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Monthly Archives: October 2015

DoJ is Following The Money Trail Disclosed By Swiss Bank's to Singapore and Israel!

October 10, 2015

On October 9, 2015 we posted OVDP Penalty Increased To 50% For 55 Foreign Banks Asset Management Firms! which  supplements our earlier post OVDP Penalty Increased To 50% For 50 Foreign Banks! , where we discuss that in accordance with the terms of the Swiss Bank Program, each bank mitigated its penalty by encouraging U.S. account holders to come into compliance with their U.S. tax and disclosure obligations.  Under the program, banks are required to:

  • Make a complete disclosure of their cross-border activities;
  • Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;
  • Cooperate in treaty requests for account information;
  • Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed (a/k/a Levers List);
  • Agree to close accounts of account holders who fail to come into compliance with U.S. reporting obligations; and
  • Pay appropriate penalties.

Banks meeting all of the above requirements are eligible for a non-prosecution agreement.

“With each Additional Agreement, 
the World where Criminals can Hide Their Money 
is Becoming Smaller and Smaller. 
 
Those Who Circumvent Offshore Disclosure Laws
Have Little Room to Hide.”
said Chief Richard Weber of IRS-Criminal Investigation.  


Now Bloomberg reports that the flood of information is now giving U.S. investigators intelligence to try to build new cases against individuals and institutions in other countries, said Caroline Ciraolo, the Justice Department’s top tax prosecutor. Financial institutions in Singapore and Israel are possible targets, according to lawyers and prosecutors.

“The money is moving out of Switzerland to a variety of jurisdictions,” said Ciraolo, an acting assistant attorney general.
 
“We’re following leads and following the money, wherever that leads us.”




U.S. agents interviewed taxpayers who used a Singapore money management firm to hide assets from the IRS, said Bryan Skarlatos and Scott Michel, lawyers who separately represent some of those Americans. They wouldn’t identify the firm, and Ciraolo wouldn’t discuss it.

 
“Certainly, Singapore would be one of the jurisdictions that we’re looking at,” Ciraolo said.
 

Societe Generale SA’s Swiss private banking unit admitted in its settlement that it transferred assets of U.S. customers to “corporate and individual accounts at other banks in Switzerland, Hong Kong, Israel, Lebanon, Liechtenstein and Cyprus,” according to its statement of facts. The unit paid a $17.8 million fine.  A bank spokesman declined to comment.

In its settlement document, Banque Pasche SA said that client money was transferred to banks located in Israel and Hong Kong “in an attempt to further escape detection.”  An e-mail and phone call to the bank weren't returned.
 
 
 

We previously posted the various IRS problems with Israeli Banks:

The data coming directly from Swiss banks are supplementing a separate trove the IRS gathered from 50,000 U.S. taxpayers who disclosed their offshore accounts and paid $7 billion in back taxes, fines and penalties since 2009.
 
Many US taxpayers disguised their money in entities set up in tax havens outside of Switzerland. Of 54 banks that settled:
 
  • 18 held assets in corporations, foundations or trusts in Liechtenstein;
  • 15 in Panama;
  • 11 in the British Virgin Islands, and
  • 4 in Hong Kong.

The DOJ is getting some very valuable information served up on a silver platter as a result of the OVDP program and its non-prosecution agreements with Swiss banks. 
 
With roughly 96 Swiss banks taking the DOJ deal and FATCA requiring the entire world to report to the IRS resulting in increasing disclosures, everyone American is eventually going to be discovered.
Banks worldwide want to know if there US clients are compliant with the IRS.

 

Within the OVDP, people who pre-cleared before the various effective dates are generally safe from the higher 50% penalty. As additional banks are added to the list, only those American taxpayers that request pre-clearance before their bank is listed, will get the 27 1/2% OVDP penalty. The 50% penalty now applies to all taxpayers with accounts at financial institutions or with facilitators which are named, are cooperating or are identified in a court filing such as a John Doe summons.

Although the 50% penalty is high, willful civil violations can result in tax, penalties and interest totaling 325% of the highest balance in the account for the  most recent six years period. Recent guidance suggests that the IRS could be more lenient in the future, but the IRS’s definition of leniency can still make the OVDP a very good deal that provides certainty.  

Do You Have Undeclared Income From the Foreign Bank?
 
 
Is Your Name Being Handed Over to the IRS?
 
 Want to Know if the OVDP Program is Right for You?
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

Read more at: Tax Times blog

OVDP Penalty Increased To 50% For 55 Foreign Banks Asset Management Firms!

October 9, 2015

On September 21, 2015  we posted "OVDP Penalty Increased To 50% For 50 Foreign Banks!" well now make 55 (54 Banks +1 Asset Management Firm) including "The 1st Swiss Asset Management Firm To Turn Over Names of US Clients Over to the IRS!" 

The DoJ announced on October 8, 2015 that Schaffhauser Kantonalbank (SHKB) has reached a resolution and is turning over names of its US depositors! 
 
The IRS keeps updating its list of foreign banks where the holders of these offshore accounts are subject to a 50% (rather than 27.5%) penalty in the IRS’s Offshore Voluntary Disclosure Program (OVDP). This penalty is based on the highest account balance measured over up to eight years. 

 
The complete list is as follows, as of 10/8/15: 
  1. UBS AG
  2. Credit Suisse AG, Credit Suisse Fides, and Clariden Leu Ltd.
  3. Wegelin & Co.
  4. Liechtensteinische Landesbank AG
  5. Zurcher Kantonalbank
  6. swisspartners Investment Network AG, swisspartners Wealth Management AG, swisspartners Insurance Company SPC Ltd., and swisspartners Versicherung AG
  7. CIBC FirstCaribbean International Bank Limited, its predecessors, subsidiaries, and affiliates
  8. Stanford International Bank, Ltd., Stanford Group Company, and Stanford Trust Company, Ltd.
  9. The Hong Kong and Shanghai Banking Corporation Limited in India (HSBC India)
  10. The Bank of N.T. Butterfield & Son Limited (also known as Butterfield Bank and Bank of Butterfield), its predecessors, subsidiaries, and affiliates
  11. Sovereign Management & Legal, Ltd., its predecessors, subsidiaries, and affiliates (effective 12/19/14)
  12. Bank Leumi le-Israel B.M., The Bank Leumi le-Israel Trust Company Ltd, Bank Leumi (Luxembourg) S.A., Leumi Private Bank S.A., and Bank Leumi USA (effective 12/22/14)
  13. BSI SA (effective 3/30/15)
  14. Vadian Bank AG (effective 5/8/15)
  15. Finter Bank Zurich AG (effective 5/15/15)  
  16. Societe Generale Private Banking (Lugano-Svizzera) SA (effective 5/28/15)
  17. MediBank AG (effective 5/28/15)
  18. LBBW (Schweiz) AG (effective 5/28/15)
  19. Scobag Privatbank AG (effective 5/28/15)  
  20. Rothschild Bank AG (effective 6/3/15)
  21. Banca Credinvest SA (effective 6/3/15)
  22. Societe Generale Private Banking (Suisse) SA (effective 6/9/15)
  23. Berner Kantonalbank AG (effective 6/9/15)
  24. Bank Linth LLB AG (effective 6/19/15)
  25. Bank Sparhafen Zurich AG (effective 6/19/15)
  26. Ersparniskasse Schaffhausen AG (effective 6/26/15)
  27. Privatbank Von Graffenried AG (effective 7/2/15)
  28. Banque Pasche SA (effective 7/9/15)
  29. ARVEST Privatbank AG (effective 7/9/15)
  30. Mercantil Bank (Schweiz) AG (effective 7/16/15)
  31. Banque Cantonale Neuchateloise (effective 7/16/15)
  32. Nidwaldner Kantonalbank (effective 7/16/15)
  33. SB Saanen Bank AG (effective 7/23/15)
  34. Privatbank Bellerive AG (effective 7/23/15)
  35. PKB Privatbank AG (effective 7/30/15)
  36. Falcon Private Bank AG (effective 7/30/15)
  37. Credito Privato Commerciale in liquidazione SA (effective 7/30/15)
  38. Bank EKI Genossenschaft (effective 8/3/15)
  39. Privatbank Reichmuth & Co. (effective 8/6/15)
  40. Banque Cantonale du Jura SA (effective 8/6/15)
  41. Banca Intermobiliare di Investimenti e Gestioni (Suisse) SA (effective 8/6/15)  
  42. bank zweiplus ag (effective 8/20/15)
  43. Banca dello Stato del Cantone Ticino (effective 8/20/15)
  44. Hypothekarbank Lenzburg AG (effective 8/27/15)
  45. Schroder & Co. Bank AG (effective 9/3/15)
  46. Valiant Bank AG (effective 9/10/15)
  47. Bank La Roche & Co AG (effective 9/15/15)
  48. Belize Bank International Limited, Belize Bank Limited, Belize Corporate Services Limited, their predecessors, subsidiaries, and affiliates (effective 9/16/15)
  49. St. Galler Kantonalbank AG (effective 9/17/15)
  50. E. Gutzwiller & Cie, Banquiers (effective 9/17/15)
  51. Migros Bank AG (effective 9/25/15)
  52. Graubundner Katonalbank (effective 9/25/15)
  53. BHF-Bank (Schweiz) AG (effective 10/1/15)
  54. Schaffhauser Kantonalbank (effective 10/8/15
  55. Finacor SA (effective 10/1/15) 
Outside of these banks, the norm within the OVDP remains 27.5%. That is far better than prosecution or much bigger civil penalties. Some taxpayers can opt for the easier and less costly Streamlined program. This list does not impact the Streamlined programs because you must be non-willful to qualify. All of this is part of the June 2014 improvements to the OVDP, which sparked new interest in cleaning up offshore accounts.
 
With roughly 96 Swiss banks taking the DOJ deal and FATCA requiring the entire world to report to the IRS resulting in increasing disclosures, everyone American is eventually going to be discovered.
Banks worldwide want to know if there US clients are compliant with the IRS.

 Within the OVDP, people who pre-cleared before the various effective dates are generally safe from the higher 50% penalty. As additional banks are added to the list, only those American taxpayers that request pre-clearance before their bank is listed, will get the 27 1/2% OVDP penalty. The 50% penalty now applies to all taxpayers with accounts at financial institutions or with facilitators which are named, are cooperating or are identified in a court filing such as a John Doe summons.

Although the 50% penalty is high, willful civil violations can result in tax, penalties and interest totaling 325% of the highest balance in the account for the  most recent six years period. Recent guidance suggests that the IRS could be more lenient in the future, but the IRS’s definition of leniency can still make the OVDP a very good deal that provides certainty.  

Do You Have Undeclared Income from one of 
These Swiss Banks or
Swiss Asset Management Company?
 
 
Is Your Name Being Handed Over to the IRS?
 
 
Want to Know if the OVDP Program is Right for You?
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

 

Read more at: Tax Times blog

LB&I Agents Lose Autonomy To Centralized Office That Will Be Using Data to Identify Compliance Risks For Audit!

October 9, 2015

Tax practitioners will face new questions from examination teams as the IRS selects compliance risks based on data, in the Large Business and International Division's (LB&I) move from individual audits of multinationals to broader considerations involving risk assessment.

As opposed to the exam team coming out and identifying what areas will be looked at; the issues will be per-identified for  the revenue agent. This change shifts the responsibility of selecting items to examine in an audit from the field agents to the revenue agents who are analyzing data in a centralized office. Exam teams will however, have the ability to raise other issues not identified from the data. LB&I Commissioner Douglas W. O'Donnell said that LB&I will be reorganizing its exam structure to save resources and create a more centralized approach.

A new organizational design will be put in place to facilitate transition to the new ways of doing business. The new LB&I will be organized around nine “practice areas.” Four of the practice areas will be organized geographically and appear to be structured similar to the current five industry directors with:

  • Directors of Field Operations (DFO) and 
  • Territory Managers (TM) constituting the management structure within the practice area.

The other five practice areas (or “PAs”) are delineated along technical or subject matter lines:

  • Pass-through entities
  • Enterprise activities
  • Cross-border activities
  • Withholding and international individual compliance
  • Treaty and transfer pricing operations

Similarly, it is envisioned that all of the International Examiners will likely be housed within at least two of the international practice areas.  It appears that at a strategic level, the subject matter practice areas will lead the development and coordination of the campaigns and treatments aimed at specific compliance risks.  At a tactical level, the design calls for them to also work directly with examiners from the geographic practice areas that are assigned specific issues to work.

 

This highlights the need to equip LB&I to operate competently in the fast evolving global tax administration environment which was one of the prime drivers of the new concept of operations. In explaining the new “concepts of operation” and organizational alignment, there are four guiding principles on which he said LB&I’s future success is predicated:

  • Flexible, well-trained workforce—developing deeper specialized knowledge and dynamic tools
  • Selection of better work—based on data analytics and real-time examiner feedback
  • Tailored treatments—a more flexible stream of options to address current and emerging issues
  • Integrated feedback loop—continual collection and analysis of data that permits more precise focus on the right compliance risks
Both federal and state Tax Administration Agencies 
must use their Limited Resources to achieve 
Maximum Taxpayer Compliance. 

Data Mining can help Tax Agencies 
Achieve Compliance Goals and 
Improve Operating Efficiency.

Managing an effective auditing organization involves many decisions.Each stage involves decisions that can increase or reduce the efficiency of the overall auditing program.

Texas and several other states, as well as tax agencies in the United Kingdom and Australia, rely on data mining to help find delinquent taxpayers and make effective resource allocation decisions. Data mining leverages specialized data warehousing systems that integrate internal and external data sources to enable a variety of applications, from trend analysis to non-compliance detection and revenue forecasting, that help agencies answer questions such as:

  • How should we split auditing resources among tax types?
  • Which taxpayers are higher audit priorities?
  • What is the expected yield from a particular audit type?
  • Which SIC codes are associated with higher rates of noncompliance?

Tax agencies have access to enormous amounts of taxpayer data. Most auditing agencies, in fact, draw information from these data sources to support auditing functions. Audit selectors, for example, search data sources for taxpayers with specific profiles. These profiles, developed by experts, may be based on a single attribute, such the taxpayer industry code (SIC), or on a complex combination of attributes (for example, taxpayers in a specific retail sector that have a specific sales-to-reported-tax ratio).

Data mining technologies do the same thing, but on a much bigger scale. Using data mining
techniques, tax agencies can analyze data from hundreds of thousands of taxpayers to identify common attributes and then create profiles that represent different types of activity. Agencies, for example, can create profiles of high-yield returns, so auditors can concentrate resources on new returns with similar attributes. Data mining enables organizations to leverage their data to understand, analyze, and predict non-compliant behavior.

Data mining is the exploration and analysis, by automatic or semiautomatic means, of large quantities of data in order to discover meaningful patterns and rules. Organizations use this information to detect existing fraud and noncompliance, and to prevent future occurrences.

This  recently announced restructuring of the IRS' LB&I is aiming to bring about a “cultural change” in the department, said Sergio Arellano, director of International Business Compliance for LB&I.

“Really, the change for us that is critical is that we're going to have a cultural change,” Arellano said. “We're going to have to focus on becoming an organization that is comfortable pre-identifying issues.”
As part of the restructuring, LB&I will create a new position, assistant deputy commissioner for compliance integration and will likely be dropping its continuous audit program for large taxpayers, Arellano said during a Sept. 18 panel discussion at the American Bar Association Section of Taxation meeting in Chicago.
Individual audits aren't the answer, Arellano said. “We can't audit our way out of our issues. We have to find different methods and different approaches.”
LB&I is scheduled to implement the new structure in early calendar year 2016.
Are You 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).

Sources
KPMG 
Bloomberg BNA
D Micci-Barreca

Read more at: Tax Times blog

IRS Offers FATCA Guidance for Trusts & Partnerships

October 7, 2015

The IRS posted FAQ'stoday on the effective dates of FATCA agreements for entities that apply on or after April 1 to be withholding foreign partnerships or withholding foreign trusts. 

Qualified Intermediaries: Withholding Foreign Partnerships/ Withholding Foreign Trusts

Q1. How does a Financial Institution that is not currently a Qualified Intermediary (“QI”), a Withholding Foreign Partnership (“WP”), or a Withholding Foreign Trust (“WT”) register to become one?
Q2. How do FIs that are currently QIs, WPs and WTs renew their agreements?
Q3. I am not currently a QI/WP/WT.  Can I use the LB&I registration portal to register for FATCA and become a new QI/WP/WT?
Q4. Must an FI become a QI/WP/WT in order to register under FATCA?
Q5. If an FFI has a QI/WP/WT agreement in place, does the Responsible Party for purposes of the QI/WP/WT Agreement also have to the serve as the FFI’s Responsible Officer?
Q6. If a member of the Expanded Affiliated Group is a Qualified Intermediary/Withholding Trust/Withholding Partnership, does the Lead Financial Institution renew the Qualified Intermediary/Withholding Trust/Withholding Partnership agreement on behalf of the member or does the member renew its own agreement?
Q7. How will Withholding Foreign Partnerships (WP) and Withholding Foreign Trusts (WT) renew their WP and WT agreements, if the revised WP and WT agreements will not be published before June 30, 2014?
Q8. When will the terms of the revised QI Agreement set forth in Revenue Procedure 2014-39 be effective for: (a) entities seeking QI status, and (b) entities seeking renewal of their QI Agreements?
Q9. If an entity submits an application for WP or WT status on or after April 1 and is approved for such status, what will the effective date of its WP or WT agreement be?

Is This Your Idea of Dealing with 
Previously Undeclared Foreign Income?

Need Help With

  Your US Reporting Requirements?
 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) 882-924

Read more at: Tax Times blog

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