tag:blogger.com,1999:blog-1519969502186924526.post5649724161598266160..comments2023-10-24T08:00:53.865-05:00Comments on Federal Tax Crimes: U.S. International Tax Enforcement -- Exchange of Information and Collection (6/28/14)Jack Townsendhttp://www.blogger.com/profile/14469823736335455874noreply@blogger.comBlogger44125tag:blogger.com,1999:blog-1519969502186924526.post-60004789138435999732014-07-26T14:32:37.559-05:002014-07-26T14:32:37.559-05:00This says a lot
about Banks --- the consensus of o...This says a lot<br />about Banks --- the consensus of opinion is that they are highly paid<br />“crooks” ---- no wonder they voted Ivan Pictet banker of the<br />year.<br /><br />It appears that<br />crimes in the “establishment.” are honoured by their peers.<br /><br /> “HONOURS<br />AMONG THIEVES.”jack loachnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-1847023768216104902014-07-01T05:32:03.493-05:002014-07-01T05:32:03.493-05:00Jack, Thanks for your help on this. If it doesn&...Jack, Thanks for your help on this. If it doesn't raise issues around client privilege, would you be able to post (in general terms) whether or not the IRS accepts the withdrawal prior to July 1?gottaloveUStax1noreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-35075543088165068632014-06-30T22:44:08.923-05:002014-06-30T22:44:08.923-05:00I meant in a SFOP setting. Since the program is SO...I meant in a SFOP setting. Since the program is SO new, you might have the advantage of explaining or making a case to the Examiner and his/her manager that you (the taxpayer) can qualify under SFOP, and explain that the 330 day can overlap two calendar years, assuming you are on the border of qualifying for SFOP. I had the advantage of getting transitionary SDOP treatment in light of the Examiner saying my client would be construed willful in an Opt Out situation. I think my examiner was extremely tired of the back & forth, and the situation that my client was going to possibly Opt Out. I don't think the examiner wanted to spend more time on the same case, after 2.5 years in OVDP, in an Opt Out situation with the Opt Out Committee.Milan Madhani, CPAhttp://www.vimlantax.comnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-78278128900593213682014-06-30T15:50:36.988-05:002014-06-30T15:50:36.988-05:00Yes. It's basically for people who have owners...Yes. It's basically for people who have ownership in both a CFC & PFIC entity, and when you should file a 5471 versus a 8621. It does not mean that you should not be filing a 8621 for your PFIC, but rather a 5471, since that may take precendence. It's a highly complex reg, and I don't know if it's final yet, but even if it's not, you can still use the temp regulations. Again, you need a good CPA or Practioner to walk you through.Milan Madhani, CPAhttp://www.vimlantax.comnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-25220972281489017452014-06-30T15:23:58.977-05:002014-06-30T15:23:58.977-05:00If you're in OVDP, then you can use the MTM me...If you're in OVDP, then you can use the MTM method (which is the proscribed alternative resolution, Code 1296). This is spelled out in FAQ 10, in both the old & new OVDP (2012 & 2014). You'll need to find a CPA or a practioner who knows MTM (1296) & 1291 rules. <br /><br /><br />But in lay defintion, MTM means, everytime the mutual fund goes up in value, even though you did NOT sell it, it's TAXABLE as ordinary income (surprise!), and every time it goes down, it's deductible as an ordinary loss ONLY up to the prior gain you've taxed yourself on (these are called unreversed inclusions and are cumulative). <br /><br /><br />But find a good CPA who knows PFICS inside and out. (not me).Milan Madhani, CPAhttp://www.vimlantax.comnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-2695734031754492282014-06-30T15:11:32.271-05:002014-06-30T15:11:32.271-05:0040 years - straightline. See Pub 946, & Reg 1...40 years - straightline. See Pub 946, & Reg 1.168(i)-1(f). Foreign real estate is a GAA (gneral asset account) and subject to ADS (usually).Milan Madhani, CPAhttp://www.vimlantax.comnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-1346009432931201222014-06-30T15:07:13.072-05:002014-06-30T15:07:13.072-05:00My understanding is that an ultimatum given by pho...My understanding is that an ultimatum given by phone to sign the 906 or optout is meaningless. The IRS must follow procedures and send you a letter saying as much and giving you time to respond (I think 30 days.) In any case you must act before the IRS signs the 906. Suggest you ask the agent for the name and phone of his/her manager and talk to the manager.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-36202927382589511622014-06-30T14:55:41.012-05:002014-06-30T14:55:41.012-05:00In the streamline certification statement (multip...In the streamline certification statement (multipage document) it asks for the EOY balance (unlike the highest balance in OVDI.) This simplifies the calculations and would benefit some whose highest balance did not occur on Dec 31 but sometime during the year. Also, by reporting Dec. 31 balances, there is no need to do the sometimes complicated calculations of netting out interbank transfers, since this is a snapshot taken on Dec. 31 of each year. HOWEVER ... note that under streamlined the penalty base is accounts which EITHER had no FBAR filed OR income was not reported on the tax return, in other words tax-compliant accounts which were not reported on the FBAR are not excluded from the penalty base (see Streamline FAQs.)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-17581183817380224072014-06-30T14:46:26.059-05:002014-06-30T14:46:26.059-05:00A-B-S-O-L-U-T-E-L-Y. Welcome to OVDP Bizarro worl...A-B-S-O-L-U-T-E-L-Y. Welcome to OVDP Bizarro world.Milan Madhani, CPAhttp://www.vimlantax.comnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-40048955063473580162014-06-30T14:07:04.855-05:002014-06-30T14:07:04.855-05:00Milan - For e.g. on a $100K foreign property, how ...Milan - For e.g. on a $100K foreign property, how do we calculate the yearly depreciation expense or depletion? Most of the CPA's don't know on this.<br /><br /><br />Would it be challenged by IRS?<br /><br />Thank youAnon2014R anonnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-9013979889714701872014-06-30T13:46:32.257-05:002014-06-30T13:46:32.257-05:00You have a lot "ifs" in your situation, ...You have a lot "ifs" in your situation, but it seems you might have a lot of reasonable cause arguments also. Your general picture seems to cry "nonwillful", but no one can really be sure until you do a nice story line, chronologically, and what exactly happened, etc. etc.. You need good counsel. Regarding the certification, yes , it's true that the IRS could come back to you if they find something they feel is truly deceiful or representative of fraud by you, but assuming you are thorough with your filings, as much as possible, I would not worry about an account you missed here or there because the IRS has to establish a pattern of bad behaviour by you which truly cries out that you are willfully not disclosing. The cerification for SDOP/SFOP itself says that nonfwillfulness is "due to negligence, inadvertence,...."<br /><br /><br />Just my take.Milan Madhani, CPAhttp://www.vimlantax.comnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-66236013678357336552014-06-30T13:38:04.164-05:002014-06-30T13:38:04.164-05:00I had a situation where my client gave the 906 to ...I had a situation where my client gave the 906 to the OVDP Examiner, dually signed by him and his wife. However, he had second thoughts, and before the Examiner executed the 906, he requested that the 906 not be executed until he had time to review his case with the Taxpayer Advocate Service. The Examiner complied and said she would give him time to decide on the Opt Out. Then the streamlined programs came out on June 18th, and my guy requested the 5% treatment per Transition FAQ 9. Examiner agreed and has recommended he receive the SDOP 5% mitigation. How has your case turned out?Milan Madhani, CPAhttp://www.vimlantax.comnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-3950115176652548722014-06-30T13:29:54.779-05:002014-06-30T13:29:54.779-05:00Milan ,
Than you for your reply. I have sitauatio...Milan ,<br /><br />Than you for your reply. I have sitauation where I have purchased $1000 a dollor worth of Mutual funds in year 2010. It never made any profit during last 3 years and Still own them. Never knew about reporting foreign mutual funds. I am not sure how to report this to IRS during the process of amending tax return. Any information on this will be appreciated.sksnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-73647381012667929112014-06-30T13:23:06.448-05:002014-06-30T13:23:06.448-05:00I read this hurriedly, but are you saying the IRS ...I read this hurriedly, but are you saying the IRS signaled a willful conclusion if the client opted out but was willing to give the client the 5% streamlined penalty? <br /><br />That seems pretty early in the process for that kind of determination to have been made and, if it was made, that is a fantastic and counter-intuitive result.<br /><br />Jack ToiwnsendJack Townsendhttp://www.tjtaxlaw.com/noreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-48397439269527545632014-06-30T13:20:06.296-05:002014-06-30T13:20:06.296-05:00I can't speak to what the IRS would consider i...I can't speak to what the IRS would consider it, but I do think the word withdraw connotes something different than opt out. Opting out keeps the taxpayer in the OVDI/P structure, but just adopts a different civil penalty regime (the audit regime rather than the offshore penalty regime). Withdrawing throws the taxpayer back in the original milieu, which he solves by streamlining.<br /><br />Jack TownsendJack Townsendhttp://www.tjtaxlaw.com/noreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-70236734416486021052014-06-30T13:13:39.827-05:002014-06-30T13:13:39.827-05:00Yes, I believe that they process the returns when ...Yes, I believe that they process the returns when they come in, but in any event they will cash the check for the payments. <br /><br />You have to be careful about how the IRS posts the payments. If they are posted to the years to which they \apply, then the 2 year period to claim the refund will apply. If, as they IRS started doing, the payments are posted to the earliest clearly open year (say the first year in the 3 year statute of limitations, even though the payments relate to earlier years), then the statute will be open because of the consents that are signed in the OVDP process and the payments can be refunded.<br /><br />Jack TownsendJack Townsendhttp://www.tjtaxlaw.com/noreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-28129594074375337542014-06-30T12:23:18.310-05:002014-06-30T12:23:18.310-05:00Only a US person has concerns of having a financia...Only a US person has concerns of having a financial interest. I think the word nominee is key here. India for e.g., has a very different defintion of what the word nominee means, compared to IRS definitions. If the money is essentially the nominee's after the US person passes on (assuming the US person did not leave a will or beneficiary for some accidental reason) , then does the nominee being able to keep the monies after US account owner's death mean the US person did NOT have financial interest while US person was alive? I don't think so. The key for you, might be, that how the nominee (IRS definition), who, being on legal title, acts on behalf of the US person while US person is alive, and that indeed, in my opinion, can create a financial interest for that US person because a nominee (IRS definition) is still acting on behalf (according to some instructions by US person). It all depends what the foreign country's definition of "nominee" means, and what, if any, instrucitons (either on a pre-written document, or verbally) which the nominee (IRS definition) is taking from US persons not legally on title of those accounts . See here, from Internal Revenue Manual: 4.26.16.3.4 (07-01-2008)<br /><br />"A United States person also has a financial interest in each bank, securities, or other financial account in a foreign country for which the owner of record or holder of legal title is: a person acting as an agent, nominee, attorney, or in some other capacity on behalf of the U.S. person;"Milan Madhani, CPAhttp://www.vimlantax.comnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-51275440598523831852014-06-30T12:00:11.780-05:002014-06-30T12:00:11.780-05:00Jack - If TP submits 8 yrs of returns and then opt...Jack - If TP submits 8 yrs of returns and then opts-out, does IRS process and assess tax on the out of statute returns or not?MMnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-35186175761578635032014-06-30T11:38:42.387-05:002014-06-30T11:38:42.387-05:00My question is: do you think there is a chance th...My question is: do you think there is a chance that the IRS would deem the letter to withdraw to be equivalent to an opt out, which would then disqualify you from the Streamlined and automatically put you into the opt out/possible examinationgottaloveUStax1noreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-52379211207321683212014-06-30T11:27:19.858-05:002014-06-30T11:27:19.858-05:00No. I disagree. Fixing mistakes on domestic matter...No. I disagree. Fixing mistakes on domestic matters is okay, but signing the certificaiton statement, in SDOP or SFOP, can muddy the waters. Jack has commented on this. See below.Milan Madhani, CPAhttp://www.vimlantax.comnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-89718620250367247582014-06-30T11:14:41.379-05:002014-06-30T11:14:41.379-05:00Asher,
This is exactly my case. My client inher...Asher, <br /><br /><br />This is exactly my case. My client inherited an amount well over FBAR reporting standards some 9 years ago, and from those monies, opened up two accounts at a bank (now a known bank with a John Doe summons from DOJ). They used the smaller account (whose balance never anywhere near $10), but the larger 6 digit account stayed passive (no withdrawals and deposits from anywhere, whatsoever. The smaller account was used for expenses whilst abroad. <br /><br /><br />Original returns did NOT have any foreign interest income, nor had he checked the box at bottom of Schedule B in those original covered OVDP years.<br /><br /><br />OVDP Examiner had said he was willful would he to Opt Out. That was a bunch of Mallarkey (Joe Biden's term), because we now know willful, per IRM, and court cases has VERY difficult to prove with only one factor alone. <br /><br /><br />Taxpayer got SDOP approval (transition FAQ 9), for just the 5% penalty. <br /><br /><br />It depends on the full set of facts. Hope this helps.<br /><br /><br />I had presented a 48 page letter, using JustMe & Moby's template. <br /><br /><br />It depends on theMilan Madhani, CPAhttp://www.vimlantax.comnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-28677514717175232742014-06-30T10:49:04.302-05:002014-06-30T10:49:04.302-05:00If you have a foreign mutual fund, you have to app...If you have a foreign mutual fund, you have to apply the asset or income test from the 8621 instructions. Most foreign mutual funds I know of are in fact PFICs. Minnow is not a technical term and there are no special provisions for exemptions of 8621 fiing, as far as I know, for anyone in OVDP, SDOP, SFOP, or making a reasonable clause disclosure outside of those programs. If you are in OVDP, you can use MTM, if it's suitable, but keep in mind, the tax in the FIRST year alone for OVDP is 27% on the unrealized gains of the PFIC, and thereafter, is 20% FLAT going forward unti the end of your OVDP period. <br /><br /><br />Your first year of OVDP will be the 8 years previous, for the year which the extended due date for filing the return has passed. So right now, anyone contemplating OVDP would be entering for 2005-2012, EVEN if 2012's return was filed with a refund. So WATCH out. Another "snowbird", or "minnow" trap. ;)Milan Madhani, CPAhttp://www.vimlantax.comnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-7077777430401678582014-06-30T10:35:50.848-05:002014-06-30T10:35:50.848-05:00Jack - Thank you very much..Jack - Thank you very much..Anon2014R anonnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-58675561096476065212014-06-30T10:32:25.150-05:002014-06-30T10:32:25.150-05:00If it helps, the certification statement for SDOP ...If it helps, the certification statement for SDOP & SFOP has the following statement about negligence being an element of nonwillfulness. But I defer to Jack. <br /><br />"My failure to report all income, pay all tax, and submit all required information returns, including FBARs, was due to non-willful conduct. I understand that non-willful conduct is conduct that is due to negligence, inadvertence, or mistake or conduct that is the result of a good faith misunderstanding of the requirements of the law."Milan Madhani, CPAhttp://www.vimlantax.comnoreply@blogger.comtag:blogger.com,1999:blog-1519969502186924526.post-46125003506672321792014-06-30T10:25:45.791-05:002014-06-30T10:25:45.791-05:001) Just federal.
2) No.
3) No, but there are ris...1) Just federal.<br /><br />2) No.<br /><br />3) No, but there are risks to not going through a lawyer to help with the certification as to nonwillfulness. No one can assess the risk without knowing all the facts and nuance. Having said that, for most minnows, probably getting the legal advice would be like buying limited insurance. If you don't die, you didn't need the insurance. Similarly, if the IRS does not audit the certification or agrees that the certification was correct, you did not need to engage the lawyer, but you don't know that in advance.<br /><br />Jack TownsendJack Townsendhttp://www.tjtaxlaw.com/noreply@blogger.com