Yearly Archives: 2017

We previously posted Set up Your 2017 Calendar to Reflect New Filing Dates for 2016 US Tax Returns  where we discussed that on July 31, 2015, President Obama signed into law P.L. 114-41, the “Surface Transportation and Veterans Health Care Choice Improvement Act of 2015,” which includes a number of important tax provisions, including revised due dates for partnership, S corporations and C corporation returns and revised extended due dates for some returns.
Historically the Reports of Foreign Bank and Financial Accounts (FBAR) for foreign financial accounts wasdue on June 30 of each year, for purposes of reporting accounts for the preceding calendar year. FinCen reminds preparers and account holders that starting this year, the due date has been moved, starting for 2016 accounts, to April 15 (April 18 for 2017).
 FinCEN Report Due Date Revised

The new law, for returns for tax years beginning after Dec. 31, 2015, the due date of FinCEN Report 114 will be Apr. 15, with a maximum extension of 6 months ending on Oct. 15. The IRS may also waive the penalty for failure to timely request an extension for filing the Report, for any taxpayer required to file FinCEN Form 114 for the first time.

The IRS or FinCEN need to provide clarification on the format or forms for such extensions, which may be similar to Form 4868, which is the form for requesting extensions on Individual tax returns currently. There may also be a requirement that these extensions be filed on the BSA Website as in the case of the FBAR forms.

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for a FREE Tax Consultation

at www.TaxAid.com or www.OVDPLaw.com

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

The OECD made its end-November 2016 deadline to release the text of the multilateral treaty to give effect to the BEPS Actions which involve changes to tax treaties, see here. The 49 page treaty text, which is commonly referred to as the multilateral instrument or MLI, and 85 page explanatory statement (ES) contain substantive changes to existing tax treaties in a relatively small subset of provisions.

The objective of the MLI is to have a single instrument which a country can sign to update its suite of treaties by a single stroke, without having to re-negotiate each treaty individually. So, if Australia (or any other country) signs the MLI, potentially all its existing treaties could be amended in one place.

Hence this one instrument has to be flexible enough to effect amendments to over 3,000 treaties based on different treaty models, some containing the amending provisions already (eg, an arbitration clause), of varying scope and age, some with protocols, in a variety of languages, and between countries that have different views on just how much and which parts of the BEPS agenda they want to implement. That drafting challenge explains a lot about why the instrument is so obtuse.

The changes which the MLI would make are hedged around with elections, options and the possibility of reservations, which is why the text of the MLI manages to be double the length of a typical tax treaty, while perhaps leaving readers wondering exactly what it all means. (Before grappling with the details of these complexities, it is helpful to read the summary in ES pages 3-7.)

Treasury released a Consultation Paper (CP) on 19 December 2016 setting out how it is proposed that Australia react to the menu of choices on offer in the MLI with submissions due by 13 January 2017. It will be interesting to see how many submissions were received given this timing.

The MLI is already open for signature from 31 December 2016 and will not start to operate until five ratifications have been deposited with the OECD. In Australia’s case ratification will require the usual treaty review process and for a bill to pass through Parliament giving effect to whatever we sign up to. The CP indicates a target start date for the MLI in Australia of 1 January 2019, assuming sufficient ratifications by then, which in the light of the timing indicated in the MLI for coming into force and effect means passage of enabling legislation by mid-2018.

In the meantime Australia has to draw up a list of treaties it wants to be amended, sort through the
It is unlikely there will be any signatures on the MLI before the proposed signing ceremony in Paris in the week of 5 June 2017 back-to-back with the OECD Ministerial Council meeting when a sufficient number of high-profile politicians will be on hand to do the honours. The MLI provides for provisional notification of all reservations etc by countries at the time of signature and final notification at the time of depositing instruments of ratification.

For more on how and when the MLI will operate, the current likely Australian position on it and the potential impact of the new US President Click Here To Read More...

 

The Internal Revenue Service today said avoiding taxes by hiding money or assets in unreported offshore accounts remains on its 2017 list of tax scams known as the “Dirty Dozen.”

Since the first Offshore Voluntary Disclosure Program (OVDP) opened in 2009, there have been more than 55,800 disclosures and the IRS has collected more than $9.9 billion from this initiative alone.

In addition, another 48,000 taxpayers have made use of separate streamlined procedures to correct prior non-willful omissions and meet their federal tax obligations, paying approximately $450 million in taxes, interest and penalties. The IRS conducted thousands of offshore-related civil audits that resulted in the payment of tens of millions of dollars in unpaid taxes. The IRS has also pursued criminal charges leading to billions of dollars in criminal fines and restitutions.

The IRS receives more foreign account information each year, making it harder to hide income offshore. I urge taxpayers with international tax issues to come forward and get right with the system."

Compiled annually, the “Dirty Dozen” lists a variety of common scams that taxpayers may encounter anytime, but many of these schemes peak during filing season as people prepare their tax returns or hire people to help with their taxes.

Illegal scams can lead to significant penalties as well as interest and possible criminal prosecution. The IRS Criminal Investigation Division works closely with the Department of Justice to shut down scams and prosecute the criminals behind them.

Hiding Income Offshore

Over the years, numerous individuals have been identified as evading U.S. taxes by attempting to hide income in offshore banks, brokerage accounts or nominee entities. Then access the funds using debit cards, credit cards or wire transfers. Others have employed foreign trusts, employee-leasing schemes, private annuities or insurance plans for the same purpose.

The IRS uses information gained from its investigations to pursue taxpayers with undeclared accounts, as well as bankers and others suspected of helping clients hide their assets overseas.

While there are legitimate reasons for maintaining financial accounts abroad, there are reporting requirements that need to be fulfilled. U.S. taxpayers who maintain such accounts and who do not comply with reporting requirements are breaking the law and risk significant  fines, as well as the possibility of criminal prosecution.

Since 2009, tens of thousands of individuals have come forward to voluntarily disclose their foreign financial accounts, taking advantage of special opportunities to comply with the U.S. tax system and resolve their tax obligations. And, with new foreign account reporting requirements being phased in over the next few years, hiding income offshore is increasingly more difficult.

At the beginning of 2012, the IRS reopened the Offshore Voluntary Disclosure Program  following continued strong interest from taxpayers and tax practitioners after the closure of the 2011 and 2009 programs.
This program will be open for an indefinite period until otherwise announced.

Third-Party Reporting

Under the Foreign Account Tax Compliance Act (FATCA) and the network of intergovernmental automatic third-party account reporting has entered its second year. The IRS continues to receive more information regarding potential non-compliance by U.S. persons because of the Department of Justice’s Swiss Bank Program. This information makes it less likely that offshore financial accounts will go unnoticed by the IRS.
agreements between the U.S. and partner jurisdictions,

Potential civil penalties increase substantially if U.S. taxpayers associated with participating banks wait to apply to OVDP to resolve their tax obligations.

 

 

 

Let US Help!

 

 

Contact the Tax Lawyers at
Marini & Associates, P.A.

 

 for a FREE Tax Consultation Contact US at

www.TaxAid.com or www.OVDPLaw.com

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