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IRS Tell Estates No Closing Letters – Pull Transcripts!


We previously posted IRS Tell Estates No Closing Letters - Pull Transcripts Yourself! where we discussed that for estate tax returns filed after June 1, 2015, if the estate wished to receive a closing letter and form 5173, the personal representative or power of attorney had to send a letter to the IRS more than four months after the filing of the tax return requesting the issuance of both the closing letter and form 5173.   

The IRS issued Notice 2017-12, 2017-4 IRB where it announced that an IRS-issued account transcript can substitute for an estate tax closing letter.  
An estate tax closing letter (IRS Letter 627) is a written communication from IRS that specifies the amount of the net estate tax, the state death tax credit or deduction, and any generation-skipping transfer tax for which the estate is liable.
 
The estate tax closing letter also confirms that the estate tax return has either been accepted by IRS as filed, or has been accepted after an adjustment by IRS to which the estate has agreed. Thus, the receipt of an estate tax closing letter generally indicates that, for purposes of determining the estate tax liability of the decedent's estate, the IRS examination of the estate tax return is closed.
 
Prior to June 1, 2015, IRS issued an estate tax closing letter for every estate tax return filed (except in certain limited instances). However, for estate tax returns filed on or after June 1, 2015, IRS changed its policy and issues an estate tax closing letter only at the request of an estate, which request is to be made at least four months after the filing of the estate tax return.  
Notice 2017-12, 2017-4 IRB that announces that an IRS-issued account transcript can substitute for an estate tax closing letter. In so doing, IRS has updated some of the information on the Transcripts in Lieu of Estate Tax Closing Letters webpage 
IRS says that it understand that executors, local probate courts, state tax departments, and others have come to rely on estate tax closing letters for confirmation that the IRS examination of the estate tax return has been completed and the IRS file has been closed. Estate tax closing letters continue to be available upon request. However, an account transcript may substitute for an estate tax closing letter and is available at no charge.
 

 

Estates and their authorized representatives may request an account transcript by filing Form 4506-T, Request for Transcript of Tax Return. Currently, Form 4506-T can be filed with IRS via mail or facsimile (per the instructions on the form). Although account transcripts for estate tax returns are not currently available through IRS's online Transcript Delivery System (TDS), the IRS website, www.irs.gov, will have current information should an automated method become operational. 
 
To allow time for processing the estate tax return, requests should be made no earlier than four months after filing the estate tax return.
 
IRS says that estates and their authorized representatives who wish to continue to receive estate tax closing letters may call IRS at (866) 699-4083 to request an estate tax closing letter no earlier than four months after the filing of the estate tax return. 
This certainly presents an opportunity to demonstrate how the IRS can create unnecessary complexities (and accompanying misery) for people wishing to receive Federal Closing Letters. Lots of luck!

Have a US Estate Tax Problem?
 
Estate Tax Problems Require
an Experienced Estate Tax Attorney

 

Contact the Tax Lawyers at
Marini & Associates, P.A.
 for a FREE Tax Consultation Contact US at
or Toll Free at 888-8TaxAid (888 882-9243).
 
------------------------------------------------------------------------------------------- 
Robert S. Blumenfeld  - 
 Estate Tax Counsel

Mr. Blumenfeld concentrates his practice in the areas of International Tax and Estate Planning, Probate Law, and Representation of Resident and Non-Resident Aliens before the IRS.

Prior to joining Marini & Associates, P.A., he spent 32 years as the Senior Attorney with the Internal Revenue Service (IRS), Office of Deputy Commissioner, International.

While with the IRS, he examined approximately 2,000 Estate Tax Returns and litigated various international and tax issues associated with these returns.As a result of his experience, he has extensive knowledge of the issues associated with and the preparation of U.S. Estate Tax Returns for Resident and Non-Resident Aliens, Gift Tax Returns, Form 706QDT and Qualified Domestic Trusts.



Read more at: Tax Times blog

IRS Warns of Variation of Form W-8BEN scam!

The Internal Revenue Service warned in IR-2018-119 of a new twist tied to an old scam aimed at international taxpayers and non-resident aliens. In this scam, criminals use a fake IRS Form W-8BEN to solicit detailed personal identification and bank account information from victims. Here’s how the scam works:

  1. Criminals mail or fax a letter indicating that although individuals are exempt from withholding and reporting income tax, they need to authenticate their information by filling out a phony version of Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting. Recipients are requested to fax the information back.
  2. The Form W-8BEN is a legitimate U.S. tax exemption document, however, it can only be submitted through a withholding agent.
  3. In the past, fraudsters have targeted non-residents of the U.S. using the form as a lure to get personal details such as passport numbers and PIN codes.
  4. The legitimate IRS Form W-8BEN does not ask for any of that information.
  5. The phony letter or fax also refers to a Form W9095, which does not exist.
  6. Furthermore, the IRS doesn’t require a recertification of foreign status.

Scam variations

Be alert to bogus letters, emails and letters that appear to come from the IRS or your tax professional requesting information. Scam letters, forms and e-mails are designed to trick taxpayers into thinking these are official communications from the IRS or others in the tax industry, including tax software companies. These phishing schemes may seek personal information, including mother’s maiden name, passport and account information in order steal the victim’s identity and their assets.

Note that the IRS does not:

  • Demand that people use a specific payment method, such as a prepaid debit card, gift card or wire transfer. The IRS will not ask for debit or credit card numbers over the phone. For people who owe taxes, make payments to the United States Treasury or review IRS.gov/payments for IRS online options.  
  • Demand immediate tax payment. Normal correspondence is a letter in the mail and taxpayers can appeal or question what they owe. All taxpayers are advised to know their rights as a taxpayer.
  • Threaten to bring in local police, immigration officers or other law enforcement to arrest people for not paying. The IRS also cannot revoke a license or immigration status. Threats like these are common tactics scam artists use to trick victims into believing their schemes.

Taxpayers who receive the IRS phone scam or any IRS impersonation scam should report it to the Treasury Inspector General for Tax Administration at its IRS Impersonation Scam Reporting site and to the IRS by emailing [email protected] with the subject line “IRS Impersonation Scam.”

 Have a Problem With IRS Paperwork? 
Contact the Tax Lawyers at
Marini & Associates, P.A.
 
for a FREE Tax Consultation Contact us at:
or Toll Free at 888-8TaxAid (888 882-9243).

Read more at: Tax Times blog

ABA Request Voluntary Disclosure for Bitcoin

According to JDSUPRA, The American Bar Association has written to the US Internal Revenue Service, asking it clarify whether assets held as cryptocurrencies such as Bitcoin are subject to the Foreign Bank Account Reports (FBAR) and Form 8938 reporting rules.  

IRS Notice 2014-21asserted that cryptocurrencies were 'property' rather than currencies for federal income tax purposes but did not address their FBAR and Forms 8938 status. 
US Cryptocurrency Investors Made $92 Billion of Taxable Gains during 2017 Alone, Resulting in about $25 Billion of Cryptocurrency related Tax Liabilities, and the ABA Is Asking the IRS to Offer an Offshore Voluntary Compliance Initiative Focused on Virtual Currency and Equivalent Assets.

“It is unclear whether a taxpayer holding cryptocurrencies on a foreign cryptocurrency exchange (e.g., Xapo.com or Binance.com) or in a wallet maintained by a foreign wallet service provider (e.g., Blockchain.com) is required to report the account(s) on an FBAR as it is unclear whether cryptocurrencies may qualify as a reportable account for FBAR purposes.

There is tension between the Service’s classification of cryptocurrency as “property,” the Securities Exchange Commission’s (“SEC”) classification of cryptocurrency, in certain circumstances, as a “security,” and the Commodity Futures Trading Commission’s (“CFTC”) classification of  cryptocurrency as a “commodity.”

This tension is perhaps most pronounced in the context of the FBAR reporting requirements, which blend concepts of tax, securities, commodities, and money and finance laws. 

  • On the one hand, if cryptocurrency is property, then it is arguably not subject to FBAR reporting requirements because it is not, under the current regulatory definitions, a “bank, securities, or other financial account.” 
 

  • On the other hand, if cryptocurrency is a “security,” then FBAR reporting requirements may apply under the general rule: “each United States person having a financial interest in, or signature authority over, a bank, securities, or other financial account in a foreign country shall report such relationship to the Commissioner…”
 

  • Moreover, by treating cryptocurrency as “property,” the answer to whether cryptocurrency held in foreign wallets must be reported likely depends on what functions the wallet provider actually provides, which may be difficult for taxpayers to determine in many cases. 
 

  • Furthermore, it is unclear how these requirements may apply to taxpayers who hold cryptocurrencies directly on a distributed blockchain.
Additional guidance is needed with respect to whether, and the extent to which, the FBAR reporting requirements apply to cryptocurrency. Assuming an FBAR may be required in particular cases, it would also be helpful if guidance addresses the differences in filing requirements for cryptocurrency held on an exchange, cryptocurrency held  through a wallet service company (custodial or noncustodial), or cryptocurrency held directly through a wallet address maintained by the taxpayer.  
The ABA believes that cryptocurrency that is held directly by a taxpayer or held through a noncustodial wallet should not be reportable on the FBAR as there is no “financial account” maintained by a third party as there is with other reportable accounts. 
We previously discussed, that an abundance of caution, a taxpayer may want to report their investments in cryptocurrencies on their FBAR and Form the 8938, since Taxpayers who do not properly report the income tax consequences of virtual currency transactions can be audited for those transactions and, when appropriate, can be liable for penalties and interest. 
In more extreme situations, taxpayers could be subject to criminal prosecution for failing to properly report the income tax consequences of virtual currency transactions.  
Criminal charges could include tax evasion and filing a false tax return. Anyone convicted of tax evasion is subject to a prison term of up to five years and a fine of up to $250,000. Anyone convicted of filing a false return is subject to a prison term of up to three years and a fine of up to $250,000.

  

 Have an IRS Tax Problem?  

     

     Contact the Tax Lawyers at 

    Marini & Associates, P.A. 

     

     
    for a FREE Tax Consultation Contact us at:
    or Toll Free at 888-8TaxAid (888) 882-9243

 

 

 

 

 

 

 

Read more at: Tax Times blog

IRS Searching For Non-Compliant Non-Residents'!

According to Law360, the Internal Revenue Service announced on May 14, 2018 that it will undertake a campaign to increase compliance for rules involving nonresident aliens' tax treaty exemption claims.

Because the statutes involving income-based tax treaty exemption claims can be confusing, the IRS' Large Business and International Division will focus on education and outreach to increase awareness and compliance, according to a statement.

“Some nonresident alien taxpayers may either misunderstand or misinterpret applicable treaty articles, provide incorrect or incomplete forms to the withholding agents or rely on incorrect information returns provided by U.S. payors to improperly claim treaty benefits and exempt U.S. source income from taxation,” the statement said.

 
“This Campaign Will Address Noncompliance through a Variety of Treatment Streams, Including Outreach/Education and Traditional Examinations.”
 

Under the provisions of certain treaties, some payments from U.S. residents to nonresident aliens are not subject to the complete withholding obligation of 30 percent, as defined under Internal Revenue Code Section 1441.

The Campaign Was One of Six the Large Business and International Division Announced Monday, Following the Rollout of Five Others in March.


Nonresident aliens will also be the subject of additional campaigns, designed to encourage compliance in instances when they inappropriately apply for education tax credits, which are available only to U.S. residents, and income-oriented credits, for which they are also not eligible.
The announcement highlighted the agency's priority in ensuring compliance with both effectively connected and fixed, determinable, annual periodical tax treaty-based income credits.

The Agency Will Also Pursue Campaigns to Increase Compliance with Withholding, Deposit and Reporting Requirements per IRS Form 1042 and

Compliance with the Reporting of Transactions with Foreign Trusts, per IRS Form 3520, According to the Announcement.

The process for ensuring compliance may include "examinations and penalties assessed by the campus when the forms are received late or are incomplete," the announcement stated.

 
Have an International Tax Problem?
 
Contact the Tax Lawyers at
Marini & Associates, P.A.
 
for a FREE Tax Consultation Contact Us at:
or Toll Free at 888-8TaxAid (888 882-9243).


 

Read more at: Tax Times blog