Tax Blog | TaxConnections

11 Mar 2014

United States Client of Credit Suisse? Last Chance To File A Voluntary Disclosure!

Thousands of Credit Suisse Group AG’s United States clients still don’t know whether tax authorities will learn their identities as prosecutors work to conclude a three-year probe of how the bank helped them evade taxes.

We posted on February 27, 2014, Report to Congress: Credit Suisse Help US Taxpayers Hide Billions in Offshore Accounts! where we discussed the Permanent Subcommittee on Investigations (PSI) of the United States Senate held a hearing, “Offshore Tax Evasion: The Effort to Collect Unpaid Taxes on Billions in Hidden Offshore Accounts,” on Wednesday, February 26, 2014.

The PSI hearing’s stated purpose of continuing the PSI’s examination of tax haven bank Read More

Written by tbeecher | Posted in OVDP • Tax Fraud/Evasion/Crimes

10 Mar 2014

Think You Got Game? Try Solving A Criminal Tax Problem – Part II

Question #2: What theories of proof should be pursued?

Continued… See Part I, Part III, Part IV and Part V

a. This would be a case in which the government uses specific items or the direct method in some instances and indirect methods in other instances. For example, Jack received $ 2,000 in dividends in 2004, none of which he reported on his 2004 tax return. That is a specific item. The government’s argument is quite simple: “Got dividends? We see that you do. Were they reported on the return? It appears that they weren’t. That’s all we have to prove.” Of course, that is a bit of an exaggeration because the government must prove willfulness. Read More

Written by Michael DeBlis, III | Posted in Tax Fraud/Evasion/Crimes

10 Mar 2014

The Tax Non-Compliant American Abroad: What Are Your Choices? Part I

Before you know it, tax returns will be due. Many Americans living overseas have not filed tax returns or so-called FBARs for many years, even though they were required to do so. The Internal Revenue Service’s crackdown on tax evasion through the use of foreign accounts and entities has understandably frightened many of these Americans. Many did not knowingly avoid or evade US tax, nor did they intentionally disregard their tax filing duties. They simply did not understand the tax filing requirements when living and working abroad, or they obtained incorrect tax advice. In fact, in many instances, the typical client I assist owes little, or no tax after taking into account foreign tax credits and foreign earned income and housing exclusion amounts. The problem is that when a taxpayer has a duty to file tax returns, accompanying information returns or FBARs, but does not do so, he is Read More

Written by Virginia La Torre Jeker, J.D. | Posted in Expatriate • FATCA • FBAR • Individual • IRS • Tax Fraud/Evasion/Crimes

10 Mar 2014

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

When submitting your client’s Offer in Compromise, 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 Read More

Written by tbeecher | Posted in Audit • IRS

10 Mar 2014

$1,500 Home Office Deduction Option – IRS Reminder

The IRS reminded people with home-based businesses that this year for the first time they can choose a new simplified option for claiming the deduction for business use of a home.

In tax year 2011, the most recent year for which figures are available, some 3.3 million taxpayers claimed deductions for business use of a home (commonly referred to as the home office deduction) totaling nearly $10 billion.

The new optional deduction, capped at $1,500 per year based on $5 a square foot for up to 300 square feet, will reduce the paperwork and recordkeeping burden on small businesses by an estimated 1.6 million hours annually. Read More

Written by Betty Williams | Posted in IRS • Small Business

10 Mar 2014

Employment Taxes And The Self-Employed Global Worker – So “Un”Happy Together – Part II (4)

II. Social Security Taxes: The Bane of the Existence of Self-employed U.S. Citizens Who Work Abroad –

ii. Absence of a Totalization Agreement –

Now assume that the same facts exist in Japan, a country in which a social insurance program exists, but which does not have a totalization agreement with the United States. Because John works in Japan, he would be taxed under the Japanese social insurance program.

A critical issue confronting U.S. citizens and residents who work abroad is what to do in the event they are subject to social insurance taxes in the foreign country where they work Read More

Written by Michael DeBlis, III | Posted in International

10 Mar 2014

7 Habitual Mistakes Companies Make – Chapter 6 (9)

Internal Audits Fix Financial Accounting Problems –

Provisions and Tax –

WHEN BUSINESSES ACQUIRE database management and tracking systems such as SAP- or Oracle-based systems, closing balances from the previous systems used are transferred as opening balances to the new system.

After a number of years, and a change of guard at management level, the understanding and specific knowledge required to determine how those opening balances were made up. The old closing balance records are destroyed or get lost. If a specific inquiry is directed at these opening balances, many businesses have problems in providing the Read More

Written by Daniel Erasmus | Posted in Tax Risk Management

10 Mar 2014

Simplified Home Office Expense Deduction Will Save 1.6M Hours Annually Says IRS!

The new option is available starting with the 2013 return taxpayers are filing now. Normally, home-based businesses are required to fill out a 43-line form 8829 often with complex calculations of allocated expenses, depreciation and carryovers of unused Read More

Written by Pallav Acharya | Posted in IRS • Small Business

07 Mar 2014

Credit Risk and Currency Control and Offshore Financial Centers

Introduction

It is essential in dealing with Offshore Financial Centers to develop a method identifying the various relationships created and the underlying risk associated with each part of a financial transaction. Analysts in the process of evaluating risks often divide them into three basic categories: legal risk, market risk, and credit risk. Political and sovereign risks can contribute to such unexpected results by virtue of Sovereign Immunity concepts, the Act of State Doctrine, and exchange controls.

Credit Risk

Credit risk includes the risk that a counter-party will not perform to contract as a result of Read More

Written by William Richards | Posted in International

07 Mar 2014

Chile Becomes The 1st South American Country To Sign FATCA

On March 5 , 2014, Chile signed a FATCA Agreement with the United States. 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 United States 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 Read More

Written by tbeecher | Posted in FATCA

07 Mar 2014

Think You Got Game? Try Solving A Criminal Tax Problem – Part I

While reading can aid in learning, there is no substitute for doing. Reading about what steps should be taken to solve a tax problem is no different than reading about how to ride a bicycle. In the same way that the only way to learn how to ride a bicycle is by experiencing it firsthand – i.e., by physically getting on it (and perhaps falling off it more than once) – the only way to become proficient at solving tax problems is by trudging through a multitude of hypotheticals. Therefore, my motto is, “Learning by doing.”

So why not test your problem solving skills out on a true-to-life hypothetical? Below is a fact pattern based upon a real case. While the analysis is quite detailed, it is nonetheless very practical in the sense that it covers issues that come up with the greatest frequency for tax preparers who are “on the front lines.” In fact, if I had to venture a guess, I’d say that Read More

Written by Michael DeBlis, III | Posted in Tax Fraud/Evasion/Crimes