “We are pleased that Switzerland has signed a bilateral agreement with us, and we look forward to quickly concluding agreements based on this model with other jurisdictions.”

Widmer-Schlumpf said the Fatca deal could also put more pressure on Switzerland to accept the automatic exchange of bank data with the European Union.

Until now Switzerland has refused to cave in to demands from Brussels, saying bilateral agreements with individual EU member states on a withholding tax were more practical.

Accords with Britain and Austria came into force at the beginning of the year. A similar deal with Berlin was rejected by the German parliament. Negotiations with a number of other countries are pending.

 Undeclared Income from a Swiss Bank 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:

swissinfo.ch

U.S. Department of the Treasury

 

IRS' Whistleblower Program is in High Gear!

It official that the IRS' Whistleblower Program is in High Gear!

The Internal Revenue Service issued its 2012 report to congress regarding the results of its' Whistleblower Program.

During FY 2012, the IRS received 332 whistleblower submissions relating to 671 taxpayers that, based on the face of the submissions, appear to meet the threshold of $2,000,000 in tax, penalties, interest, and additions to tax in section 7623(b). Many of the individuals submitting information to the IRS claimed to have inside knowledge of the reported transactions, often including extensive documentation in support of their claims.

The IRS does not yet know how many of these cases will result in collected proceeds after examination or investigation, as the amounts alleged reflect only the whistleblower’s estimate of the potential recovery.

Table of Activity By Year	Whistleblower -7623(b) SUBMISSIONS	Taxpayers Identified
2007	50	875
2008	377	1369
2009	472	2178
2010	422	5545
2011	314	734
2012	332	671

Many of the individuals submitting information to the IRS claimed to have inside knowledge of the reported transactions, often including extensive documentation

in support of their claims.  

The IRS does not yet know how many of these cases will result in collected proceeds after examination or investigation, as the amounts alleged reflect only the whistleblower’s estimate of the potential recovery.  

Current Status of Open Whistleblower - 7623(b) Claims (as of 12/10/2012)
Current Status	Submissions	Taxpayers	Whistleblowers	Claim #s
Not recorded	3	23	3	23
Appeals 16	40	102	38	87
CI Review	4	4	3	4
Operating Division Field Examination	695	2846	542	2714
Operating Division Subject Matter Expert Review	116	327	83	318
Whistleblower Office - Award Evaluation 17	4	7	4	3
Whistleblower Office - Case Suspended 18	171	4913	123	4810
Whistleblower Office - Case Suspended Collection Action 19	4	17	4	17
Whistleblower Office - Case Suspended Refund Statute 20	3	6	3	5
Whistleblower Office - Case Suspended Related Claims Still In Process 21	44	605	32	550
Whistleblower Office - Case Suspended TEFRA Related 22	1	54	1	51
Whistleblower Office - Form 11369 Review 23	313	1069	252	987
Whistleblower Office - Initial Review	51	70	38	67
Total	1449	10043	1126	9636

Twelve of 128 claims paid in FY 2012 involved collections of more than $2,000,000.

 

====================== 

Want a Reward of Between 15- 30% of Underpaid IRS

Tax Liabilities for

Blowing the Whistle on a Tax Cheat?

 

======================

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).

IRS Issues Memorandum For Obtaining an ITIN When Requesting ASFR/SFR Reconsideration.

SBSE-05-0213-009 

February 7, 2013

Impacted: IRM 5.21.7 Procedures for Obtaining an ITIN when Requesting ASFR/SFR Reconsideration

Current procedures for requesting an ITIN for cases in which ASFR/SFR reconsideration is needed has caused delays and confusion in processing the Form 3870 adjustment.

 

Both the ITIN Operation and the ASFR/SFR unit need the original return to process the corresponding requests.   

 
1. The ITIN unit requires the original tax return and supporting documentation be attached to the W-7, Application for ITIN. This request is sent to the ITIN operations at the Austin Campus for processing.
2. However, the original tax return must also be attached to the Form 3870, Request for Adjustment in order to process the reconsideration request. Form 3870 is sent to the Brookhaven ASFR/SFR unit.

The following procedures should be used in all cases where a taxpayer is requesting an ASFR/SFR reconsideration and is submitting a Form W-7 for an ITIN:

 Date stamp the Form W-7 with the received date.

 Review the Form W-7 application and the original supporting documents to determine if the form and supporting documents meet foreign status and identity requirements (SeeInstructions to the W-7). If the taxpayer provides copies of the supporting documents, the documents must be a certified copy by the issuing agency. Note: The ITIN unit has final approval regarding the validity of the documents provided.

 Complete the IRS only box on the Form W-7 using the document number codes for the types of documents reviewed (See attachment 1). You must also include your employee SEID number. Attach the original documents or certified copies from the issuing agency to the Form W-7 application.

 Mail the Form W-7, supporting documents, the original return(s) and Form 3870 via
overnight mail to the ITIN Operations Unit:

Internal Revenue Service
ITIN Operation
Mail Stop 6090 - AUSC
3651 South Interregional Hwy 35
Austin, TX 78741-0000

 International ROs can use the ITIN – RTS to verify that an ITIN has been assigned to the TP. The ITIN unit will process the W-7 Application, and send the original return with the Form 3870 to the ASFR/SFR unit in Brookhaven Campus for processing. An ITIN will be assigned to the taxpayer within 30 days.

 The status of the adjustment(s) can be checked using IDRS.

 Need Help Obaining an ITIN for a ASFR/SFR?

 

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).

OECD Could Lead to Redefining Global Taxation Rules

The OECD produced this report from the concern of many of it members regarding whether there is fair taxation of the profits of multinational corporations operating in the global market as compared to smaller businesses which operate mainly in domestic market.
 

On February 12, 2013, the OECD released its report Addressing Base Erosion and Profit Shifting. The report will be reviewed by the G20 at its February summit in Moscow. The 93 page document surveys publicly available data regarding Base Erosion and Profit Shifting and it identifies “pressure points” where it said countries should consider a comprehensive approach to closing loopholes that allow companies to shift profits.  
 

"These include, for example, the balance between source and residence taxation, the tax treatment of intragroup financial transactions, the implication of anti-abuse provisions, including CFC legislation, as well as transfer pricing rules.  A comprehensive approach , globally supported, should draw on the in depth analysis of the interaction of all these pressure points."

This report could lead to an overhaul of certain parts of the OECD's Model Tax Convention on Income and on Capital, which has served as the model for several thousand bilateral tax treaties.

Need To Properly Structure Your WorldWide Operations?

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).