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Yearly Archives: 2015

Suspicious Activity Reports (SARs) Are One of the Best Methods to Battle Financial Crimes according to the OECD

September 22, 2015

 A recent Organization for Economic Cooperation and Development (OECD) report, one of the best methods to combat financial crimes such as tax evasion, money laundering, corruption and terrorist financing, is to have countries ensure that their tax administrators have access to reports of suspicious financial transactions

Financial crimes, including tax crimes, threaten the strategic, political and economic interests of both developed and developing countries and undermine confidence in the global financial system.

In a world of limited resources and increasing complexity, government authorities must work closely together in a “whole of government” approach to best address these challenges. This applies, as much as anywhere, to the authorities combating serious financial crimes such as tax crimes, bribery corruption, money laundering and terrorism financing. Through each authority pooling their knowledge and skills, the fight against financial crimes will be more effective.

This interaction between each authority’s objectives has therefore become increasingly recognized.

There are potentially significant financial and efficiency gains to be realized by both tax administrations and money laundering authorities, namely the Financial Intelligence Unit (FIU), from increasing their levels of co-operation, information sharing and, more specifically, in developing an agreed approach to the analysis of Suspicious Transaction Reports (STRs). 

This is recognized in the whole of government approach where tax authorities have a key role in not only identifying tax evasion but also in identifying and reporting other suspected serious crimes such as bribery, corruption, money laundering and terrorism financing. However, tax authorities are hindered in this role as it is still not universally the norm for tax authorities to have access to STRs, and even where some level of access is provided significant barriers, both of a legislative and non-legislative nature, remain.

The content of this report is based on survey data obtained from 28 countries on the access of tax administrations to STRs for both criminal and civil matters and provides a picture of the current state of play. As the report sets out, there are various models to provide for tax administration access to STRs – each with particular strengths and challenges – broadly categorized as: full unfettered

access to STRs by the tax administration (whether on a push or pull basis); joint decision - making on the use of STRs by the tax administration and the FIU; and models relying on the FIU to make the decision on what should be shared with the tax authority. Ways to overcome the associated challenges with each model are suggested in the report.

The report moves on to highlight the potential benefits of sharing STRs and documents some of the different uses of STRs in relation to tax compliance. While STRs are primarily used for criminal purposes, increasing numbers of jurisdictions are realizing significant benefits from also using STRs for civil purposes. However STRs are used, in order to ensure they are used as effectively as possible, it is critical to focus on policies and procedures as well as the legal framework for tax administrations and FIUs to work closely together on an ongoing basis and for clear communication strategies to be employed with reporting financial institutions and other reporting entities.

The report also explains the types of confidentiality requirements that will need to be considered and discusses how to remove barriers to closer co-operation, while respecting these confidentiality requirements. Finally, specific recommendations are made designed to enhance levels of co-operation and therefore increase the overall effectiveness of governments in the fight against tax evasion and financial crimes, including money laundering. 
The volume of STRs has generally increased significantly over recent years. While this is  encouraging, it is not necessarily a sign of increased compliance. It is clear, however, that STRs are an important means of identifying financial crimes. There is no ideal target number of STRs to be submitted: this depends on the level of risk facing an institution, sector or country, as well as the size and composition of an economy. Nevertheless it is useful to look at STR volumes for a general indication of such reporting for countries with similar characteristics.

Tax administrations that have access to reports of suspicious transactions see an increase in their ability to identify a range of serious crimes and have an additional source of information to enforce tax compliance, the report said.

For example, the South Korean tax administration in 2013 gained access to suspicious transaction reports for civil cases and reported an increase in tax assessed of KRW 367 billion ($337 million at the time), the report said.

“While STRs are primarily used for criminal matters, including tax crimes, increasing numbers of jurisdictions are experiencing significant benefits through their use for civil tax matters.”

Do You Have Undeclared Income from a Foreign Bank?

Do You Value Your Freedom?


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

Read more at: Tax Times blog

Exporters and Near Non-Exporters – Can Claim Tax Breaks Year After Year!

September 22, 2015

Submitted by Robert Feinschreiber and Margaret Kent, ExportDISC.com   [email protected]. 

The tax law provides six tax breaks for exporters – and for near exporters. Consider if your business can claim some - or perhaps all six - of these government-sponsored tax benefits:

  1. Your company can claim the tax-rate spread, paying 20 percent tax instead of the regular corporate tax – without limitation - if your company exports U.S. products.
  2. Your company can defer tax on a major share of its export profits – but only up to $10 million in gross receipts.
  3. Your company can obtain additional tax saving by – literally – venturing into foreign territory.  These rules provide for even more tax deferral.
  4. Your company can claim both domestic production deduction tax benefits and export benefits if the company produces or manufactures items in the U.S. 
  5. Your company can claim estate and gift tax benefits it the company follows all the rules.
  6. Your company can increase its tax benefits by grouping or segregating its export transactions.

These tax breaks apply to a plethora of industries. Here are some possible examples if the company meet all of the tax requirements then exports its property:

  1. Boat manufacturers can qualify for the export tax incentive. Boat wholesalers and sellers can qualify as well. The wholesaler or the seller must buy the boat – directly or indirectly - from a U.S. manufacturer and sell the boat to a customer offshore.
  2. Aircraft manufacturers can qualify for the export tax incentive. An aircraft repairfacility can qualify as well, but the repair facility must buy the aircraft and must make substantial repairs to the aircraft while in the U.S., and sell the aircraft offshore. 
  3. Phone companies can qualify for the export tax incentive. If the phones are imported, the company must add very substantial value to the phones in the U.S., and the company needs to sell the phones overseas.
  4. Companies that farm, raise, or gather agricultural products can qualify for the export tax inventive unless the U.S. government gives them separate tax breaks. Eligible agricultural products can include grains, fruits, and other agricultural products.
  5. Electronic manufacturers can qualify. They need to ascertain that 50% of fair market value was U.S., and demonstrate the electronics then go overseas.
  6. The equipment refurbishers can qualify if they purchase the equipment and substantiate their refurbishing efforts.
  7. Chemical manufacturers and wholesalers can qualify for the export tax incentive. By-product and joint product costing issues can arise, particularly when the company sells one product domestically and sells the other product overseas.
  8. Architectural services, engineering services, other related services can potentially qualify for export incentive benefits if the project is for an overseas customer.
Ascertaining when a business can claim these export benefits.
 

 Examine these potential tax benefits:

  • Inland manufacturers have products that go overseas: The company can benefit from the tax incentive if the company produces the products in the U.S.; the goods go overseas, and the manufacturer can track the sales to the foreign customer.
  • The company does not manufacture anything. The company buys items from an unrelated manufacturer and sends these products overseas. The company can qualify if it can track the purchases and sales.
  • Recyclers of used equipment potentially can qualify for export tax benefits if the  company can track the transactions that are overseas.
  • The company consolidates U.S.-made products before they ship the goods overseas. This company can qualify for export incentive tax benefits.  
  • An importer substantially modifies a product in the U.S. before the company sells the good to foreign customers. This company can qualify for export incentive tax benefits.
  • A distributor buys U.S. made products and sells these products to a cruise ship or to an international airline. This company can qualify for export incentive tax benefits.
  • Foreign located companies that distribute U.S. made goods can potentially qualify if the goods are made in the U.S. and the goods go overseas.
You must take action to claim these tax benefits. IC-DISC  procedures and requirements

  1. Initial – one time – IC-DISC Requirements
  2. Gross receipts test –the 95 percent requirement yearly
  3. Assets test-the 95 percent requirement yearly
  4. Importance of meeting timing requirements yearly
Want to Know More About These Tax Breaks?


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


 

    Read more at: Tax Times blog

    OVDP Penalty Increased To 50% For 50 Foreign Banks!

    September 21, 2015

    The new revisions to the US offshore voluntary disclosure initiative, which we posted on 6/18/14 "IRS Makes Changes to Offshore Programs; Revisions Ease Burden and Help More Taxpayers Come into Compliance", now provides for and increased 50% FBAR Penalties for 'Willful' Non-Disclosers. 

    This group includes those individuals who have offshore bank accounts with a foreign financial institution which has been publicly identified as being under investigation, or is cooperating with a government investigation. IRS has published a list of those foreign financial institutions or facilitators. 

    The complete list is as follows, as of 9/17/15:

     

     

        1. UBS AG (effective 8/4/14)
        2. Credit Suisse AG, Credit Suisse Fides, and Clariden Leu Ltd. (effective 8/4/14)
        3. Wegelin & Co. (effective 8/4/14)
        4. Liechtensteinische Landesbank AG (effective 8/4/14)
        5. Zurcher Kantonalbank (effective 8/4/14)
        6. swisspartners Investment Network AG, swisspartners Wealth Management AG, swisspartners Insurance Company SPC Ltd., and swisspartners Versicherung AG (effective 8/4/14)
        7. CIBC FirstCaribbean International Bank Limited, its predecessors, subsidiaries, and affiliates (effective 8/4/14)
        8. Stanford International Bank, Ltd., Stanford Group Company, and Stanford Trust Company, Ltd. (effective 8/4/14)
        9. The Hong Kong and Shanghai Banking Corporation Limited in India (HSBC India) (effective 8/4/14)
        10. The Bank of N.T. Butterfield & Son Limited (also known as Butterfield Bank and Bank of Butterfield), its predecessors, subsidiaries, and affiliates (effective 8/4/14)
        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 Compay 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)

     

    A list of foreign financial institutions or facilitators meeting this criteria is available.

    Of course, the IRS may add names to that list at any time, and whole groups of taxpayers will then be cut-off from OVDP without prior notice.

    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.  While U.S. account holders at these banks who have not yet declared their accounts to the IRS may still be eligible to participate in the IRS Offshore Voluntary Disclosure Program, the price of such disclosure has increased.

    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.

     

     


    The same goes for taxpayers who worked with a "facilitator" who helped the taxpayer establish or maintain an offshore arrangement if the facilitator has been publicly identified as being under investigation or as cooperating with a government investigation. 
     

    Taxpayers who had undeclared income from one of these 48 Banks are still be eligible to enter the OVDP, but they will be subject to a 50% offshore penalty, rather than the existing 27.5 percent penalty.

    Of course if the IRS already has a particular taxpayer's name, then that person will not be eligible to enter the OVDP, and could be subject to multiple FBAR penalties.

     

    Do You Have Undeclared Income from One
    of the 48 Banks Delivering Names to the IRS?

     

    Do You Value Your Freedom?

     

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

    Read more at: Tax Times blog

    Oh Oh, We Are Half Way There … 50 Swiss Banks Are Turning Over Their US Client's Names… Living on a Prayer?

    September 21, 2015

    The number of Swiss banks that have entered deferred prosecution agreements with the U.S. government keeps growing. 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.

    On September 17, 2015 we posted 48 Swiss Banks Are Turning Over Their US Client's Names, well make that 50 now. The IRS recently added St. Galler Kantonalbank AG (SGKB) and E. Gutzwiller & Cie, Banquiers on 9/17/15. The complete list is as follows, as of 9/17/15:
    1. UBS AG (effective 8/4/14)
    2. Credit Suisse AG, Credit Suisse Fides, and Clariden Leu Ltd. (effective 8/4/14)
    3. Wegelin & Co. (effective 8/4/14)
    4. Liechtensteinische Landesbank AG (effective 8/4/14)
    5. Zurcher Kantonalbank (effective 8/4/14)
    6. swisspartners Investment Network AG, swisspartners Wealth Management AG, swisspartners Insurance Company SPC Ltd., and swisspartners Versicherung AG (effective 8/4/14)
    7. CIBC FirstCaribbean International Bank Limited, its predecessors, subsidiaries, and affiliates (effective 8/4/14)
    8. Stanford International Bank, Ltd., Stanford Group Company, and Stanford Trust Company, Ltd. (effective 8/4/14)
    9. The Hong Kong and Shanghai Banking Corporation Limited in India (HSBC India) (effective 8/4/14)
    10. The Bank of N.T. Butterfield & Son Limited (also known as Butterfield Bank and Bank of Butterfield), its predecessors, subsidiaries, and affiliates (effective 8/4/14)
    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 Compay 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)

    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 a Swiss Bank
     Who Is Handing Over Names 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

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