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Yearly Archives: 2013

TIGTA – Correspondence Audit Selection Process Could Be Strengthened To Include Audit of Prior Year Returns!

September 10, 2013

TIGTA evaluated a statistical sample of 102 of 7,470 single-year correspondence audits of individual tax returns closed between April 1, 2010, and March 31, 2011, in which each of the taxpayers involved agreed that they understated their tax liabilities by at least $4,000. 
 
Similar tax issues also existed for the prior and/or subsequent years tax returns filed by 43 of the 102 taxpayers.  
 
IRS records showed that:
  • 32 of the 43 taxpayers’ prior and/or subsequent year tax returns were not audited.

  • For 16 audits, the taxpayers agreed they owed  approximately $4,100 to $7,550 in additional taxes after the IRS determined they were not entitled to Earned Income and other credits taken on their tax returns.  The 16 audits were initiated through the Revenue Protection Strategy process.
 
  • For 12 audits, the taxpayers agreed they owed approximately $4,100 to $14,400 in additional taxes after the IRS determined they overstated itemized deductions on their tax returns.  The 12 audits were initiated as a result of the correspondence return classification process. 
 
  • For four audits, the taxpayers agreed they owed approximately $4,450 to $5,850 in additional taxes after the IRS determined they overstated business expenses on their tax returns.  The four audits were initiated as a result of the correspondence return classification process. 
Had the prior and/or subsequent tax returns for these 32 taxpayers been audited for similar tax issues, we estimate the potential additional tax, penalty, and interest assessments would range from $2,343 to $18,874—totaling $189,422. 
 
When the sample results are projected to the population of 7,470 audits closed between April 1, 2010, and March 31, 2011, we estimate that 2,344 taxpayers may have avoided additional tax, penalty, and interest assessments of $13.9 million.
 
TIGTA Recommended that the Director of Campus Compliance Services, SB/SE Division, should develop and implement procedures in the IRM that instruct how current year correspondence audit results are to be used in deciding whether the prior and/or subsequent year tax returns warrant an audit.  Furthermore, to ensure that the instructions are properly followed; the procedures should include instructions for monitoring how well current year correspondence audit results are used in deciding to audit prior and/or subsequent year tax returns.
 
Being Audited By the IRS?


Contact the Tax Lawyers at

Marini & Associates, P.A.
  
for a FREE Tax Consultation Contact US at
www.TaxAid.us or www.TaxLaw.ms
or Toll Free at 888-8TaxAid (888 882-9243)) begin_of_the_skype_highlighting
 
 
 
 
Source:
 
TIGTA
 
 

Read more at: Tax Times blog

G20 Nations Agree to Automatic Exchange of Tax Information!

September 5, 2013

Heads of G20 countries meet today, September 5, 2013 in St Petersburg, where they will sign an agreement to counter 'Aggressive Tax Planning' by multinational companies.
 
The global paradigm change in the fight against tax avoidance and evasion is set to be taken further by G20 leaders. The EU, with its considerable expertise and experience – for example, in creating an EU-wide system for the automatic exchange of information, or the fight against aggressive tax planning – will push for the automatic exchange of information to become the global standard.
 
It will, notably, support any efforts that help to ensure its swift implementation. The EU will also strongly support the OECD's action plan to fight corporate tax avoidance worldwide, which this summit is expected to endorse.

 OECD's Action Plan to Combat Tax Avoidance

Co-operation between tax administrations is critical in the fight against tax evasion and a key aspect of that cooperation is exchange of information. Political interest has increasingly focussed on the opportunities provided by automatic exchange of information.  

 
What is Automatic Exchange?
Automatic exchange of information involves the systematic and periodic transmission of “bulk” taxpayer information by the source country to the residence country concerning various categories of income (e.g. dividends, interest, royalties, salaries, pensions, etc).  It can provide timely information on non-compliance where tax has been evaded either on an investment return or the underlying capital sum even where tax administrations have had no previous indications of non-compliance.
 
Standardised Model of Automatic Exchange
The OECD is developing a standardised, secure and cost effective model of bilateral automatic exchange for the multilateral context. The advantage of standardisation is process simplification, higher effectiveness and lower costs for all stakeholders concerned.  A proliferation of different and inconsistent models would potentially impose significant costs on both government and business to collect the necessary information and operate the different models.

 
A standardised multilateral automatic exchange model requires a legal basis for the exchange of information. There are different legal bases upon which automatic exchange could take place, including a bilateral treaty with Article 26 of the OECD Model Tax Convention, or the Multilateral Convention on Mutual Administrative Assistance in Tax Matters.
 
All treaties and exchange of information instruments contain provisions regarding tax confidentiality and the obligation to keep information exchanged as secret or confidential.  The OECD recently released a Guide on Confidentiality, “Keeping it Safe” which sets out best practices related to confidentiality and provides practical guidance on how to meet an adequate level of protection.

 
Finally, the development of common technical solutions for reporting and exchange of information is a critical element in a standardised exchange system – especially one that will be used by a large number of countries and financial institutions.
 
Need Advise on the Impact of
Automatic Exchange on Your Company?
 
 Contact the Tax Lawyers at

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

 


 Sources:

EuropeanCommission

BBC News

OECD

Read more at: Tax Times blog

Offshore US Tax-Dodger Dragnet Widens!

September 4, 2013

The U.S. government, stepping up its pursuit of American offshore tax dodgers worldwide, stands to gather an abundance of leads through a bank information-sharing deal between the United States and Switzerland, tax lawyers said on September 3, 2013.

Last week we posted Swiss Banks Agree to Plan to End Past US Tax Evasion Issues which marked a turning point in a lengthy dispute between Bern and Washington, and opened the door for about 100 second-tier Swiss banks to turn over information about American account holders to the U.S. government.

Part of the deal requires Swiss banks to tell Washington about so-called leavers, or U.S. customers who shift assets to other countries. This disclosure will be a powerful tool for U.S. authorities, who started turning up the heat on offshore tax avoidance in 2008.

In a statement last week on the pact, the U.S. Justice Department noted that its tax enforcement activities are global and have included actions undertaken in India, Luxembourg, Israel and Caribbean countries.

The United States for five years has been aggressively pursuing U.S. citizens who have been hiding assets abroad to evade taxes.

The Swiss settlement program is only open to banks. U.S. prosecutors are hoping the renewed pressure on banks will drive U.S. taxpayers into the IRS's voluntary disclosure program, which allows taxpayers to come clean about all of their assets abroad, pay a penalty and avoid prosecution.

If a large number of Swiss banks participate in settlements, it's just a matter of time before the U.S. authorities find the U.S. person.

On August 16, a Swiss lawyer accused of helping U.S. clients hide millions of dollars in offshore accounts pleaded guilty to conspiracy to commit tax fraud in federal court in New York.

The Justice Department said last week that since 2009 it has charged more than 30 bankers and 68 U.S. account holders with violations arising from offshore banking activities. It said 54 U.S. taxpayers and four bankers and advisers have pleaded guilty, while five taxpayers have been convicted at trial.

Have Un Reported Income From a Swiss Bank?

 

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.us or www.TaxLaw.ms
or Toll Free at 888-8TaxAid (888 882-9243


 

Source:

Reuters

Read more at: Tax Times blog

IRS Continues Cracks Down on Undeclared Israeli Bank Accounts!

September 3, 2013


We originally posted about US taxpayers with undeclared income from Israeli  Bank Accounts on Thursday, September 8, 2011 "More Tax Problems for U.S. Citizens with Foreign Bank Accounts in Israel" and more recently on Monday, March 11, 2013 "IRS Targets Israeli Banks and Their US Client;" now we have come to discover that Aaron Cohen of Encino, Calif., pleaded guilty Thursday,August 28, 2013 in the U.S. District Court for the Central District of California to conspiracy to defraud the United States. Cohen, a U.S. citizen, maintained undeclared bank accounts at two international banks headquartered in Tel Aviv, Israel, identified in court documents as Bank A and Bank B, according to the Justice Department and the Internal Revenue Service’s Criminal Investigation unit. One of Cohen’s undeclared accounts was maintained at a branch of Bank A located in the Cayman Islands.
The accounts were held in the names of nominees in order to keep them secret from the U.S. government.
“Today’s guilty plea is but the latest example that attempting to hide income and assets from the United States in offshore accounts is a bad gamble,” said Assistant Attorney General for the Justice Department’s Tax Division Kathryn Keneally in a statement.
Until recently, Switzerland appeared to be the main target of the Justice Department and the IRS’s efforts to crack down on undeclared foreign bank accounts.
Increasingly, the IRS and the Justice Department have been looking beyond Switzerland and the Cayman Islands to other countries where U.S. taxpayers may have undeclared bank accounts, including Israel, Liechtenstein and India.
Cohen is the latest in a series of defendants charged with failing to report income from undeclared accounts in Israel, such as Bank Leumi (see Bank Leumi Said to Help California Man Cheat IRS and Tax Preparers Charged with Hiding Funds in Israeli Banks):
  • Last month, Moshe Handelsman pleaded guilty to filing a false tax return.

  • On March 29, 2013, Zvi Sperling, pleaded guilty to conspiring to defraud the United States in connection with back-to-back loans obtained in Los Angeles at branches of Bank A and Bank B that were secured by funds in undeclared bank accounts in Israel.

  • On May 21, 2013, Guity Kashfi, pleaded guilty to conspiring to defraud the United States in connection with back-to-back loans obtained from branches of Bank A and Bank B in Los Angeles that were secured by funds in undeclared bank accounts in Israel and Luxembourg.

  • Alexei Iazlovsky of Potomac, Md., pleaded guilty on July 2, 2013 in the U.S. District Court for the Central District of California to filing a false tax return for tax year 2008.

U.S. citizens and residents who have an interest in, or signature or other authority over, a financial
account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account on Schedule B, Part III, of their individual income tax returns, the Justice Department noted.

In addition, U.S. citizens and residents must file a Report of Foreign Bank and Financial Reports, or FBAR, with the U.S. Treasury disclosing any financial account in a foreign country with assets in excess of $10,000 in which they have a financial interest, or over which they have signature or other authority.

Cohen faces up to 5 Years in Prison and a maximum fine of $250,000.

He has agreed to pay a civil penalty to the IRS in the amount of 50 % of the high balance of his undeclared accounts for failing to file FBARs.

Have unreported income from an Israeli Bank?
 
Felling a Bit Faclept?
 
Contact the Tax Lawyers at 
Marini & Associates, P.A.
 
 
for a FREE Tax Consultation at: www.TaxAid.us or www.TaxLaw.ms or
Toll Free at 888-8TaxAid (888 882-9243).

Source:

AccountingToday

Read more at: Tax Times blog

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