tag:blogger.com,1999:blog-1519969502186924526.post4999846160931537542..comments2023-10-24T08:00:53.865-05:00Comments on Federal Tax Crimes: To OVDI or not to OVDI - Part 2 (7/31/11)Jack Townsendhttp://www.blogger.com/profile/14469823736335455874noreply@blogger.comBlogger223125tag:blogger.com,1999:blog-1519969502186924526.post-28479956930316101532012-05-14T19:36:31.533-05:002012-05-14T19:36:31.533-05:00Hi Jack, How would you calculate high bal of broke...Hi Jack, How would you calculate high bal of brokerage account, take the dec 31 value for each security owned in year 2011, or take purchase value even though purchases were made in different years, or how else?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-50043491256081061922012-05-02T15:16:35.665-05:002012-05-02T15:16:35.665-05:00Read the article. Would disagree with the stateme...Read the article. Would disagree with the statement that there is no penalty for late FBARs, since once the June 30 deadline is gone, the penalty (whatever it ultimately is) applies and there is no provision that filing or not filing a late FBAR will make a difference.<br /><br />Also, am not sure what the difference is between accounts in Switzerland or elsewhere. So far (and surprisingly) Swit. is the only country being pursued and which is cooperating (to some extent.) Don't know why nothing is going on with Caymans, Singapore, Hong Kong, Bahamas, and many others.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-29784882641278518432012-05-01T15:59:46.981-05:002012-05-01T15:59:46.981-05:00I found what I think is a very good article from a...I found what I think is a very good article from a firm that seems to look after the interests of their customers.<br />Their thinking seem to be inline with Jack's and other reasonable attorneys.<br />Although the article is a couple years old, the strategy looks like it’s still valid, given the fact that the IRS has not provided better guidance.<br /><br />http://www.rowbotham.com/knowledgenet/execfocus/newsletter28.phpAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-18489667339291819572012-04-16T05:35:14.903-05:002012-04-16T05:35:14.903-05:00Generally, the IRS is not supposed to share tax in...Generally, the IRS is not supposed to share tax information with other government departments except under limited circumstances. So I don't think this would be an issue. <br /><br />However, I do think 'going forward' is an issue for people who are still in the process of immigration and/or naturalization. You are normally required as part of immigration/naturalization to attest (under pain of perjury) that you are up to date with Federal, state and local tax obligations (which you would not be if you did not include past income). You are also required to attest that you have never failed to file a required tax return. Technically, the FBAR is not a tax return, so maybe having old unfiled FBARs is not an issue here, but there may be other tax forms that are pending.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-42008135122858240682012-04-14T20:11:20.362-05:002012-04-14T20:11:20.362-05:00I am including the income on maturity in some of m...I am including the income on maturity in some of my two year CD's.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-9387827562086434162012-04-14T19:47:51.652-05:002012-04-14T19:47:51.652-05:00I seriously doubt the possibility. So far from the...I seriously doubt the possibility. So far from the cases i have seen, unless there is some clear evidence of mischief, i have not seen the Service being punitive. Again i am not a lawyer and this<br />is based on my limited observation.<br />Jack may have definitely have a better idea.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-44292892262627103122012-04-14T11:22:46.823-05:002012-04-14T11:22:46.823-05:00Can someone comment of the risks of green card hol...Can someone comment of the risks of green card holders in the US to be deported for not having reported the account on their 1040 and failure to file FBARs, in the case of an audit with quiet disclosure or going forward?<br />Let's assume the people were negligent (small accounts (less than 75k), small amount of interest not declared, no other source of income abroad, and transfer of money only from abroad to the US (i.e. definitely not tax evaders).Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-38831246648788517012012-04-11T15:41:14.390-05:002012-04-11T15:41:14.390-05:00The 2011 FBAR form is due June 30, 2012. You shou...The 2011 FBAR form is due June 30, 2012. You should mail it a few days in advance because it needs to be at the Detroit Service Center by 6/30/12. Your foot is in the water by that time, and I would recommend that you go ahead and file your return at least by that time unless there is some other reason to postpone until the end of the extension period.<br /><br />I don't think that there will be anything material that will happen that will affect the 2011 tax return and FBAR. Anything that could happen (I make no comment on whether anything is likely to happen), will probably just affect per-2011 years.<br /><br />Jack TownsendJack Townsendhttps://www.blogger.com/profile/14469823736335455874noreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-62404295696987573592012-04-11T14:51:47.626-05:002012-04-11T14:51:47.626-05:00Jack, will it be a good idea to take extension and...Jack, will it be a good idea to take extension and buy more time to decide what we should do? I'm considering going forward option but very scared. Buying some more months to see if IRS is changing any stand or some high power intervenes to add some clarity though chances are slim. What do you suggest? <br /><br />Also, its hard to gather all data from foreign banks. I'm trying very hard. If i don't get all data, shd i ask extention or make best guess.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-23755336504889009672012-04-05T20:43:26.810-05:002012-04-05T20:43:26.810-05:00Anyone has other thoughts?Anyone has other thoughts?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-72340657989519805592012-04-05T01:07:12.915-05:002012-04-05T01:07:12.915-05:00Anonymous Aug 10, 2011 09:08 AM
"Is it mandat...Anonymous Aug 10, 2011 09:08 AM<br />"Is it mandatory to include the offshore house in the OVDI penalty calculation if there was unreported rent from it?"<br /><br />As a cautionary note, I also would like to remind other fellow readers with cross-border implications to carefully examine treaty articles that may apply, to find if they are entitled to a tax credit, tax exemption, reduced rate of tax, or other treaty benefit or safeguard.<br />To be somewhat more specific, some of the treaties the U.S. has in place with other countries follow the OECD Model Tax Convention on Income and on Capital. There it says in Chapter III, TAXATION OF INCOME, ARTICLE 6, INCOME FROM IMMOVABLE PROPERTY, 1.: “Income derived by a resident of a Contracting State from immovable property (...) situated in the other Contracting State may be taxed in that other State.”<br />This could mean, depending on your specific circumstances, that the answer to your question is no, since income from your offshore house might not even be taxable in the U.S.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-43190883246303011712012-04-04T17:31:26.101-05:002012-04-04T17:31:26.101-05:00The risk you run is that if you ever get audited (...The risk you run is that if you ever get audited (especially if tax rates change), IRS or state tax departments could allege that you are shifting income between years to take advantage of lower tax rates.<br /><br />Every Indian bank provides a CD which shows the maturity value of the CD. The prudent thing to do is to estimate the 2011 accrual based on the time of the CD i.e. if its a 18-month CD and 12 months fall in 2011 and 6 months fall in 2012 you have got to split the income over that time frame in the ratio. I had a similar problem with SBI. They give interest accrual and TDS certificates only as of March 31st of each year. <br /><br />I would rather use that approach then not declaring any income on the CD and only declaring income when the CD matures as that approach understates the income in the year.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-34705803163162714802012-04-04T16:14:08.357-05:002012-04-04T16:14:08.357-05:00For interest and tax from India, is it absolutely ...For interest and tax from India, is it absolutely must that we calculate using the OID (accrual) method for CDs or is it ok to use maturity date payouts. Reason i ask is, I've accounts with two banks. One bank statement lists interest accrued and tax deducted date wise, so I can calculate all pymts/accruals for this bank for jan-Dec. But for the other bank, they are not able to give me this data. Hence its difficult to calculate with accuracy. So i'm asking if it will be acceptable and ok if I just use the matured date mechanism for this second bank. That is, only show interest for CD's which were matured in 2011 and not show any accrued values for other existing CDs. Those will be shown in 2012 when those CDs mature. Please advise.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-43755222395240268362012-04-02T04:35:02.884-05:002012-04-02T04:35:02.884-05:00You could make the argument you suggest about your...You could make the argument you suggest about your 2006 return, but what about the other years returns? If that is the only favorable fact you have, you have to make the best argument you can. But, the truth is your case will be resolved based on a host of facts, so I can't really say anything except that, at the margins, this could be a helpful facts.<br /><br />Jack TownsendJack Townsendhttps://www.blogger.com/profile/14469823736335455874noreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-25576450851549352312012-04-02T02:50:57.223-05:002012-04-02T02:50:57.223-05:00Hi Jack, may be you can give some advice on this c...Hi Jack, may be you can give some advice on this case. On one of the past returns 2006, the schedule B question is unchecked but the country name is written. I think i had answered it yes first and later got to know that it was applicable only for US citizens and removed it as it was not applicable as per my understanding. This shows that there was no intent to hide. However, if this was an obligation that i had, then I would have expected the tax dept to catch this and let me know right away which could have clarified all vague rules and I would have given all information. As there was no intent to hide but just doubtful as to whether its applicable on immigrants, and even tax dept did not notify me while there was still time to correct, can't this be a valid proof in my favor and also wouldn't this suggest that even tax dept wasn't concerned with this.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-81043033543318942512012-04-02T02:37:53.717-05:002012-04-02T02:37:53.717-05:00To Anonymous Mar 20, 2012 12:10 PM:
Are you getti...To Anonymous Mar 20, 2012 12:10 PM:<br /><br />Are you getting these details from Indian Banks as to when the FD got the interest payment and tds deducted. I'm having very hard time to get this data, they are only saying that they can give collective data for indian financial year?<br /><br />Also, are you just doing this going forward or entering the OVDI scheme?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-69304021718826071462012-03-23T15:51:19.587-05:002012-03-23T15:51:19.587-05:00I came to know about form 8938 a week back and the...I came to know about form 8938 a week back and then a little bit of digging in let me here. :( Why my CPA was ignorant of all this.. :(<br /><br />My situation is:<br /><br />- opened foreign account from 2008. I sent some of my savings, US taxed money (my US taxed salary) to the account. Some money sent to that account was used to repay a part of a house loan, both house and house loan in foreign land. the remaining part of the loan was paid by my father residing in foreign land. The remaining money accrued interest income. Both the account and the interest income (not much) has not been reported. <br /><br />- The house itself was mortgaged to secure the loan.<br /><br />- I got temporary possession of the house in 2011 and the whole place is still under construction and not rented out. <br />During year [2008 - 2011) the house was non-tangible (mortgaged) and non-income generating (still is non-income generating).<br /><br />In OVDI what would be the base for penalty calculation:<br />1. would my share of the fmv of the house be included (since it was non-tangible, not income generating)<br /><br />It would be good to hear if anyone had similar experiences and would like to share them.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-46318411856188342912012-03-23T07:08:09.978-05:002012-03-23T07:08:09.978-05:00The violation of law occurs on each 6/30 when the ...The violation of law occurs on each 6/30 when the FBAR is not filed. Hence, the same violation is punished in any type of audit -- opt out audit, quiet disclosure audit or go forward audit. There is no obligation file delinquent FBARs. Hence, at least from a theory standpoint, if the IRS gave better treatment on audit to those OVDI opt outs and quiet disclosures it would, in effect, be punishing the go forwards when the law says that that person had no obligation to file delinquent FBARs. Why should you punish someone greater when he had no obligation?<br /><br />Now, it is true that the IRS could have announced as an incentive that opt outs and quiet disclosures would be treated better as a way to encourage taxpayers to do something affirmative, but the IRS did not announce that. What the IRS announced is that opt outs would be treated to regular audits with no special preference for having come into the sunlight. That same treatment presumably applies to quiet disclosures. And, finally, it should apply to go-forwards who get audited.<br /><br />Best,<br /><br />Jack TownsendJack Townsendhttps://www.blogger.com/profile/14469823736335455874noreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-45181410558064049412012-03-23T05:22:09.505-05:002012-03-23T05:22:09.505-05:00Anon @Mar 22, 2012 09:35 PM
You say
"Clear...Anon @Mar 22, 2012 09:35 PM<br /><br />You say <br /><br />"Clearly if the person files FBARs for 1 year he becomes willful if he does not do so for all years he is required."<br /><br />From a strictly legal perspective, willfulness should be based on state of mind before the deadline had passed. However, the IRS has considerable leeway in deciding on reasonable cause and in administering the non-willful penalties, and they have already said that in the manner of reasonable cause, this would be one factor they would consider.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-7413948908104635812012-03-22T22:35:05.644-05:002012-03-22T22:35:05.644-05:00Jack,
I don;t think this is fair:"The answer...Jack,<br /><br />I don;t think this is fair:"The answer is that you should get the same result on audit as you would had the audit occurred after (i) joining OVDI and opting out or (ii) doing a quiet disclosure"<br /><br />Why does a person gets treated the same if he does not file his past FBARs as opposed to someone that filled delinquent or came in voluntarily. Clearly if the person files FBARs for 1 year he becomes willful if he does not do so for all years he is required.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-31815039336140434362012-03-22T18:16:52.342-05:002012-03-22T18:16:52.342-05:00Excellent question.
The answer is that you should...Excellent question.<br /><br />The answer is that you should get the same result on audit as you would had the audit occurred after (i) joining OVDI and opting out or (ii) doing a quiet disclosure. At least in theory, you should not get a worse result. (The fuzz word is at least in theory, the problem being that, given the discretion allowed agents in audits, they may well at the margins treat the OVDI opt out audit taxpayer and even the quiet disclosure taxpayer better than they treat the go-forward taxpayer; but at least in theory I don't think they are supposed to do that.)<br /><br />The one except is where the person doing the go-forward is at material risk of criminal prosecution. That person could be criminally investigated and prosecuted. Hence, a taxpayer with a material risk of prosecution should -- repeat should -- seriously consider joining the OVDI 2011 as extended unless he is willing to assume the risk.<br /><br />Best,<br /><br />Jakc TownsendJack Townsendhttps://www.blogger.com/profile/14469823736335455874noreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-61511658234253616732012-03-22T17:01:03.763-05:002012-03-22T17:01:03.763-05:00Prospective Filings:
Since there is no obligation ...Prospective Filings:<br />Since there is no obligation to correct the past year taxes, let's assume one does prospective filing of FBARs and 1040s after 5+ years. If IRS notices this first time filing for FBAR and decides to an audit of previous years:<br />- What kind of penalties if at all are we looking at (for previous years)?<br />- Is there any opportunity to present reasonable cause argument to the agent to waive of penalties when audited?<br /><br />Thanks<br />KCAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-88959089991081874772012-03-20T20:17:19.564-05:002012-03-20T20:17:19.564-05:00Keep in mind that 2012 OVDI is just an extension o...Keep in mind that 2012 OVDI is just an extension of the 2011 OVDI. Hence the 2011 OVDI FAQ applies except as modified for post-2011 entrants (e.g., the in lieu of penalty rate).<br /><br />Jack TownsendJack Townsendhttps://www.blogger.com/profile/14469823736335455874noreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-13559727904314272682012-03-20T17:30:24.741-05:002012-03-20T17:30:24.741-05:00Thanks ij for the info. I am still waiting for th...Thanks ij for the info. I am still waiting for the Q/A frequent asked questions for 2012 OVDP, which IRS has not updated yet.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-32304931928735666752012-03-20T14:10:17.057-05:002012-03-20T14:10:17.057-05:00Anon - I had to do the annual calculations by myse...Anon - I had to do the annual calculations by myself especially because I have 2 or 3 year certificates of deposit. Indian banks either disclose March 31 or September 30 or in some cases July 1 and Jan 31 interest accrual / payment / deduction of taxes. So you have to calendarize these calculations based on days of year covered by their statements otherwise you wont be able to estimate accurately the max balance and annual interest income. This applies to the FBAR or Form 8938 that you will file this year as well so be prepared because Indian banks are not going to give you calendar based statements and if they do they are probably inaccurate because the US IRS requires OID based calculation for long term CDs.Anonymousnoreply@blogger.com