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Yearly Archives: 2013

What … More Reporting Requirements in Addition to the Dreaded FBAR Report?

February 26, 2013

Besides having to file FBAR reports for a US taxpayer's Interest in Foreign Accounts, US Taxpayers also have the following Reporting Requirement for their Investments in Foreign Entities:

· Form 5471 –Used to report that you are a 10% or more shareholder in a foreign corporation.

· Form 5472 –Used to report that a US corporation had a 25% foreign shareholder or engaged in reportable transactions.

· Form 8886 –Used to report any reportable transaction you participated in.

· Form 8865 –Used to report that you are a 10% partner in a foreign partnership.

· Form 926 –Used to report transfers of property to a foreign corporation, including undistributed earnings.

· Form 3520 –Used to report a foreign trust with a US owner.

· Form 8621 –Used to report a shareholder interest in a Passive Foreign Investment Company (PFIC, most foreign mutual funds) or a Qualified Electing Fund.

These forms are all information returns, meaning they do not calculate any tax but are a document that is simply for the IRS’s information. These are in addition to any tax forms an individual, business, or other entity may have to file to report income and pay tax.

These forms are among the most complex the IRS has to offer,and require meticulous record-keeping and data entry. Knowing whether a person or entity is required to file can be a difficult determination. Furthermore, the penalties for failure to file are extremely steep:

· Failure to file Form 5471 penalties:$10,000 failure to file penalty per year per person required to file.

· Failure to file Form 5472 penalties:$10,000 failure to file per year per person required to file.

· Failure to file Form 8886 penalties:minimum of $5,000 in the case of an individual, $10,000 in the case of any other entity, maximum of $10,000 for an individual and $50,000 for other entities. This rises to a maximum of $100,000 per individual and $200,000 per entities for certain listed transactions for which the form is not filed.

· Failure to file Form 8865 penalties: $10,000 failure to file penalty per year per person required to file.

· Failure to file Form 926 penalties:10% of the property transfer, up to $100,000 although not limited if the failure to file was due to “intentional disregard.”

· Failure to file Form 3520 penalties:The greater of $10,000 or 35% of the gross value of the property transferred to a foreign trust or 35% of the gross value of distributions received from a foreign trust.

· Failure to file Form 8621: There are no direct penalties for failing to report a shareholder interest in a PFIC or Qualified Electing Fund.

If these failures to file have occurred due to reasonable cause, we have been able to help several taxpayers file previous information returns and receive penalty abatements for failure to file. This is in the case of failure to file information returns only. 
 
If you have failed to file information returns and have a tax liability due to previously unreported foreign transactions or income, you may need to participate in the Offshore Voluntary Disclosure Program in order to protect yourself from steep penalties or other consequences.

Many taxpayers have used foreign entities as a shield to help them hide assets and income from the IRS. Yet because of FATCA such techniques may no longer work and were not advisable in the first place.

Additionally, where a taxpayer fails to report certain information regarding foreign transactions, the time for assessment of any tax with respect to any tax return, event, or period to which the information relates will not expire before the date that is three years after the date on which the information is reported. IRC §6501(c)(8).

Accordingly, it appears that the additional time for assessment applies not only to items related to the failure to report but also any other item pertinent to the return in question.

The good news is those who have failed to file any of the above returns and have unreported income may also enter in to the current IRS Voluntary Disclosure Initiative.

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 at www.TaxAid.us or www.TaxLaw.ms

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

Source:

Anthony Parente

 

Read more at: Tax Times blog

Do You Qualify to Settle Your IRS Tax Debt For Pennies on the Dollar?

February 26, 2013

Now you no longer need to guess because the Internal Revenue Service has introduced a new tool for determining a taxpayer’s eligibility for an offer in compromise that can help lower the taxpayer’s outstanding tax debts. 

The IRS’s new Offer in Compromise Pre-qualifier toolHelps Tax Practitioners determine a taxpayer’s eligibility for an offer in compromise and calculates a preliminary offer amount before they start on the paperwork. An offer in compromise is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. 

The online tool asks information such as the taxpayer’s ZIP code, state, county, the total number of members of their household, including those over age 65, and the total IRS tax debt, along with the most recent tax year they are requesting to compromise. It begins by asking if the taxpayer is in an open bankruptcy proceeding, has filed all of the required federal tax returns, made all of the required estimated tax payments, and submitted all of the required federal tax deposits if they are self-employed or have employees.  

The tool also requests information on the taxpayer’s assets, income and expenses, and leads to a proposal. 

Last year, the IRS expanded its Fresh Start initiative to offer more help to unemployed and financially stressed taxpayers (see IRS Announces More Flexible Offer-in-Compromise Terms to Help a Greater Number of Struggling Taxpayers!). Those efforts included streamlined procedures for both installment agreements and offers in compromise. The IRS now has more flexibility with financial analysis for determining reasonable collection potential for distressed taxpayers. 

However, an offer generally will not be accepted if the IRS believes the liability can be paid in full as a lump sum or through a payment agreement. The IRS first examines a taxpayer’s income and assets before making a determination regarding the taxpayer’s ability to pay. 

The number of requests for offers increased by 28 percent between fiscal years 2007 and 2011. At the same time, the resources available at the IRS to work on the offers have decreased, creating an inventory backlog and delaying responses to taxpayers.  

The new OIC pre-qualifier tool could help the IRS reduce this backlog by encouraging taxpayers and tax practitioners to do the work ahead of time to determine whether an offer in compromise is worth pursuing.

IRS Problems Keeping You Awake at Night?
 

Want to Settle for Pennies on the Dollar!

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

Get Ready for the EU TIN … Comming To Europe Soon!

February 25, 2013


The European Commission requested consultations from the pubic regarding establishing an EU Taxpayer Identification Number (TIN).





Comment Are Requested:
 
Use of an EU Taxpayer Identification Number (TIN)
Title
Consultation on the "Use of an EU Taxpayer Identification Number (TIN)" [short-name: EUTIN]
 
Policy fields
Taxation
 
Target groups
All citizens and organisations are welcome to contribute to this consultation. Contributions are particularly sought from individual citizens, businesses, tax practitioners, academics, intergovernmental, non-governmental and business organizations, tax administrations.

  

Period of consultation
From25.02.2013 to 17.05.2013
 
Objective of the consultation
The Commission adopted on 27th June 2012 a Communication on the fight against tax fraud and tax evasion. An Action Plan which details concrete proposals to strengthen the fight against tax fraud and tax evasion was adopted on the 6th of December 2012.
 
One of the 34 measures contained in the Action Plan is the creation of a European Taxpayer Identification Number (EU TIN) which is described as follows (action 22):
 
"TINs are considered as providing the best means of identifying taxpayers under automatic exchange of information.
 
The national TINs are however built according to national rules which differ considerably and make it difficult for third parties (financial institutions, employers, other) to correctly identify and register foreign TINs and for the tax authorities to report back this information to the other tax jurisdictions.
 
The creation of an EU TIN might constitute the best solution to overcome the current difficulties faced by Member States in properly identifying all their taxpayers (natural and non-natural persons) engaged in cross border operations.
 
Whether this could be a unique EU number or the addition of an EU identifier to existing national TINs is an issue which should be further explored, as should be explored links with the other existing EU registration and identification systems.
 
Although the concept of an EU TIN is simple, its implementation is a complex issue which calls for a step-by-step approach.
 
  1. A public consultation will be launched by March 2013.
  2. The presentation of a subsequent legislative proposal requires further in-depth studies and the strong support of the Member States.
  3. As a first step, a possibility would be to further develop the "TIN on EUROPA" portal, by making it possible to check the validity of national TINs by linking this application with Member States' databases."
The Commission services are launching this public consultation in order to collect the opinions of all interested stakeholders on the creation of an EU Taxpayer Identification Number (TIN). The Commission is seeking to collect information on the possible scope of an EU TIN (both in terms of operations and taxpayers covered), its practical aspects (including possible simplification and a step-by-step approach), its design and functioning, as well as various legal considerations (a.o. data protection).
 
The views expressed by the contributors will be used by the Commission services to identify the appropriate approach to the creation of an EU TIN and to develop the appropriate policy response.
 
The contributions may also be used in the possible preparation of the relating impact assessment.
In taking this action forward, it will be important to confirm its exact scope in addition to addressing a large set of practical and legal questions in order to ensure that any resulting proposal will reflect the needs and concerns of stakeholders.
 
Information Sharing Have You Losing Sleep?
Contact the Tax Lawyers at Marini & Associates, P.A.
 
for a FREE Tax Consultation at www.TaxAid.usor www.TaxLaw.ms
or Toll Free at 888-8TaxAid (888 882-9243).

Source:

EU Taxation & Customs Union

 

Read more at: Tax Times blog

Everything You Ever Wanted To Know About…ATRA of 2012.

February 25, 2013

The Joint Committee Released Their Explaniation of American Taxpayer Relief Act (ATRA) of 2012.

This document, prepared by the staff of the Joint Committee on Taxation in consultation with the staffs of the House Committee on Ways and Means and the Senate Committee on Finance, provides an explanation of tax legislation enacted in the 112th Congress.

The explanation follows the chronological order of the tax legislation as signed into law. For each provision, the document includes a description of present law, explanation of the provision, and effective date. Present law describes the law in effect immediately prior to enactment. It does not reflect changes to the law made by the provision or subsequent to the enactment of the provision. For many provisions, the reasons for change are also included.

In some instances, provisions included in legislation enacted in the 112th Congress were not reported out of committee before enactment. As a result, the legislative history of such provisions does not include the reasons for change normally included in a committee report.

In some cases, there is no legislative history for enacted provisions. For such provisions, this document includes a description of present law, explanation of the provision, and effective date, as prepared by the staff of the Joint Committee on Taxation.

In some cases, technical explanations of certain bills were prepared and published by the staff of the Joint Committee. In those cases, this document follows the technical explanations.

Section references are to the Internal Revenue Code of 1986, as amended, (the ‘‘Code’’) unless otherwise indicated. 

American Taxpayer Relief Act of 2012 Giving you Headaches?

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).

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