OVDP Penalty Increased To 50% For 15 Foreign Banks

The new revisions to the US offshore voluntary disclosure initiative, which we posted on 6/18/14 "IRS Makes Changes to Offshore Programs; Revisions Ease Burden and Help More Taxpayers Come into Compliance", now provides for and increased 50% FBAR Penalties for 'Willful' Non-Disclosers.

This group includes those individuals who have offshore bank accounts with a foreign financial institution which has been publicly identified as being under investigation, or is cooperating with a government investigation. IRS has published a list of those foreign financial institutions or facilitators. 

The complete list is as follows:

1. UBS AG
2. Credit Suisse AG, Credit Suisse Fides, and Clariden Leu Ltd.
3. Wegelin & Co.
4. Liechtensteinische Landesbank AG
5. Zurcher Kantonalbank
6. Swisspartners
7. CIBC FirstCaribbean International Bank Limited, its predecessors, subsidiaries, and affiliates
8. Stanford International Bank, Ltd., Stanford Group Company, and Stanford Trust Company, Ltd.
9. HSBC India
10. The Bank of N.T. Butterfield & Son Limited (also known as Butterfield Bank and Bank of Butterfield).
11. Sovereign Management & Legal, Ltd., its predecessors, subsidiaries, and affiliates (effective 12/19/14)
12. Bank Leumi le-Israel B.M., The Bank Leumi le-Israel Trust Company Ltd, Bank Leumi (Luxembourg) S.A., Leumi Private Bank S.A., and Bank Leumi USA (effective 12/22/14)
13. BSI SA (effective 3/30/15)
14. Vadian Bank AG (effective 5/8/15)
15. Finter Bank Zurich AG (effective 5/15/15)  

A list of foreign financial institutions or facilitators meeting this criteria is available.

Of course, the IRS may add names to that list at any time, and whole groups of taxpayers will then be cut-off from OVDP without prior notice.

The same goes for taxpayers who worked with a "facilitator" who helped the taxpayer establish or maintain an offshore arrangement if the facilitator has been publicly identified as being under investigation or as cooperating with a government investigation. 

Taxpayers who had undeclared income from one of these 14 Banks are still be eligible to enter the OVDP, but they will be subject to a 50% offshore penalty, rather than the existing 27.5 percent penalty.

Of course if the IRS already has a particular taxpayer's name, then that person will not be eligible to enter the OVDP, and could be subject to multiple FBAR penalties.

Do You Have Undeclared Income from One
of the 14 Banks under Investigation by the IRS?

Want to Know if the OVDP Program is Right for You?

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)

US Regulatory Costs Are A $1.9T 'Hidden Tax According to a Recent Report

According to law360.com, Federal regulations are costing U.S. taxpayers nearly $1.9 trillion annually in compliance costs, which effectively serve as a “hidden tax” surpassing the revenue the government pulls in from individual income tax collections, according to a report released Tuesday by a public policy think tank. Meanwhile, the federal government raked in $1.3 trillion in individual income taxes last year, the report says.

On average, regulatory compliance costs $1.88 trillion annually, and if U.S. households fully bore the responsibility for that amount, they would each pay nearly $15,000 a year, says CEI’s annual Ten Thousand Commandments survey of federal regulations.


















“If it were a country, U.S. regulation would be the world’s tenth-largest economy, ranking behind Russia and ahead of India,” the report says. “U.S. regulatory costs exceed each of the [gross domestic products] of Australia and Canada, the highest income nations among the countries ranked most free in the annual Index of Economic Freedom and Economic Freedom of the World reports.”

 
The report also adds that the federal government’s share of the U.S. economy now exceeds 30 percent when regulatory costs are added to the $3.5 trillion the government spent in 2014.

Have A Tax Problem?

 

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 FREE.

Everything You Wanted to Know About and Offer in Compromise

Offer in Compromise

ALERT

Please use the most current revision of Form 656-B in preparing and submitting your Offer in Compromise. Use of outdated forms and instructions may cause a delay in the processing of your offer application.

An offer in compromise allows you to settle your tax debt for less than the full amount you owe. It may be a legitimate option if you can't pay your full tax liability, or doing so creates a financial hardship. We consider your unique set of facts and circumstances:

• Ability to pay;
• Income;
• Expenses; and
• Asset equity.

The IRS will generally approve an offer in compromise when the amount offered represents the most which they can expect to collect within a reasonable period of time. Explore all other payment options before submitting an offer in compromise. The Offer in Compromise program is not for everyone.

If you hire a tax professional to help you file an offer, be sure to check his or her qualifications.

Make sure you are eligible

Before the IRS can consider your offer, you must be current with all filing and payment requirements. You are not eligible if you are in an open bankruptcy proceeding. Use the Offer in Compromise Pre-Qualifier to confirm your eligibility and prepare a preliminary proposal.

Submit your offer

You'll find step-by-step instructions and all the forms for submitting an offer in the Offer in Compromise Booklet, Form 656-B (PDF).  Your completed offer package will include:

• Form 433-A (OIC) (individuals) or 433-B (OIC) (businesses) and all required documentation as specified on the forms;
• Form 656(s) - individual and business tax debt (Corporation/ LLC/ Partnership) must be submitted on separate Form 656;
• $186 application fee (non-refundable); and
• Initial payment (non-refundable) for each Form 656.

Select a payment option

Your initial payment will vary based on your offer and the payment option you choose:

• Lump Sum Cash: Submit an initial payment of 20 percent of the total offer amount with your application. Wait for written acceptance, then pay the remaining balance of the offer in five or fewer payments.
• Periodic Payment: Submit your initial payment with your application. Continue to pay the remaining balance in monthly installments while the IRS considers your offer. If accepted, continue to pay monthly until it is paid in full.

If you meet the Low Income Certification guidelines, you do not have to send the application fee or the initial payment and you will not need to make monthly installments during the evaluation of your offer. See your application package for details.

Understand the process

While your offer is being evaluated:

• Your non-refundable payments and fees will be applied to the tax liability (you may designate payments to a specific tax year and tax debt);
• A Notice of Federal Tax Lien may be filed;
• Other collection activities are suspended;
• The legal assessment and collection period is extended;
• Make all required payments associated with your offer;
• You are not required to make payments on an existing installment agreement; and
• Your offer is automatically accepted if the IRS does not make a determination within two years of the IRS receipt date.

If your offer is accepted

If your offer is rejected

You must meet all the Offer Terms listed in Section 8 of Form 656, including filing all required tax returns and making all payments; Any refunds due within the calendar year in which your offer is accepted will be applied to your tax debt; Federal tax liens are not released until your offer terms are satisfied; and Certain offer information is available for public review at designated IRS offices.

You may appeal a rejection within 30 days using Request for Appeal of Offer in Compromise, Form 13711 (PDF).

Have A Tax Problem?

 

  Want to Know if Your Qualify for an Offer?

 

 

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.

More & More Swiss Banks Are Striking Deals With the DoJ!

On April 9, 2015, we posted More Swiss Banks Are Striking Deals With the DoJ Including Providing Your Tax Information! where we discussed that during the week of March 30, 2015, Swiss bank BSI SA became the first bank to reach a resolution under a voluntary disclosure program for tax-related offenses run by the Justice Department. BSI agreed to pay a $211 million penalty after admitting it had for decades assisted thousands of U.S. clients in opening accounts in Switzerland and hiding assets from tax authorities.

"I would stay tuned," Acting Assistant Attorney General Caroline Ciraolo of the Justice Department's Tax Division said in an interview late on Tuesday, adding that a number of non-prosecution agreements will be signed in the "very near future."

On Friday, May 8, 2015 the The Department of Justice (DoJ ) announced that Vadian Bank AG (Vadian), located in St. Gallen, Switzerland, reached a resolution under the DOJ's Swiss Bank Program.

“The department continues to work with Swiss banks to reach final resolutions in accordance with the terms of the program, and is focused on its goal of completing this process expeditiously,” said Acting Assistant Attorney General Caroline D. Ciraolo, of the Department of Justice’s Tax Division.

“Simultaneously, the department has opened investigations of culpable individuals and entities based on information obtained from the Swiss banks in the program, and will pursue and prosecute those engaged or assisting others in evading U.S. tax obligations.”

Under the program, banks are required to:

• Make a complete disclosure of their cross-border activities;
• Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;
• Cooperate in treaty requests for account information;
• Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed (a/k/a Levers List);
• Agree to close accounts of account holders who fail to come into compliance with U.S. reporting obligations; and
• Pay appropriate penalties.

Banks meeting all of the above requirements are eligible for a non-prosecution agreement.


According to the terms of its non-prosecution agreement, Vadian agrees to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts and pay a $4.253 million penalty in return for the department’s agreement not to prosecute Vadian for tax-related criminal offenses.


In 2008, after it became publicly known that UBS was a target of a criminal investigation, Vadian accepted accounts from U.S. persons who were forced out of other Swiss banks.  At this time, Vadian’s management was aware that the U.S. authorities were pursuing Swiss banks that facilitated tax evasion for U.S. accountholders in Switzerland, but was not deterred because Vadian had no U.S. presence.  As a result of its efforts, after August 2008, Vadian attracted cross-border private banking business and increased its U.S. related accounts from two to more than 70, with $76 million in assets under management.

In resolving its criminal liabilities under the program, Vadian provided extensive cooperation and encouraged U.S. accountholders to come into compliance.

As a result of leads from banks involved in the voluntary disclosure program, Ciraolo said, the Justice Department is going after individual account holders as well as bankers and other professionals who helped conceal offshore accounts.

While Vadian’s U.S. accountholders who have not yet declared their accounts to the IRS may still be eligible to participate in the IRS’s offshore voluntary disclosure programs, the price of such disclosure has increased.

Do You Have Unreported Foreign Income?

 

Your Information Is Being Reported To The IRS!

Want to Know if the OVDP Program is Right for You?

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)

It Must Be The Time To Expatriate?

We previously posted on April 8, 2015, Is it Time to Expatriate?  where we discussed that the list of recent US expatriates’ is a diverse: one of the world’s greatest soul singers; a best-selling author, a professional basketball player, architects, artists, lawyers, retirees and financiers. The register of individuals who have “chosen to expatriate”, as the US puts it, shows an increase in the number of Americans who are renouncing their US citizenship or turning in their green card.

When the number reached 3,415 last year it was a record, although the figures are still tiny, especially in comparison with those being granted US citizenship, nearly 780,000 in 2013. But it is also the case that the numbers have risen more than 10-fold since 2008. 

However, the percentage of Americans Expatriating increased by almost 20% in the first quarter of 2015, according to IRS's quarterly list, for the quarter ending March 31.2015, of individuals who have chosen to expatriate.

The 1,335 Expatriations in the quarter ending March 31, 2015 is a new record. These Americans are driven to turn in their passports in part because of laws that have expanded bank reporting and tax compliance requirements for expatriates. 

"Should I Stay or Should I Go"?

Need Advise on Expatriation ... 

Contact the Tax Lawyers of
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)

Caterpillar Faces Criminal Probe In Addition to IRS Penalties Related to its Offshore Tax Strategy

We had previously posted Caterpillar Saved Billions in US Tax By Shifting Profits to a Swiss Subsidiary where we discussed that Caterpillar Inc., an American manufacturing icon, used a wholly owned Swiss affiliate to shift $8 billion in profits from the United States to Switzerland to take advantage of a special 4 to 6 percent corporate tax rate it negotiated with the Swiss government and defer or avoid paying $2.4 billion in U.S. taxes to date, a new report from Sen. Carl Levin, the chairman of the U.S. Senate Permanent Subcommittee on Investigations shows.

The report by the U.S. Senate Permanent Subcommittee on Investigations said the company used a tax strategy built around redirecting to Switzerland taxable profits from sales of Caterpillar-branded replacement parts manufactured by third parties under contract with the company. Sen. Carl Levin (D-Mich.) senateinquiry found that Caterpillar saved as much as $2.4 billion in taxes over 13 years from what , then chairman of the committee, said was a “paper change.”

In exchange for a small royalty, Caterpillar transferred rights to profits from its international parts distribution business to Caterpillar SARL, or CSARL, the report said. In effect, Caterpillar redirected the profits by simply replacing its name with CSARL on its invoices, according to the report

Prior to issuing its license with CSARL, Caterpillar booked 85 percent or more of its non-U.S. parts profits in the U.S., where 70 percent of those parts are made and warehoused and where its global parts operation was created and is managed. But the license allowed CSARL to sell the parts to Caterpillar’s non-U.S. dealers and pay Caterpillar a royalty equal to only about 15 percent of the parts profits, while keeping the remaining 85 percent on its books in Switzerland, the Senate investigators found.

Now this federal probe into Caterpillar Inc.’s elaborate tax avoidance strategy highlighted in a Senate hearing last year has pivoted in a criminal direction with the global manufacturer of construction and mining equipment acknowledging a grand jury investigation by the U.S. attorney for the Central District of Illinois.

Caterpillar disclosed, in its most recent 10-Q filed with the Securities and Exchange Commission, that it is responding to a grand jury subpoena received Jan. 8, 2015  In the same 10-Q, dated May 1, 2015, Caterpillar acknowledged responding to separate investigative demands placed by the SEC and the IRS.

Caterpillar indicated that the IRS has “proposed” tax increases and penalties of about $1 billion after examining its U.S. returns for 2007-09, including a loss carryback to 2005.

The Internal Revenue Service has proposed taxing U.S. profits the company earned from certain parts transactions by its Caterpillar SARL unit based in Switzerland, Caterpillar. The IRS is also disallowing about $125 million of foreign tax credits from financing unrelated to the Swiss entity. The company received the IRS revenue agent’s report on Jan. 30, 2015.  


Caroline Nolan, a spokeswoman for PricewaterhouseCoopers LLP, which helped create the transactions, had no immediate comment on the matter.     

In August, the Indiana Supreme Court ruled that Caterpillar can't use foreign-dividend deductions to increase its state operating losses, overriding a tax court decision to let the company claim tax refunds by literally drawing new blanks on its state tax forms.
The state high court ruled that using foreign dividend deductions violates state law, overturning a 2008 tax court ruling allowing the company to count foreign-source dividend income in its 2000-03 calculations of its net operating losses in Indiana and carry the losses into other tax years. The construction and mining giant is incorporated in Delaware and has its headquarters in Illinois but has hundreds of subsidiaries.

It looks like Caterpillar may need several of its earth movers, to dig its way out of its Tax Problems!

Have a Tax Problem?

 

Contact the Tax Lawyers at

Marini & Associates, P.A.

 for a FREE Tax Consultation Contact US at

www.TaxAid.us or www.TaxLaw.ms

or Toll Free at 888-8TaxAid ().

Sources:
US SENATE REPORT

Bloomberg

Law360

BVI Opens Portal for FATCA Registration & The Bahamas Gears up for FATCA

British Virgin Islands – FATCA

The British Virgin Islands opens its Financial Account Reporting System to enable financial institutions to register and submit information on their U.S. clients in line with the BVI's agreement with the U.S. on its Foreign Account Tax Compliance Act. The system is available to financial institutions that need to register in order to submit information to the government under the intergovernmental agreement between the BVI and the U.S., according to a news release.

Financial institutions must register by June 1 and report information regarding the 2014 tax year by June 30.

The British Virgin Islands has opened its Financial Account Reporting System (BVIFARS) to enable financial institutions to register and submit information on their U.S. clients in line with the BVI's agreement with the U.S. on its Foreign Account Tax Compliance Act.

The system is available to financial institutions that need to register in order to submit information to the government under the intergovernmental agreement between the BVI and the U.S., according to an April 15 news release.

Financial institutions must register by June 1 and report information regarding the 2014 tax year by June 30. The BVI government will then transmit the information to the Internal Revenue Service.

The government said financial institutions that have nothing to report aren't obligated to file a “nil report.”

“As such, if there is nothing to report, there is no mandatory requirement to enroll with BVIFARS,” the government said. “However, BVIFARS has the capability to accept nil reports and if a financial institution chooses to submit a nil report, then that financial institution will have to enroll.”

Bahamas – FATCA

 
Bahamas gears up for FATCA – video - Guidelines regarding the US Foreign Accounts Tax Compliance Act are nearing completion, according to government officials.

As we previously posted on Friday, February 27, 2015, FATCA Update! - 112 FATCA Agreement To Date!,where we discussed that there was a total to 112 jurisdictions with FATCA agreement with the United States, including the BVI & Bahamas.

Do You Have Unreported Foreign Income?

Is Your Foreign Account in

Any of the Countries Mentioned Below?

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 ()

_____________________________

See Below For Types of FATCA Agreements Signed

By Each Country and Links to the Actual Agreements.

The following jurisdictions are treated as having an intergovernmental agreement in effect (scroll down for a list of jurisdictions with agreements in substance):

Jurisdictions that have signed agreements:

Model 1 IGA

• Australia (4-28-2014)
• Bahamas (11-3-2014)
• Barbados (11-17-2014)
• Belgium (4-23-2014)
• Brazil (9-23-2014)
• British Virgin Islands (6-30-2014)
• Bulgaria (12-5-2014)
• Canada (2-5-2014)
• Cayman Islands (11-29-2013)
• Costa Rica (11-26-2013)
• Curaçao (12-16-2014)
• Cyprus (12-2-2014)
• Czech Republic (8-4-2014)
• Denmark (11-19-2012)
• Estonia (4-11-2014)
• Finland (3-5-2014)
• France (11-14-2013)
• Germany (5-31-2013)
• Gibraltar (5-8-2014)
• Guernsey (12-13-2013)
• Hungary (2-4-2014)
• Honduras (3-31-2014)
• Ireland (1-23-2013)
• Isle of Man (12-13-2013)
• Israel (6-30-2014)
• Italy (1-10-2014)
• Jamaica (5-1-2014)
• Jersey (12-13-2013)
• Latvia (6-27-2014)
• Liechtenstein (5-19-2014) 
• Lithuania (8-26-2014)
• Luxembourg (3-28-2014)
• Malta (12-16-2013)
• Mauritius (12-27-2013)
• Mexico (4-9-2014)
• Netherlands (12-18-2013)
• New Zealand (6-12-2014)
• Norway (4-15-2013)
• Poland (10-7-2014)
• Qatar (1-7-2015)
• Singapore (12-9-2014)
• South Africa (6-9-2014)
• Spain (5-14-2013)
• Slovenia (6-2-2014)
• Sweden (8-8-2014)
• United Kingdom (9-12-2012)
• Turks and Caicos Islands (12-1-2014)

Model 2 IGA

• Austria (4-29-2014)
• Bermuda (12-19-2013)
• Chile (3-5-2014)
• Hong Kong (11-13-2014)
• Japan (6-11-2013)
• Moldova (11-26-2014)
• Switzerland (2-14-2013)

Jurisdictions that have reached agreements in substance as of June 30, 2014 and have consented to being included on this list (beginning on the date indicated in parenthesis):

Model 1 IGA

• Algeria (6-30-2014)
• Anguilla (6-30-2014)
• Antigua and Barbuda (6-3-2014)
• Azerbaijan (5-16-2014)
• Bahrain (6-30-2014)
• Belarus (6-6-2014)
• Cabo Verde (6-30-2014)
• China (6-26-2014)
• Colombia (4-23-2014)
• Croatia (4-2-2014)
• Dominica (6-19-2014)
• Dominican Republic (6-30-2014)
• Georgia (6-12-201)
• Greenland (6-29-2014)
• Grenada (6-16-2014)
• Guyana (6-24-2014)
• Haiti (6-30-2014)
• India (4-11-2014)
• Indonesia (5-4-2014)
• Kosovo (4-2-2014)
• Kuwait (5-1-2014)
• Malaysia (6-30-2014)
• Montenegro (6-30-2014)
• Panama (5-1-2014)
• Peru (5-1-2014)
• Portugal (4-2-2014)
• Romania (4-2-2014)
• St. Kitts and Nevis (6-4-2014)
• St. Lucia (6-12-2014)
• St. Vincent and the Grenadines (6-2-2014)
• Saudi Arabia (6-24-2014)
• Serbia (6-30-2014)
• Seychelles (5-28-2014)
• Slovak Republic (4-11-2014)
• South Korea (4-2-2014)
• Thailand (6-24-2014)
• Turkey (6-3-2014)
• Turkmenistan (6-3-2014)
• Ukraine (6-26-2014)
• United Arab Emirates (5-21-2014)
• Uzbekistan (6-30-2014)

Model 2 IGA

• Armenia (5-8-2014)
• Iraq (6-30-2014)
• Nicaragua (6-30-2014)
• Paraguay (6-6-2014)
• San Marino (6-30-2014)
• Taiwan (6-23-2014)*

*Consistent with the Taiwan Relations Act, the parties to the agreement would be the American Institute in Taiwan and the Taipei Economic and Cultural Representative Office in the United States.

Jurisdictions that have reached agreements in substance as of November 30, 2014 and have consented to being included on this list (beginning on the date indicated in parenthesis):

Model 1 IGA

• Angola (11-30-2014)
• Cambodia (11-30-2014)
• Greece (11-30-2014)
• Holy See (11-30-2014)
• Iceland (11-30-2014)
• Kazakhstan (11-30-2014)
• Montserrat (11-30-2014)
• Philippines (11-30-2014)
• Trinidad and Tobago (11-30-2014)
• Tunisia (11-30-2014)

Model 2 IGA

• Macao (11-30-2014)