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Yearly Archives: 2013

Americans Renouncing U.S. Citizenship Increased 6X so far in 2013!

August 9, 2013

Americans renouncing U.S. citizenship increased 6X in the second quarter from a year earlier as the government prepares to introduce tougher asset-disclosure rules.

Expatriates giving up their nationality at U.S. embassies climbed to 1,131 in the three months through June from 189 in the year-earlier period, according to Federal Registerfigures published today.

That brought the first-half total to 1,810
compared with 235 for the whole of 2008.

The U.S. is the only nation in the OECD that taxes its citizens wherever they reside.
 
Shunned by Swiss and German banks and facing tougher asset-disclosure rules under the Foreign Account Tax Compliance Act, more of the estimated 6,000,000 Americans living overseas are weighing the cost of holding a U.S. passport. 

Factors causing U.S. Citizens to renounce: 

1.      Since 2011, Americans, who disclose their non-U.S. bank accounts to the IRS, must file the more expansive 8938 form that asks for all foreign financial assets, including insurance contracts, loans and shareholdings in non-U.S. companies as well as the traditional FBAR Form TD 90.22.1.

2.      Failure to file the 8938 form can result in a fine of as much as $50,000.

3.      Clients can also be penalized 50% of the amount in an undeclared foreign bank account under the Banks Secrecy Act of 1970 for failure to file and report their account(s) on the FBAR form.

4.      It is estimated that the additional compliance costs for companies that employ Americans abroad and want to ensure that they are filing the correct U.S. tax returns and asset-declaration forms are at least $5,000 per person annually.

5.      The resulting increased U.S. accounting costs alone are around $2,000 per year for a U.S. citizen residing abroad. and

6.      They are shunned by Foreign Banks and cannot open nor maintain their accounts with foreign banks that are facing tougher reporting rule under FATCA.

Need Advice On "Should I Stay or Should I Go"?
 
 Contact the Tax Lawyers
At Marini & Associates, P.A. 
For a FREETax Consultation at:
www.TaxAid.us or www.TaxLaw.ms or
Toll Free at 888-8TaxAid (888 882-9243).

 

Sources:

Bloomberg
 
Federal Register

 

 

 

Read more at: Tax Times blog

IRS Open Aug. 30 – Furlough Postponed

August 9, 2013

On April 19, 2013 we posted "IRS Begins Furlough Notice" which discussed that the IRS planned furlough included May 24, June 14, July 5, July 22 and August 30, with another two days possible in August or September.  

The Internal Revenue Service announced on Aug. 7, 2013 that it will be open on Friday, Aug. 30, following the postponement of its fifth scheduled agency-wide employee furlough day.

 

"We have made substantial progress in cutting costs. … Our progress is such that we have decided to postpone the furlough day scheduled for Aug. 30.  

 

We still have more work to do on the budget and cost-savings, so we will reevaluate in early September and make a final determination as to whether we will need another furlough day in September," said Danny Werfel, IRS Acting Commissioner, in a message to IRS employees.

 

‪The IRS has so far taken three furlough days on May 24, June 14 and July 5 due to the current budget situation, including the sequester. 

 

‪Last month, the IRS was also able to cancel the previously scheduled July 22nd furlough day due to cost-cutting efforts.

Trouble Contacting the IRS to Resolve Your Tax Problem?
Contact the Tax Lawyers
at Marini & Associates, P.A.

 

 

for a FREE Tax Consultation at:
Toll Free at 888-8TaxAid (888 882-9243 begin_of_the_skype_highlighting 888 882-9243 FREE  end_of_the_skype_highlighting).
Source:

 

 IRS

 

 

Read more at: Tax Times blog

Need To Renew Your US Passport … IRS and State Department Begin “Cooperating”!

August 8, 2013

There are millions of Americans living overseas but only a fraction file United States tax returns and even fewer file Reports of Foreign Bank and Financial Accounts (“FBARs” for short). Back in the 1970’s, Congress passed the Bank Secrecy Act, which requires U.S. taxpayers with aggregate offshore financial assets in excess of $10,000 to report those assets annually to the IRS. Until 2008, the law was largely unenforced.

Beginning with the criminal investigation of Swiss bank UBS in 2008, the IRS and Justice Department has put a great deal of resources into enforcing the foreign reporting laws. Several big changes to these rules are coming which puts all those not in compliance at tremendous risk.

The newest and biggest risk to financial privacy is FATCA. Beginning next year, FATCA – the Foreign Account Tax Compliance Act – requires “foreign financial institutions” to review their accounts and report those with ties to the United States. Foreign banks, hedge funds, some precious metal companies and even some life insurance companies are all subject to the new law. Under the threat of huge financial penalties, Uncle Sam is making foreign bankers become the eyes and ears of the IRS.

FATCA isn’t the only risk, however. Back in 1986 Congress authorized the IRS and State Department to share information. Although the provision laid dormant for years, the IRS says it is readying new regulations; regulations that will require the State Department to disclose to the IRS the social security number and foreign residency information of those persons obtaining or renewing passports.

The law, codified at 26 U.S.C. section 6039E, applies to both new passports and renewals. More ominously, it sets the stage for even more disclosures. As passed by Congress, the law allows the IRS to require the State Department to require applicants to provide “such other information as the Secretary [IRS] may prescribe.”

You can refuse to supply your SSN to the State Department but that sets you up for a $500 fine and more importantly, an IRS audit or investigation. Refusing to provide a social security number won’t get you far and will only raise giant red flags.

Many taxpayers simply didn’t know of their foreign reporting requirements. Some folks just received bad accounting advice. Still others have been sitting on the fence wondering if they will get caught. In this age of big data, the odds are not in their favor.

So what should you do? While there is much talk of renouncing citizenship, few have done so (although the numbers are trending up dramatically). More importantly, the United States won’t allow you to renounce citizenship if you are currently delinquent in your taxes.

We advise that you bring your foreign reporting into compliance NOW!

The IRS is offering an Offshore Voluntary Disclosure Program, although it carries a large price tag – a one time 27.5% penalty for most participants. Not a great deal unless your previous noncompliance was willful. For most participants, amnesty comes with a get-out-of-jail free card and no audit.

If you are like most Americans and simply didn’t know or understand the foreign reporting rules, there are much better alternatives. Sometimes all penalties can be waived.

Not sure what to do?
Well considering that:
  1. The expected exchange of information between the IRS and State Department could be a real nightmare for many Americans.
  2. The government has become quite adept at finding people with unreported income and offshore accounts.
  3. The solution isn’t repatriating your money back to the United States; and
  4. It’s probably already to late anyway since the new FATCA foreign reporting requirements have banks performing a retroactive review on many accounts.
The best option is to comply while you still have options!
 

Want to Make an Offshore Voluntary Disclosure? 
  

Contact the Tax Lawyers
of  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 begin_of_the_skype_highlighting 888 882-9243 FREE  end_of_the_skype_highlighting ). 

 

 Source :

TaxConnections

 

Read more at: Tax Times blog

New Florida Sales & Use Exemption For Machinery & Equipment

August 8, 2013

On May 17, 2013 Governor Rick Scott signed into law one of the main agenda goals of his term in office. Specifically, Sec. 212.08(7)(kkk), Florida Statutes (F.S.), was enacted to allow a 100% exemption for machinery and equipment purchased for the use in Florida based manufacturing and processing companies.
 
A simply exemption certificate can be supplied to the vender selling the equipment and no sales or use taxes are theoretically due. If your company or your clients are in the manufacturing industry, then this is a huge win. However, there are a few nuances of the law to which you should pay attention. For example, by the terms of the law, the exemption will expire on April 30, 2017 if not extended.
 
For more on these nuances as well as the full text of the new law go to article by James H Sutton Jr CPA Esq.
 
Sales or Use Tax Problem?

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).

Read more at: Tax Times blog

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