Monthly Archives: May 2018

Estates and their authorized representatives may request an account transcript by filing Form 4506-T, Request for Transcript of Tax Return. Currently, Form 4506-T can be filed with IRS via mail or facsimile (per the instructions on the form). Although account transcripts for estate tax returns are not currently available through IRS's online Transcript Delivery System (TDS), the IRS website, www.irs.gov, will have current information should an automated method become operational. 
 
To allow time for processing the estate tax return, requests should be made no earlier than four months after filing the estate tax return.
 
IRS says that estates and their authorized representatives who wish to continue to receive estate tax closing letters may call IRS at (866) 699-4083 to request an estate tax closing letter no earlier than four months after the filing of the estate tax return. 
This certainly presents an opportunity to demonstrate how the IRS can create unnecessary complexities (and accompanying misery) for people wishing to receive Federal Closing Letters. Lots of luck!

Have a US Estate Tax Problem?

 

Estate Tax Problems Require

an Experienced Estate Tax Attorney

 

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).
 

------------------------------------------------------------------------------------------- 

Robert S. Blumenfeld  - 

 Estate Tax Counsel

Mr. Blumenfeld concentrates his practice in the areas of International Tax and Estate Planning, Probate Law, and Representation of Resident and Non-Resident Aliens before the IRS.

Prior to joining Marini & Associates, P.A., he spent 32 years as the Senior Attorney with the Internal Revenue Service (IRS), Office of Deputy Commissioner, International.

While with the IRS, he examined approximately 2,000 Estate Tax Returns and litigated various international and tax issues associated with these returns.As a result of his experience, he has extensive knowledge of the issues associated with and the preparation of U.S. Estate Tax Returns for Resident and Non-Resident Aliens, Gift Tax Returns, Form 706QDT and Qualified Domestic Trusts.

The Internal Revenue Service warned in IR-2018-119 of a new twist tied to an old scam aimed at international taxpayers and non-resident aliens. In this scam, criminals use a fake IRS Form W-8BEN to solicit detailed personal identification and bank account information from victims. Here’s how the scam works:

1. Criminals mail or fax a letter indicating that although individuals are exempt from withholding and reporting income tax, they need to authenticate their information by filling out a phony version of Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting. Recipients are requested to fax the information back.
2. The Form W-8BEN is a legitimate U.S. tax exemption document, however, it can only be submitted through a withholding agent.
3. In the past, fraudsters have targeted non-residents of the U.S. using the form as a lure to get personal details such as passport numbers and PIN codes.
4. The legitimate IRS Form W-8BEN does not ask for any of that information.
5. The phony letter or fax also refers to a Form W9095, which does not exist.
6. Furthermore, the IRS doesn’t require a recertification of foreign status.

Scam variations

Be alert to bogus letters, emails and letters that appear to come from the IRS or your tax professional requesting information. Scam letters, forms and e-mails are designed to trick taxpayers into thinking these are official communications from the IRS or others in the tax industry, including tax software companies. These phishing schemes may seek personal information, including mother’s maiden name, passport and account information in order steal the victim’s identity and their assets.

Note that the IRS does not:

• Demand that people use a specific payment method, such as a prepaid debit card, gift card or wire transfer. The IRS will not ask for debit or credit card numbers over the phone. For people who owe taxes, make payments to the United States Treasury or review IRS.gov/payments for IRS online options.  
• Demand immediate tax payment. Normal correspondence is a letter in the mail and taxpayers can appeal or question what they owe. All taxpayers are advised to know their rights as a taxpayer.
• Threaten to bring in local police, immigration officers or other law enforcement to arrest people for not paying. The IRS also cannot revoke a license or immigration status. Threats like these are common tactics scam artists use to trick victims into believing their schemes.

Taxpayers who receive the IRS phone scam or any IRS impersonation scam should report it to the Treasury Inspector General for Tax Administration at its IRS Impersonation Scam Reporting site and to the IRS by emailing [email protected] with the subject line “IRS Impersonation Scam.”

According to JDSUPRA, The American Bar Association has written to the US Internal Revenue Service, asking it clarify whether assets held as cryptocurrencies such as Bitcoin are subject to the Foreign Bank Account Reports (FBAR) and Form 8938 reporting rules.  

“It is unclear whether a taxpayer holding cryptocurrencies on a foreign cryptocurrency exchange (e.g., Xapo.com or Binance.com) or in a wallet maintained by a foreign wallet service provider (e.g., Blockchain.com) is required to report the account(s) on an FBAR as it is unclear whether cryptocurrencies may qualify as a reportable account for FBAR purposes.

There is tension between the Service’s classification of cryptocurrency as “property,” the Securities Exchange Commission’s (“SEC”) classification of cryptocurrency, in certain circumstances, as a “security,” and the Commodity Futures Trading Commission’s (“CFTC”) classification of  cryptocurrency as a “commodity.”

• On the one hand, if cryptocurrency is property, then it is arguably not subject to FBAR reporting requirements because it is not, under the current regulatory definitions, a “bank, securities, or other financial account.” 

• On the other hand, if cryptocurrency is a “security,” then FBAR reporting requirements may apply under the general rule: “each United States person having a financial interest in, or signature authority over, a bank, securities, or other financial account in a foreign country shall report such relationship to the Commissioner…”

• Moreover, by treating cryptocurrency as “property,” the answer to whether cryptocurrency held in foreign wallets must be reported likely depends on what functions the wallet provider actually provides, which may be difficult for taxpayers to determine in many cases. 

• Furthermore, it is unclear how these requirements may apply to taxpayers who hold cryptocurrencies directly on a distributed blockchain.

We previously discussed, that an abundance of caution, a taxpayer may want to report their investments in cryptocurrencies on their FBAR and Form the 8938, since Taxpayers who do not properly report the income tax consequences of virtual currency transactions can be audited for those transactions and, when appropriate, can be liable for penalties and interest. 

According to Law360, the Internal Revenue Service announced on May 14, 2018 that it will undertake a campaign to increase compliance for rules involving nonresident aliens' tax treaty exemption claims.

Because the statutes involving income-based tax treaty exemption claims can be confusing, the IRS' Large Business and International Division will focus on education and outreach to increase awareness and compliance, according to a statement.

“Some nonresident alien taxpayers may either misunderstand or misinterpret applicable treaty articles, provide incorrect or incomplete forms to the withholding agents or rely on incorrect information returns provided by U.S. payors to improperly claim treaty benefits and exempt U.S. source income from taxation,” the statement said.

Under the provisions of certain treaties, some payments from U.S. residents to nonresident aliens are not subject to the complete withholding obligation of 30 percent, as defined under Internal Revenue Code Section 1441.

Nonresident aliens will also be the subject of additional campaigns, designed to encourage compliance in instances when they inappropriately apply for education tax credits, which are available only to U.S. residents, and income-oriented credits, for which they are also not eligible.
The announcement highlighted the agency's priority in ensuring compliance with both effectively connected and fixed, determinable, annual periodical tax treaty-based income credits.

The Agency Will Also Pursue Campaigns to Increase Compliance with Withholding, Deposit and Reporting Requirements per IRS Form 1042 and

Compliance with the Reporting of Transactions with Foreign Trusts, per IRS Form 3520, According to the Announcement.

The process for ensuring compliance may include "examinations and penalties assessed by the campus when the forms are received late or are incomplete," the announcement stated.