Friday, March 7, 2014

Do You Have the Most Recent Offer-In-Compromise Form?


When submitting an Offer in Compromise for your client, use the January 2014 versions of Form 656-B, Offer in Compromise Booklet, and Form 656, Offer in Compromise.


The OIC user fee has increased from $150 to $186 in January. IRS will return applications submitted on older versions of the form with the old user fee.
 
On Monday, August 5, 2013, we posted Eight Tips for Taxpayers Who Owe Taxes, which discussed that 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 and we provided eight tips for those who owe federal taxes.

Tip #6 discussed an 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.

For more information on the
 IRS Offer In Compromise 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)
Posted by at No comments:

Chile Becomes The 1st South American Country To Sign FATCA

On March 5 , 2014, Chile signed a FATCA Agreement with the US. They signed a type-2 intergovernmental agreement (IGA).



Under the agreement there is no automatic exchange of information but each financial institution must provide to the IRS the information about financial accounts held by US taxpayers.


This provision of information must be authorized by the relevant account holder, which is consistent with Chilean legislation. Where there is no consent from the account holder, the financial institution may provide only aggregated information about US taxpayers investing in Chile and, in case the IRS requires more information, it must request it under the exchange of information provision of the Chile/United States Income and Capital Tax Treaty of 2010. The Chile/ United States Income and Capital Tax Treaty (2010) , is currently under the ratification process in both countries.


Chilean pension funds and the various financial products provided by the Pension Law (Decree Law 3,500) are, inter alia, excluded from the scope of application of FATCA.


Chile is the first South American country that signs an IGA with the United States.


Do You Have Unreported Foreign Income?

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





Posted by at No comments:

Canada Limits Model I FATCA Agreement.

On Monday, February 10, 2014, we posted U.S. Signs FATCA Agreements with Canada and Hungary, where we discussed that the Treasury Department announced February 5, 2014 Canada and Hungary to implement the Foreign Account Tax Compliance Act, or FATCA, in an effort to discourage offshore tax evasion.

The agreement is of the Model I type under which Canadian banks will report the affairs of their American clients to the Canada Revenue Agency (CRA). The CRA will then forward the information annually to the US Internal Revenue Service.

This arrangement is similar to that adopted by the five main European countries early in 2012. It also includes reciprocal information exchange provisions under which US banks will have to report their Canadian clients' doings to the CRA.



Many Canadian-resident individuals, corporate entities and trusts qualify as US persons for taxation purposes, and are thus subject to FATCA's reporting requirements. Estimates indicate that one million US citizens live in Canada, and in the 2011 National Household Survey more than a quarter of a million Canadians identified themselves as immigrants from the US. This makes it especially difficult for Canadian financial institutions to identify their American clients, as required by FATCA.

However, it has taken a considerable time for Ottawa to agree to implement the act. The Ottawa government now claims to have obtained significant concessions when negotiating the new inter-governmental agreement, which is officially designated part of the existing Canada-US Tax convention, including:



1.  The FATCA withholding tax (a 30 per cent deduction from US-sourced income) will not apply to clients of Canadian financial institutions.
    • It will only be imposed on Canadian financial institutions that are in 'significant and long-term non-compliance' with their obligations under the agreement. 
    • Canadian institutions that are compliant will not be subject to withholding, and they will not be required to close the accounts of 'delinquent' US taxpayers.
2.  Several exemptions from FATCA reporting have also been negotiated. These include:
    • registered retirement savings plans and income funds, registered disability savings plans and tax-free savings accounts. Previously, the IRS did not recognize these savings vehicles, instead taxing them as offshore trusts.
    • Smaller savings institutions, such as credit unions, with assets of less than CAD175 million will also be FATCA-exempt. 
    • Pension plans are included as exempt beneficial owners. The Investment Funds Institute of Canada said the concessions obtained by Ottawa will 'benefit the millions of Canadians who hold mutual funds in these types of plans'.
Ottawa has been careful to portray the new agreement as merely a Tax Information Sharing Deal, and not an imposition of US law on Canada. 
 
'This agreement will not impose any US taxes or penalties on US citizens or US residents holding accounts in Canada', said national Revenue Minister Kerry-Lynne Findlay. 
 
The CRA will not collect US taxes from Canadian citizens, even dual Canada-US citizens, she said.However, non-exempt Canadian financial institutions, including some trusts, will still have to register with the US tax authorities, in order to obtain an ID number that they will use for reporting to the CRA.
 
 Do You Have Unreported Foreign Income?

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

Sources

- See more at: http://www.step.org/canada-signs-model-i-fatca-agreement?j=610675&e=marini@bellsouth.net&l=346_HTML&u=14474954&mid=1062735&jb=0#sthash.6EMm34hs.KBrpyazC.dpuf

Sources

- See more at: http://www.step.org/canada-signs-model-i-fatca-agreement?j=610675&e=marini@bellsouth.net&l=346_HTML&u=14474954&mid=1062735&jb=0#sthash.6EMm34hs.KBrpyazC.dpuf
 
 

Sources

- See more at: http://www.step.org/canada-signs-model-i-fatca-agreement?j=610675&e=marini@bellsouth.net&l=346_HTML&u=14474954&mid=1062735&jb=0#sthash.6EMm34hs.KBrpyazC.dpuf
 Sources

    Canadian Federal Department of Finance
    KPMG
    IFIC
    Toronto Globe and Mail
    Bloomberg
    Canadian Federal Department of Finance
    S 
Posted by at No comments:

Thursday, March 6, 2014

The Intergovernmental FATCA Schema Version 1.1 User Guide is Now Available on the FATCA Website


On Thursday, December 19, 2013, we posted FATCA FFI List Resources and FFI List FAQs are Now Available where we discussed that what taxpayers representatives should be paying attention to in these FATCA discussions, among other things, is that the form of the FATCA submissions entitled "Schema" is a uniform computer readable report. This is the same language/requirement which is being utilized in discussions regarding intergovernmental agreements.

So effectively, in the not-too-distant future, we may be seeing foreign banks submitting their "Schema" to their government to be shared with the US and other foreign governments; which can then be used by the IRS or the other home country to match up the information in the "Schema" against that depositors local tax report!

Some of the requirement currently being discussed include that these "Schema" contain the taxpayers  home country identification number. So for a US taxpayer it would contain their Social Security number.


Now the IRS has released the actual guide which explains, in detail, the information required to be included in each data element of the FATCA XML schema v1.1. The guide is divided into logical sections based on the schema and provides information on specific data elements and any attributes that describe that data element. Where a data element is not used for FATCA reporting, the associated attribute(s) are also not used.



The requirement field for each data element and its attribute indicates whether the element must

be included in the schema (mandatory or validation), is optional, or is not used for F

ATCA (null). 

The following terms are used:

• Validation – The data element is required for schema validation and must be included
• Mandatory –The data element is not required for schema validation but IS required for
FATCA reporting
• Optional – The data element is not required for FATCA reporting but may be provided if
available
• Null – The data element is not used for FATCA reporting and may be left blank

The version of the schema is identified by the version attribute on the schema element.

The version consists of two numbers separated by a period sign: major and minor versions.
The target namespace of the FATCA schema contains only the major version.

Element                      Attribute        Size     Input Type     Requirement

FATCA_OECD        version                        xsd:string       Mandatory

The root element FATCA_OECD has a version attribute. The version attribute on the root
element in the report must be set to the value of the FATCA schema version. This allows
identification of the schema version that was used to create the report. The version attribute on
the root element in the schema is not fixed. This allows creating a report with a lower compatible
version of the schema and validating it with the current schema.

Example: The schema version 3.1 is updated with a new currency code to a new version 3.2,
which is backward compatible with the previous version. Bank A created a report using schema
3.1. The report contains a version attribute 3.1. The report from Bank A will be validated with
the schema 3.2. Bank B created a report using schema 2.4, which is incompatible with the
current version 3.2. By checking the version attribute in the report, which is 2.4., the processing
application will identify that the report was created with incompatible version and Bank B will
be notified that it needs to update the schema.

Now that this is happening, tax advisers need to advise their clients that it's no longer a question of if; rather it's a question of when, the US and other governments are able to match the information from these intergovernmental agreements to an individual US taxpayers transcript information or other country's tax information.

No one can tell exactly when this ability to cross match foreign information with US  taxpayers transcripts will occur; however a good guess would be as soon as 3 to 5 years in the future; given all the logistics associated with such a program.

Do You Have Unreported Foreign Income?

Contact the Tax Lawyers at 
Marini & Associates, P.A.  
for a FREE Tax Consultation
Toll Free at 888-8TaxAid (888 882-9243888 882-9243 begin_of_the_skype_highlighting 888 882-9243888 882-9243 FREE  end_of_the_skype_highlighting)

Posted by at No comments:

Tuesday, March 4, 2014

President Obama Wants To Eliminate Overseas Tax Avoidance By US Companies!



President Barack Obama released his fiscal year 2015 budget request to Congress on Tuesday March 4, 2014 and lawmakers will promptly ignore it.


But the annual ritual highlights his policy priorities for the coming year and serves as a Democratic Party manifesto as Democrats seek to draw a contrast with Republicans ahead of congressional elections in November which include Overseas Tax Proposals.





The administration wants new limits on overseas tax avoidance by corporations by seeking to prevent them from playing one country's tax rules against an other's.

At the moment, big corporations must pay the top 35 percent corporate tax rate on foreign profits, but not until those profits are brought into the country.

Many lawmakers argue this structure encourages companies to make job-creating investments in foreign countries rather than in the United States.


The proposed reforms to the US International Tax System include (Detail of Proposal):
  1. Defer Deduction of Interest Expense Related to Deferred Income of ForeignSubsidiaries
  2. Determine the Foreign Tax Credit on a Pooling Basis
  3. Tax Currently Excess Returns Associated with Transfers of Intangibles Offshore
  4. Limit Shifting of Income Through Intangible Property Transfers
  5. Disallow the Deduction for Excess Non-Taxed Reinsurance Premiums Paid to Affiliates
  6. Restrict Deductions for Excessive Interest of Members of Financial Reporting Groups
  7. Modify Tax Rules for Dual Capacity Taxpayers
  8. Tax Gain from the Sale of a Partnership Interest on Look-Through Basis
  9. Prevent Use of Leveraged Distributions from Related Corporations to Avoid Dividend Treatment
  10. Extend Section 338(h)(16) to Certain Asset Acquisitions
  11. RemoveForeign Taxes From a Section 902 Corporation’s Foreign Tax Pool When Earnings Are Eliminated
  12. Create a New Category of SubpartF Income for Transactions Involving Digital Goods or Services
  13. Prevent Avoidance of Foreign Base Company Sales Income through Manufacturing Services Arrangements
  14. Restrict the Use of Hybrid Arrangements That Create Stateless Income
  15. Limit the Application of Exceptions Under Subpart F for Certain Transactions That Use Reverse Hybrids to Create Stateless Income
  16. Limit the Ability of Domestic Entities to Expatriate
 Need Help Structuring Your International Business?



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




Sources:

White House

Reuters

Posted by at No comments:

Monday, March 3, 2014

Statute of Limitations Remains Open Forever for Any Return Which Fails to File an Associated Information Report!




Taxpayer spend some of their time monitoring when the statute of limitations expires for certain tax return exposure items. This means watching the calendar until you are clear of audit. Unless you skip filing taxes entirely, you might assume your risk of audit eventually passes.

Taxpayers with a unreported income  from  a foreign bank account  find that this situation  is tough to resolve. The safest approach is going into the IRS Offshore Voluntary Disclosure Program, although some clients opt for more aggressive approaches.


Failure to file any one of the various foreign information reporting forms (e.g. 5471, 3520, 8838, etc.) leaves the statute of limitations open for every item in the associated federal income tax return.

Besides the various $10,000 penalty per year, per report, associated with each failure file a foreign information report;  the statute of limitations for the IRS to discover and  assess tax on the associated with  federal return remains open indefinitely and thereby creates a double whammy.

These $10,000 penalty per year, per report, associated with each failure file a foreign information report; apply even where no additional tax is due.
Have Un-Reported Offshore Income?

Value Your Freedom?
 
 
Contact the Tax Lawyers at
Marini & Associates, P.A.
  
for a FREE Tax Consultation Contact US at
or Toll Free at 888-8TaxAid (888 882-9243) 

Source:

 Forbes

Posted by at No comments:

Thursday, February 27, 2014

Delinquent FBARs - Form TDF 90.22.1 Is Replaced By Form 114!


On September 30, 2013, FinCEN posted, on their internet site, a notice announcing FinCEN Form 114, Report of Foreign Bank and Financial Accounts (the current FBAR form). FinCEN Form 114 supersedes TD F 90-22.1 (the FBAR form that was used in prior years) and is only available online through the BSA E-Filing System website.

On July 29, 2013, FinCEN posted a notice on their internet site that introduced a new form to filers who submit FBARs jointly with spouses or who wish to have a third party preparer file their FBARs on their behalf. The new FinCEN Form 114a, Record of Authorization to Electronically File FBARs, is not submitted with the filing but, instead, is maintained with the FBAR records by the filer and the account owner, and made available to FinCEN or IRS on request.

Differences Between TDF 90.22.1 & Form 114: 
  • The FinCEN Form 114 supersedes TD F 90-22.1 as the official FBAR form. 
  • The new FinCEN Form 114 is only available online on BSA E-Filing System website. 
  • A paper copy of the FinCEN Form 114 will not be accepted. 
  • The system allows the filer to enter the calender reported, including past years on the online form. 
  • The online form offers an option to explain a late filing. 
  • It also lets you indicate if a filing is being made in conjunction with an IRS compliance program. 
  • If you are filing FBAR with your spouse jointly or if you wish to have a third party preparer file your FBARs on your behalf, you can use the new FinCEN Form 114a. This form is not filed with the Form 114 but maintained with the FBAR records by the filer. 

Have Un-Reported Offshore Income?

Value Your Freedom?
 
Contact the Tax Lawyers at

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




Source:








Posted by at No comments:
Subscribe to: Posts (Atom)