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Yearly Archives: 2013

Luxembourg Chooses Model I FATCA Agreement For Sharing Account Information With the US

May 22, 2013

We originally posted U.S. Engaging with More than 50 Jurisdictions to Curtail Offshore Tax Evasion on November 8, 2012, where we discussed that the U.S. Department of the Treasury announced that it is engaged with more than 50 countries and jurisdictions around the world to improve international tax compliance and implement the information reporting and withholding tax provisions commonly known as the Foreign Account Tax Compliance Act (FATCA).
 
Luxembourg is one of the largest financial centers, which is built upon bank secrecy laws.  As such, it has come under intense pressure from the EU and the US, in their global effort to crack down on tax evasion.  

Luxembourg has now chosen the Model I FATCA Agreement, which provides for an automatic exchange of information between the Luxembourg and American fiscal authorities on bank accounts held in Luxembourg by citizens and residents of the United States.  

This decision will put Luxembourg’s relations with the US in line with the declaration of 10 April 2013, by which Luxembourg announced that it will introduce, on 1 January 2015 and within the scope of the 2003 EU Savings Directive, the automatic exchange of information within the European Union.

Luxembourg wishes to see the same conditions apply to all competing financial centers and to see the automatic exchange of information accepted as the international standard.

It has therefore agreed on May 14, 2013 to grant the European Commission a mandate to negotiate with Switzerland, Liechtenstein, Andorra, Monaco and San Marino.

 
Do Have Unreported Income From a Luxembourg Bank?

Secret Foreign Investments Keeping You Awake at Night?

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or Toll Free at 888-8TaxAid (888 882-9243).  

 


Source: 

Luxembourg Ministry of  Finance

Read more at: Tax Times blog

More taxpayers e-file from home in 2013

May 22, 2013

 The Internal Revenue Service provided updated statistics showing continued growth in electronic
filing of tax returns. So far in 2013, more than 43 million people have self-prepared and e-filed their tax returns from home, an increase of more than 4 percent compared to the prior year.

Through May 10, the IRS received more than 43.6 million self-prepared e-file returns, up from 41.7 million a year earlier. E-filed returns from tax professionals increased slightly, reaching almost 70.4 million. In all, almost 114 million tax returns came in through e-file this year, up from 112.1 million at this point last year.

Other highlights from the new filing season statistics show:

• During 2013, the IRS issued more than 101 million refunds worth almost $268 billion.

• Almost 80 percent of refunds used direct deposit.

• More people are using IRS.gov to get answers, file their returns and resolve issues. So far in 2013, the IRS web site has been accessed more than 300 million times, up almost 25 percent compared to the same time last year.

2013 FILING SEASON STATISTICS
Cumulative statistics comparing 5/11/12 and 5/10/13
Individual Income Tax Returns:
2012
2013
% Change
Total Receipts
135,473,000
134,349,000
-0.8
Total Processed
130,261,000
129,674,000
-0.5
E-filing Receipts:
TOTAL
112,089,000
113,954,000
1.7
Tax Professionals
70,344,000
70,380,000
0.1
Self-prepared
41,745,000
43,574,000
4.4
Web Usage:
Visits to IRS.gov
255,269,615
318,408,842
24.7
Total Refunds:
Number
102,522,000
101,082,000
-1.4
Amount
$277.180
Billion
$267.946
Billion
-3.3
Average refund
$2,704
$2,651
-2.0
Direct Deposit Refunds:
Number
79,308,000
79,880,000
0.7
Amount
$231.656
Billion
$228.467
Billion
-1.4
Average refund
$2,921
$2,860
-2.1

_____________________________
Need Tax Help?
Contact the Tax Lawyers at
Marini & Associates, P.A.
for a FREE Tax Consultation Contact US at
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or Toll Free at 888-8TaxAid (888 882-9243).
Source:

Read more at: Tax Times blog

GAO report reveals minnows paid penalties of as much as 129x tax owed in OVDP.

May 14, 2013

On Mar 27, 2013, the Government Accountability Office released a new Report to Congressional Requesters on “Offshore Tax Evasion”, which warns that the “IRS Has Collected Billions of Dollars, but May be Missing Continued Evasion”. It provides more in-depth information about the characteristics of OVDP participants, and also reveals some details about the treatment of (and government attitude towards) people who make quiet disclosures.

For those U.S. Persons abroad too busy to read the GAO for seventy-two page report, Stephen Ohlemacher of the Associated Press has helpfully summerized the contents of the report.

Who were the actual OVDP participants?

The first question the report the report does not answer is how many of the OVDP participants were home-grown Whales, how many were immigrants and immigrants’ kids with money in the old country, and how many were emigrants or accidentals residing abroad for decades?

Well, the GAO report can’t tell. The word “offshore” appears on literally every single page of the report besides the back cover, the word “immigrant” is mentioned on precisely two pages, and “expatriate” and “abroad” appear zero times.

Statistics on minnows in the OVDP are lised on page 13 of the report, in the table “Selected Penalty Information for 2009 OVDP Individual Taxpayers with Closed Cases as of November 29, 2012″, which provides how much of the $5.5 billion collected by the OVDP consisted of actual tax owed, and how much was penalties?

The relevant portion of the table are reproduced here, with The Isaac Brock Society's added calculations of certain ratios (in italics) in the bottom two rows:

10th
percentile		 25th
percentile		 Median 75th
percentile		 90th
percentile
Offshore account(s) balance $78,315 $190,365 $568,735 $1,595,805 $4,054,505
2009 OVDP penalty $13,320 $35,670 $107,949 $310,476 $793,166
Additional tax owed, tax years 2003–2008 $103 $1,661 $12,748 $60,449 $190,399
Ratio of penalty to tax owed 129 21.4 8.46 5.13 4.17
Penalty as proportion of account balance 17.0% 18.7% 18.9% 19.4% 19.5%

Both the rich and the poor paid between a sixth and a fifth of their account balances as Offshore Penalties, not counting the extra tens of thousands of dollars of lawyers’ fees.

Thousands of middle-class immigrants and emigrants owed Uncle Sam less than three hundred dollars of back taxes per year, which resulted in the IRS putting them through a nightmare involving tens of thousands of dollars of penalties and lawyers fees, and threats of criminal charges and jail time if they dared to exercise their right to opt out.

The Isaac Brock Society

 

Read more at: Tax Times blog

No Safe Havens for Offshore Tax Cheats … The IRS, Australia & UK Audit Leaked Information!

May 9, 2013

We originally posted on Monday, May 6, 2013,Whistleblower Exposes Massive Offshore Corruption!, where we discussed a whistleblower's release of information to the International Consortium of Investigative Journalists concerning off-shore holdings of people and companies in more than 170 countries and territories hiding trillions of dollars in income and assets.

Today the IRS announced in IR-2013-48,  that the tax administrations from the United States, Australia and the United Kingdom plan to share tax information involving a multitude of trusts and companies holding assets on behalf of residents in jurisdictions throughout the world.

The three nations have each acquired a substantial amount of data revealing extensive use of such entities organized in a number of jurisdictions including Singapore, the British Virgin Islands, Cayman Islands and the Cook Islands. The data contains both the identities of the individual owners of these entities, as well as the advisors who assisted in establishing the entity structure.





The secret records are believed to include those obtained by the International Consortium of Investigative Journalists that lay bare the individuals behind covert companies and private trusts in the British Virgin Islands, the Cook Islands, Singapore and other offshore hideaways.
The hoard of documents obtained by ICIJ represents the biggest stockpile of inside information about the offshore system ever gathered by a media organization.

The total size of the ICIJ files, measured in gigabytes, is more than 160 times larger than the leak of U.S. State Department documents by Wikileaks in 2010.

A statement from the British tax office puts the size of the data obtained by the three tax authorities at 400 gigabytes, compared to the 260 gigabytes gathered by the ICIJ.
 
“The 400 gigabytes of data is still being analyzed but early results show the use of companies and trusts in a number of territories around the world including Singapore, the British Virgin Islands, the Cayman Islands and the Cook Islands,” the British tax office statement said.

The IRS, Australian Tax Office and HM Revenue & Customs have been working together to analyze this data and have uncovered information that may be relevant to tax administrations of other jurisdictions. Thus, they have developed a plan for sharing the data, as well as their preliminary analysis, if requested by those other tax administrations.

IRS Acting Commissioner Steven T. Miller stated that:

“This is part of a wider effort by the IRS and other
tax administrations to pursue international tax evasion.” 

"Our cooperative work with the United Kingdom and
Australia reflects a bigger goal of leaving NO SAFE HAVEN
for people trying to illegally evade taxes.”

There is nothing illegal about holding assets through offshore entities; however, such offshore arrangements are often used to avoid or evade tax liabilities on income represented by the principal or on the income generated by the underlying assets.
 
In addition, ADVISORS may be subject to Civil Penalties or Criminal Prosecution for promoting such arrangements as a means to Avoid or Evade Tax Liability or Circumvent Information Reporting requirements.
 
It is expected that this multilateral cooperation and coordinated effort will allow many countries to efficiently process this information and effectively enforce any laws that may have been broken. Increasingly, tax administrations are working together in this way to assist one another in identifying non-compliance with the tax laws. U.S. taxpayers holding assets through offshore entities are encouraged to review their tax obligations with respect to these holdings, seek professional advice if necessary, and to participate in the IRS Offshore Voluntary Disclosure Program where appropriate.

Failure to do so may result in significant penalties and possibly criminal prosecution! 

Secret Foreign Investments Keeping You Awake at Night?
Want to get right with the IRS?

Contact the Tax Lawyers at
Marini & Associates, P.A.
for a FREE Tax Consultation Contact US at
www.TaxAid.usor www.TaxLaw.ms
or Toll Free at 888-8TaxAid (888 882-9243).  
 
 

Sources:
 
 
 
 

Read more at: Tax Times blog

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