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Monthly Archives: September 2011

U.S. tax-evasion probe turns to Israeli banks

September 19, 2011

The U.S. pursuit of offshore tax evaders is widening to include Israel, where U.S. authorities are scrutinizing three of Israel's largest banks over suspicions their Swiss outposts helped American clients evade taxes, people briefed on the matter said.

The banks under scrutiny by the U.S. Justice Department's criminal tax division are Bank Hapoalim, Bank Leumi le-Israel BM and Mizrahi-Tefahot, the sources said.

The shift to Israel from Switzerland, for years the main focus of the Justice Department's campaign against offshore private banking secrecy, signals the broadening of a landmark probe by the agency that began in 2007 with UBS AG, Switzerland's largest bank.

The shift also opens up a potential sore spot in the historically close relationship between the United States and Israel, a key diplomatic and military ally in the Middle East that is the biggest recipient of U.S. aid -- $3.1 billion last year.

U.S.-Israeli relations have come under strain in the past year, after U.S. President Barack Obama's drive to relaunch direct peace talks between Israel and the Palestinians collapsed, although both sides say their decades-old alliance remains unshaken.

The scrutiny of the three Swiss branches of the Israeli banks is at an early stage and has not reached the level of that of Credit Suisse, which received a target letter from the Justice Department in July, or of HSBC Holdings, a major European bank, and Basler Kantonalbank, a Swiss cantonal bank, said the people briefed on the matter.

Read more at: Tax Times blog

IRS Offer-in-Compromise Program Reduces Requirements & Raises Thresholds

September 16, 2011

The streamlined IRS offer-in-compromise program will decrease the required financial information from taxpayers in an effort to bring more of them into the program, Faris Fink, IRS Small Business/Self Employed Division commissioner, said Sept. 15.

Speaking at a tax controversy conference in Washington, Fink said IRS would raise the threshold to include individuals with an annual household income of $100,000 and less than $50,000 in tax liability.

The new program allows greater flexibility in considering an individual's ability to pay, he said. “It truly is a departure from past practice to open that program up a little wider in a less abrasive fashion in our centralized sites.” In addition, documentation and verification requirements have been reduced.

Fink said the program is geared toward wage earners who are unemployed and struggling, and self-employed individuals who have no employees.

Furthermore, Fink said, IRS has adopted the “novel” approach of calling people to get additional information instead of sending them letters. This has immeasurably cut down the time needed to process offers, he said.

Read more at: Tax Times blog

IRS Audits Will Focus on High-Income, High-Wealth Taxpayers, SB/SE Official Says

September 16, 2011

The Internal Revenue Service's examination team will focus on high-income, high-wealth taxpayers, paying close attention to those with a tax liability that is significantly reduced through the use of multiple entities, an official said Sept. 15.

The agency is paying attention to individuals with an income level that is not “huge,” but has wealth and a lower tax liability because of flow-throughs, trusts, and other similar entities, said Linda Franke, a senior level adviser with the Small Business/Self Employed Division, at an American Law Institute-American Bar Association tax controversy conference.

IRS will focus on individuals with an income of $250,000 or more and total positive income of at least $1 million, she said. This process will mostly be done corporately with field offices doing the examinations, supplemented by office examinations, Franke said.

IRS also is interested in bringing nonfilers into compliance, so it will pay close attention to taxpayers with multiple years of nonfiling.

Read more at: Tax Times blog

Offshore Voluntary Disclosure Initiative Draws 12,000 Taxpayers

September 15, 2011

The Internal Revenue Service said in a news release (IR-2011-94) announced Sept. 15 that his agency's program to encourage taxpayers to tell the government about their offshore assets has attracted 12,000 participants.

On top of that, IRS said it has garnered an additional $500 million in taxes and interest as down payments for the 2011 program, “a figure that will increase because it doesn't yet include penalties.”

The OVDI is the second time IRS has offered a set penalty structure and the chance to avoid criminal prosecution as an incentive for disclosure. The first such program drew 15,000 participants in 2009, with an extra 3,000 coming in after the program technically closed.

Read more at: Tax Times blog

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