The IRS Whistleblower Office pays money to people who blow
the whistle on persons who fail to pay the tax that they owe. If the IRS uses
information provided by the whistleblower, it can award the whistleblower up
to 30 percent of the additional tax, penalty and other amounts
it collects.
Over the last three fiscal years, the IRS has paid out
more than $186 million in awards, on collection of more than $1
billion (19%) based on whistleblower information.
Now
on August 20, 2014 the Deputy Commissioner for Services and Enforcement
Memorandum stating that a review of operating guidelines for the
Internal Revenue Service's Whistleblower Office has resulted in newly
outlined expectations for timely action on whistle-blower submissions.
Among the expectations is that
whistle-blowers will be notified of an award decision within 90 days of the
date that collected proceeds are finally determined.
The
objective of the review was to improve the timeliness and quality of
decisions as the Service evaluates and acts on whistleblower information.
Business Performance Review (BPR) reports will include summary data on the
following performance goals, and specific explanation of the facts and
circumstances for cases that exceed the target by more than 60 days:
Whistleblower
Office -claims received should be initially evaluated by the
Whistleblower Office within 90 days.
Operating
Divisions and Criminal Investigation -review by subject matter experts
or their designee. as applicable to case type, should be completed
within 90 days of receipt.
Whistleblower
Office -whistleblowers should be notified of an award decision within 90
days of when collected proceeds can be finally determined.
The Office of Chief Counsel has
established controls and reporting requirements for its risk analysis
opinions. BPR reports should include data on cases for which a risk analysis
has been requested but not received for more than 30 days. Chief Counsel has
concurred in making this area a priority.
Want
a Reward of Between
15- 30%
of
Underpaid IRS Tax Liabilities for Blowing
the Whistle on a Tax Cheat?
In PLR 201433002 which was issued on August 15, 2014, provided that a U.S. Citizen who resided in and was employed by a Company in foreign
country A who elected to exclude his foreign earned income and housing costs
under Code Sec. 911(a), was permitted to reelect Code Sec. 911 exclusion for the stated and subsequent tax years.
FACTS
Taxpayer is a United States citizen who resided in, and was employed by a company in, Country A from Year 1 until Year 4. For Year 1 through Year 2, Taxpayer elected the foreign earned income and housing cost amount exclusions under section 911(a). During preparation of Taxpayer's Year 3 return, Enrolled Agent, an enrolled agent of Consulting Firm in Country A, recommended to Taxpayer that he revoke his section 911 elections for Year 3. At the time, Taxpayer expected his employment in Country A to continue for the foreseeable future. In accordance with Enrolled Agent's advice, Taxpayer revoked his election for Year 3.
In Year 4, Taxpayer moved to Country B to work for a foreign affiliate of the Country A company. Country B's marginal tax rate for resident individuals is significantly less than Country A's tax rate.
RULING REQUESTED
Taxpayer requests permission to reelect the foreign earned income and housing cost amount exclusions under section 911(a) for Year 4 and subsequent years.
LAW
Section 911 permits certain taxpayers to elect to exclude from gross income their foreign earned income and housing cost amounts. Under Treas. Reg. § 1.911-7(a)(1), the election applies to the taxable year for which it is made and for all subsequent years, unless revoked by the taxpayer. Treas. Reg. § 1.911-7(b)(1) prescribes a method by which a taxpayer may revoke an election to exclude foreign earned income, i.e., by filing a statement revoking any previously made elections. Section 911(e)(2) provides that once revoked, the election may not be made again by the taxpayer until the sixth taxable year after the year in which the revocation was made unless the Commissioner consents to the reelection.
Treas. Reg. § 1.911-7(b)(2) provides that if an individual revokes an election under Treas. Reg. § 1.911-7(b)(1) and desires to reelect the same exclusion within the next five years, the individual must obtain permission by requesting a ruling. The Service may permit the taxpayer to prospectively reelect the foreign earned income exclusion before the sixth year after considering any facts and circumstances that may be relevant to the determination. Treas. Reg. § 1.911-7(b)(2) provides that relevant facts and circumstances may include a period of United States residence, a move from one foreign country to another foreign country with differing tax rates, a substantial change in tax laws of the foreign country of residence or physical presence, and a change of employer.
CONCLUSION
Based solely on the information and representations set forth above, it is held that Taxpayer may reelect the section 911 exclusion for Year 4 and subsequent taxable years.
Except as otherwise expressly provided herein, no opinion is expressed as to whether Taxpayer otherwise satisfies the requirements of section 911 for excluding foreign earned income and housing cost amounts from gross income. Furthermore, no opinion is expressed or implied concerning the tax consequences of any aspect of any other transaction or item discussed or referenced in this letter.
This private letter ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) provides that it may not be used or cited as precedent.
Are You A US Citizen Living Abroad?
Do You Need Help Determining
Your US Tax Liability
And Other Filing Requirements?
Financial Institutions that want to register for the Foreign Account Tax Compliance Act have a new IRS FATCA Foreign Financial Institution Registration Page.The FATCA Registration tool is a secure, web-based system. They can access the FATCA online registration system through the new page which describes:
What is it? The FATCA Registration tool is a secure, web-based system that Financial Institutions (FI) can use to register under FATCA.
What does it do? It establishes an online account with a home page and issues Global Intermediary Identification numbers to FIs and their branches.
How do I register? Which has a link to the site where they can sign up or log in to existing accounts.
The Internal Revenue Service announced August 12, 2014 that its
cornerstone "Taxpayer
Bill of Rights“ document is now available in six languages.
Newly-revised versions of Publication 1, "Your
Rights as a Taxpayer,” are now posted on IRS.gov in English, Spanish,
Chinese, Korean, Russian and Vietnamese. By making this important publication
available in multiple languages, the IRS hopes to increase the number of
Americans who know and understand their rights under the tax law.
The Taxpayer Bill of Rights takes the multiple existing rights embedded in
the tax code and groups them into 10 broad categories, making them easier to
find and understand.
“We believe that these rights are critically important for people to know
and understand, and translating them into additional languages helps us reach
even more taxpayers,” IRS Commissioner John Koskinen said. “We encourage people
to take a moment to read the Bill of Rights.”
The Taxpayer Bill of Rights contains 10 provisions. They are:
The Right to Be Informed
The Right to Quality Service
The Right to Pay No More than the Correct Amount of Tax
The Right to Challenge the IRS’s Position and Be Heard
The Right to Appeal an IRS Decision in an Independent Forum
IRS has issued final regs that provide comprehensive guidance for IRS' Code Sec. 7623 award program (i.e., whistle blower awards).
Summary. These regulations provide comprehensive guidance for the award program authorized under Internal Revenue Code (Code) section 7623. The regulations provide guidance on:
Submitting information regarding underpayments of tax or violations of the internal revenue laws and filing claims for award,
The administrative proceedings applicable to claims for award under section 7623.
The regulations also provide guidance on the determination and payment of awards, and provide definitions of key terms used in section 7623.
Finally, the regulations confirm that the Director, officers, and employees of the Whistle blower Office are authorized to disclose return information to the extent necessary to conduct whistle blower administrative proceedings.
The regulations provide needed guidance to the general public as well as officers and employees of the IRS who review claims under section 7623.
Background. Under Code Sec. 7623(a), IRS has discretionary authority to pay awards to informants (i.e., whistle blowers) in the sums it considers necessary for the detection of tax underpayments, or for the detection, trial, and punishment of tax law violators, payable from amounts collected by reason of the information provided. Under Code Sec. 7623(b), individuals, in certain cases, are entitled to receive an award of 15% to 30% of the “collected proceeds” resulting from an action based on information provided by the whistle blower. IRS has established a Whistle blower Office to administer the program.
Under Code Sec. 7623(b)(3), IRS may appropriately reduce a Code Sec. 7623(b) whistle blower award where the claim for the award is brought by an individual who planned and initiated the actions that led to the underpayment of tax or the violation of the tax laws.
Filing a claim. In large part, the final regs track the previously issued guidance in the existing regs, Notice 2008-4, 2008-1 CB 253, and the Internal Revenue Manual, including the general information that individuals should submit to claim awards and the descriptions of the type of specific and credible information on taxpayers that should be submitted.
An individual submitting a claim should identify a person and describe and document the facts supporting the claimant's belief that the person owes taxes or violated the tax laws. The regs also reaffirm IRS's practice of safeguarding the identity of individuals who submit information under Code Sec. 7623 whenever possible. (Reg. § 301.7623-1)
The final regs include eligibility requirements for filing claims for awards and a list of ineligible claimants. In finalizing the regs, IRS has removed State and local government employees and members of a Federal or State body or commission from the categories of ineligible whistle blowers.
The final regs require individuals to file a formal claim for award, Form 211, Application for Award for Original Information. The regs allow IRS to specify an alternative submission method (such as electronic claim filing) pursuant to additional guidance.
Under the final regs, in cases in which the Whistleblower Office recommends payment of an award under Code Sec. 7623(a), the whistleblower administrative proceeding begins when the Whistleblower Office send a preliminary award recommendation letter to the claimant. The claimant has 30 days to respond with comments. This period may be extended at the sole discretion of the Whistleblower Office. (Reg. § 301.7623-3(b)(1)).
Disclosure. The final regs also confirm that the Director, officers, and employees of the Reg. § 301.6103(h)(4)-1(b)).
Whistleblower Office are authorized to disclose return information to the extent necessary to conduct whistle blower administrative proceedings.
Effective date.Reg. § 301.7623-1, Reg. § 301.7623-2, Reg. § 301.7623-3, and Reg. § 301.6103(h)(4)-1 apply to information submitted on or after Aug. 12, 2014, and to claims for award under Code Sec. 7623(a) and Code Sec. 7623(b) that are open as of Aug. 12, 2014. Reg. § 301.7623-4 applies to information submitted on or after Aug. 12, 2014, and to claims for award under Code Sec. 7623(b) that are open as of Aug. 12, 2014.
_________ Want a Reward of Between 15- 30% of Underpaid IRS Tax Liabilities for
