tag:blogger.com,1999:blog-1519969502186924526.post5753631145104538966..comments2023-10-24T08:00:53.865-05:00Comments on Federal Tax Crimes: A Great Opt Out Result! IRS Gets Good Press! (9/15/12)Jack Townsendhttp://www.blogger.com/profile/14469823736335455874noreply@blogger.comBlogger196125tag:blogger.com,1999:blog-1519969502186924526.post-16330726486760484012013-06-14T14:35:25.591-05:002013-06-14T14:35:25.591-05:00Mr. Patel, could you go into a bit more detail, sp...Mr. Patel, could you go into a bit more detail, specifically <br /><br />1) did they check yes or no on Sched. B, or did they leave the response unchecked, or was interest income so low that they did not need to fill it out? <br /><br />2) did they report the income but failed to file FBARs? <br /><br />3) were they foreign residents, recent immigrants or long-term US residents?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-9587474439313842142013-06-14T10:21:42.276-05:002013-06-14T10:21:42.276-05:00Thanks. I appreciate your calling your experience...Thanks. I appreciate your calling your experience to readers' attention. Readers with relatively good facts should not fear an opt out. Unfortunately, the IRS is not very helpful to readers and even their practitioners in assessing whether to opt out.<br /><br /><br />Collectively, the anecdotal evidence such as yours overtime will help people make that assessment.<br /><br /><br />Jack TownsendJack Townsendhttp://www.tjtaxlaw.com/noreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-90664568747830501502013-06-13T20:40:28.491-05:002013-06-13T20:40:28.491-05:00Our office has recently had a few good opt out res...Our office has recently had a few good opt out results where pre-opt out penalties were about $200,000. We recommended: first a FBAR warning letter, or alternatively a reduced mitigated penalty under the IRM mitigation guidelines, instead of the 25% penalty. We provided a comprehensive legal analysis applying the law and IRM mitigation guidelines to the fact patterns to demonstrate non-willfulness and reasonable cause. <br /><br /><br />Both of our recent cases had good fact patterns: financially unsophisticated taxpayers who were totally ignorant of their FBAR reporting obligations. There was no evidence of intent or willfulness, no sophisticated foreign entities or complex investments. We highlighted the facts of non-willfulness. <br /><br /><br />In the end, a FBAR warning letter was issued (and no penalty) for the cases and the matters are now closed. These results go to show that good facts often lead to good results.Parag P. Patelnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-73886784686467480832013-02-18T22:04:50.079-06:002013-02-18T22:04:50.079-06:00Ok this tax stuff flies way over my head. I have ...Ok this tax stuff flies way over my head. I have always worked a basic minuim wage job claimed 0/0 never made more than 20000 a year. I always done my taxes got my refud and went on living .well I blinked too quick and marrieda man who I just recently found out has claimed 99 at least 60% of the time for the past 4 years. Well to top it off he hasn't done his taxes during that time either.he travels for work andhas between 10 to 30 w2 from different states and employers. Its the biggest battel I have ever tried to fight because he retuses to pay or even let me try to file( lost 2 computers and several w2 had to be replaced already) with his job and my saving benefits he technically shouldn't need ssi if its still around come them.. any one have any suggestions onhow I can opt him out of paying taxes??? PleaseSarah Postellnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-18422290934088843652013-02-15T09:47:39.107-06:002013-02-15T09:47:39.107-06:00Hello ij,
I live in the DC area and desperately n...Hello ij,<br /><br />I live in the DC area and desperately need your insights.<br />How can I contact you?<br />I'm in a crossroad and my brain can't stop thinking about this matter, <br /><br />TLV Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-15367480007038192262013-02-06T09:52:32.829-06:002013-02-06T09:52:32.829-06:00This looks precious, I think. :)This looks precious, I think. :)Antonnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-89186032174979659102012-11-13T00:10:21.686-06:002012-11-13T00:10:21.686-06:00I was not a 5% case. I had not reported a bank acc...I was not a 5% case. I had not reported a bank account and some PFIC's in a country where I resided before my current location, which is overseas. So, for me, it was 12.5% case. In my case, the reason for non-compliance was just over sight - didn't have 1099 from this bank, and since I had a small balances, didn't care much. I had reported all my accounts and investments held in the current location, including Fabr forms. So, opt out was not a sound logic, as I did know about fears.ABnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-87103059488996836702012-11-08T17:33:43.675-06:002012-11-08T17:33:43.675-06:00Good catch on the 2011 data. I had forgotten abou...Good catch on the 2011 data. I had forgotten about that.<br /><br />Thanks,<br /><br />Jack TownsendJack Townsendhttp://www.tjtaxlaw.com/noreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-39085077359817785412012-11-08T17:27:12.513-06:002012-11-08T17:27:12.513-06:00Doing some research, i found the article on this w...Doing some research, i found the article on this website http://federaltaxcrimes.blogspot.com/search?q=moneyball<br /><br />FBAR forms filed in 2009 276,386<br /><br />filed in 2011 618,134<br /><br /><br />Only 33K filed for OVDI - compare that to the 7 million US citizens abroad and 34 million foreign citizens in US. So of the potential 10 million (25% of 7+ 34 million) only 600K filed, represents a 6% compliance. this excludes USC in US who have foreign accounts.<br /><br /><br /><br />Plus, 276K in 2009 + 33K in OVDI does not equal 618K in 2011, so there are approximately 300K first time filers or QDs - it is hard to imagine 300K new immigrants and even if there are, they have a 100% compliance rate.Jannoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-32630524336327244812012-11-08T17:23:33.769-06:002012-11-08T17:23:33.769-06:00I doubt that there is any public data yet on the 2...I doubt that there is any public data yet on the 2011 filings which were due by 6/30/12. When I find that data, I will post and then perhaps we can infer something from the data.<br /><br />Jack TownsendJack Townsendhttp://www.tjtaxlaw.com/noreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-79171960442232468322012-11-08T17:20:29.263-06:002012-11-08T17:20:29.263-06:00Jack
Is there data on how many FBARS were file...Jack <br /><br /><br /><br />Is there data on how many FBARS were filed in 2011 or 2012 as compared to 2008/2009. This will give us an estimate of the number of people who opted for QD or GF as the delta between 2011/2012 filings less 33K as noted by IRS less 2008/2009 filings.Jannoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-34829954306133888782012-11-05T15:03:41.067-06:002012-11-05T15:03:41.067-06:00AB, thanks for sharing your experience. When othe...AB, thanks for sharing your experience. When others see the high cost of compliance, it scares many off, and they take actions that now make their conduct willful. This is hardly the result the IRS should be going for. Suggest you copy your post to the "Open Forum" for the IRS.<br />Unfortunately it takes about the same amount of work for a lawyer/accountant whether the account in question is large or small. Yet you are paying 18K to professionals and 10K to the IRS.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-13143306520721024972012-11-04T10:29:46.243-06:002012-11-04T10:29:46.243-06:00Thanks for sharing. As an expat, were you a 5%case...Thanks for sharing. As an expat, were you a 5%case as in FAQ 52.3? Why did you choose not to opt out?anon5percentnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-72649555320135373582012-11-04T08:59:13.764-06:002012-11-04T08:59:13.764-06:00Thank you for returning to this website to let us ...Thank you for returning to this website to let us know your result. Really helps; strongly agree that there should be alternate process. Paying $15000 to a lawyer and $5000 for tax preparation seems unjustified for a small foot fault such as yours. I am in a similar situation where I expect penalty to be much less than legal/tax prep fees.Anon_Thanksnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-36561989255859299682012-11-04T03:23:28.180-06:002012-11-04T03:23:28.180-06:00Hello all, returning here after awhile to provide ...Hello all, returning here after awhile to provide an update on my OVDI case. I submitted the package in Dec 2011 and got done this week. My case is of a small foot fault - $3,000 in back taxes, less than $1,000 in interest and penalties and $6,000 in lieu penalty (Fbar). To resolve this matter, paid $5,000 for tax preparation and $13,000 as legal fee for a plain vanilla case as I am an expat right now and didn't know how to deal with the IRS from where I live. My review was painless, no contact, just a phone call from the agent that my case was done to my lawyer - thats it. And, the IRS accepted the package as it was sent, just small adjustments in tax, interest and penalty calculation of $5. They sent form 906 last month which we signed and returned. This week I got an executed copy from them for record. They owe some refund which I hope will arrive soon.<br />It will be really beneficial for the Service and tax payers if an alternate process is in place to deal with small cases with no bad facts, just errors or omissions due to ignorance. The OVDI stress is immense and if there is no criminal intent, a separate track should be opened where folks like me can send the package without incurring such high legal and accounting fee. I had a few PFIC's and had to use an accountant for that and the complexity and fear surrounding OVDI led to seek legal help. If I was living in the US and forgot to report $3,000 of US sourced income over 4 years, I would just amend my returns and send a check without going through all this paperwork and expense and stress. It serves no one - our government or the tax payer.ABnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-82042363241991568242012-11-01T10:49:34.172-05:002012-11-01T10:49:34.172-05:00Special Statute of Limitations Rules Regarding $5,...Special Statute of Limitations Rules Regarding $5,000 Omissions from Foreign Accounts (4/9/12)<br /><br />http://federaltaxcrimes.blogspot.com/2012/04/special-statute-of-limitations-rules.htmlJack Townsendhttp://www.tjtaxlaw.com/noreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-8556834955162616012012-10-31T14:02:31.374-05:002012-10-31T14:02:31.374-05:00Is there a link to see where there is informaiton ...Is there a link to see where there is informaiton on $5K of specified financial assets. Is the $5K related to tax or income balance.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-68220060022803724192012-10-30T16:01:17.086-05:002012-10-30T16:01:17.086-05:00Income tax statutes of limitations
1. Correct.
2. ...Income tax statutes of limitations<br />1. Correct.<br />2. 6 years if (i) 25% omission or Iii) 5,000 omission from specified financial assets.<br />3. Unlimited for fraud.<br />4. IRS can assets after 3 years under paragraphs 2 or 3.<br /><br />Jack TownsendJack Townsendhttp://www.tjtaxlaw.com/noreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-36362814582704802932012-10-30T09:52:23.204-05:002012-10-30T09:52:23.204-05:00I have summarized my understanding of the SOL. Ple...I have summarized my understanding of the SOL. Please correct me if i am wrong<br /><br />1. standard SOL 3 years<br />2. 6 years SOL if there is omission of 25% or more of income OR if there is fraud<br />3. Unlimited SOL if there is fraud under civil fraud clause<br />4. IRS cannot assess tax after 3 years unless there is 'substantial' omission or if there is fraud.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-9055581738138721282012-10-28T06:51:27.990-05:002012-10-28T06:51:27.990-05:00If you don't consent, you will be considered ...If you don't consent, you will be considered to be non-cooperating. Cooperation is a requirement for the OVDI. Not good.Sallynoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-63376146818457500782012-10-27T15:46:24.053-05:002012-10-27T15:46:24.053-05:00I don't think the IRS is ignoring it. But, I ...I don't think the IRS is ignoring it. But, I do think it has to impose some FBAR penalties for cases that are not most innocent. Keep in mind that everyone who joins OVDI/OVDP is likely to comply in the future. Hence, if that alone gave them a pass, there would be no FBAR penalties for those joining or, inside the program, in lieu of penalties when the big items on the penalty worksheet are foreign accounts. So, the IRS will consider that during audit, however the audit occurs, but may want some pound of flesh appropriate to the fact circumstances.<br /><br />Jack TownsendJack Townsendhttp://www.tjtaxlaw.com/noreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-43479240425930095912012-10-25T16:26:44.648-05:002012-10-25T16:26:44.648-05:00Regarding OVDIMinnowCalifornia, I think the income...Regarding OVDIMinnowCalifornia, I think the income tax portion and FBAR portion need to be viewed separately. My own point of view is that I accept having to pay taxes, interest, and accuracy penalty on previously undeclared income, because it's something I owe. It's the FBAR penalty that concerns me, not just because in my case it's much larger, but because it's based on high balance and not on the much smaller unpaid taxes.<br /><br /><br />The practical question is not how I view the two, but how the law views them. The tax and related penalty is something properly due and which a foreign government may cooperate in collecting. <br /><br /><br /><br />I really don't know what the implications are of not paying the FBAR penalty, particularly for someone who leave the US (or who was already resident abroad during the years at issue.) I'm guessing that the US would have to obtain a judgement from a foreign court to go after foreign assets, at which point the person could raise any defenses in that foreign court. We've already heard what the Canadian gov't thinks of FBAR penalties. <br /><br /><br /><br /> I am under the impression that the penalty would become a debt, and that failure to pay debts is a civil, not criminal matter (i.e. there are no debtor's prisons.) However I know that the law has changed in recent years, that men have been jailed for failing to pay child support, apparently even when they didn't have the funds to do so, and I think I've read of people jailed for failing to pay outstanding traffic tickets.<br /><br /><br />Would like to know from a knowledgeable source how failure to pay an FBAR penalty would be treated.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-42262568372002329962012-10-22T13:42:51.577-05:002012-10-22T13:42:51.577-05:00On a related note, could you discuss the implicati...On a related note, could you discuss the implications of IRM 4.26.16.4?<br /><br /><br />I believe that the rationale behind the QAR treatment is that someone who voluntarily amends a return of his own initiative before the IRS becomes aware of previous underreported income should not pay penalties, and that penalties should apply only in cases where the IRS discovers underreporting.<br />There seems to be a similar thought process regarding the FBAR penalty, in section 4.26.16.4 of the IRM which states:"Penalties should be asserted only to promote compliance with the FBAR reporting and recordkeeping requirements. In exercising their discretion, examiners should consider whether the issuance of a warning letter and the securing of delinquent FBARs, rather than the assertion of a penalty, will achieve the desired result of improving compliance in the future."<br /> Now it seems to me that anyone who goes through the process of OVDI before being notified that his bank is about to respond to an administrative request, has an extremely high likelihood of filing FBARs in the future. Indeed, by the time someone gets to the point of deciding whether to opt out, he has likely filed timely FBARs for the past one, two, or even three years (depending on how slow the OVDI process is) as well as having filed delinquent FBARs. I cannot imagine anyone in his right mind not filing timely FBARs in the future after that experience, and it would seem to me that there is no need to "promote compliance" or "improving compliance in the future."<br /><br /><br />Can a strong legal argument be made about this provision in the Manual? The IRS seems to be ignoring it with rare exceptions (such as ij.)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-220630362969964382012-10-22T10:45:08.129-05:002012-10-22T10:45:08.129-05:00Jack - I had posted the question below
Everyon...Jack - I had posted the question below<br /><br /><br /><br /><br />Everyone,<br /><br /><br />I need some help. I am currently on a<br />work visa. I had foreign accounts, highest value $87,000 used to purchase real<br />estate of $150,000 (now valued at $200,000 due to appreciation in the foreign<br />country). The foreign accounts have been closed after the purchase and<br />repayment of loan and the property was transferred to my parents name for ease of management. The income tax related to interest is a meagre $5K, which<br />primarily relates to the year in which money was accumulated overseas for the<br />purchase. The penalty in this case will result in $60K for a tax of $5K. This<br />is not including the LCUs, attorney fees, dealings with foreign banks etc.<br /><br /><br />In this case, you and researcher had suggested that based on limited facts, I may not be a candidate for prosecution and i agree that i should not join OVDI.<br />1. Should i file 709 for the property that was given to my parents<br />2. Since i did not know of the filing requirements of 709 (similar to lack of knowledge of FBAR), am i legally liable to file it (which other developed country in the world has estate and gift taxes?) after the time for the original return has lapsed.<br /><br />3. Do nothing, since go forward may be a good strategy but there is nothing to report.<br /><br /><br />Anonnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-1420195777329127012012-10-22T10:29:13.461-05:002012-10-22T10:29:13.461-05:00Any comments or responses to the above would be ap...Any comments or responses to the above would be appreciated.<br />Many thanksAnonymousnoreply@blogger.com