Yearly Archives: 2021

According to Law360, the current Infrastructure Bill was modified by congressional Democrats to loosened their proposal to require banks to file annual tax information returns with customer account data, raising the reporting threshold from $600 to more than $10,000 and provide an exemption for wage earners and those whose income comes from federal programs such as Social Security.

Banks would not be required to report specific transactions to the IRS, Wyden said, only those that result when taxpayers save for major purchases valued above $10,000. He said the IRS would receive only two specific pieces of information: the total amount going into and out of an account.

As originally proposed this year in the Treasury Green Book, the Internal Revenue Service information reporting proposal would require banks to file tax information returns on their customer accounts with data on gross inflows and outflows, cash and foreign transactions, and transfers among each customer's different accounts.

U.S. Treasury Secretary Janet Yellen released a statement Tuesday saying the IRS reporting proposal is needed to help the agency collect taxes from wealthy Americans with opaque sources of income that typically avoid the scrutiny that wage income undergoes.

"This Two-Tiered Tax System Is Unfair And Deprives The Country Of Resources To Fund Core Priorities," Said Yellen,

adding that the administration of President Joe Biden wants to focus on collecting unpaid taxes from Americans at the top of the income scale.

Citizens are worried the proposal will turn "bank presidents, community bankers, credit unions, lenders and tellers into spies for the IRS," he said.

Taxpayers reporting $0 to $100,000 in adjusted gross income on Schedule C were responsible for about 73% of unreported income while taxpayers earning $500,000 and over were responsible for about 4%, Barthold said. 

Republicans said this analysis shows the IRS reporting proposal would impact average Americans not just the uber-wealthy.

"The reality is wealthy people often earn their income through partnerships or other ways in which they can sell an asset for $2 million, put that $2 million in the bank account and tell the IRS that they only earned $200,000," he told lawmakers.

The IRS would be able to "spot when a wealthy tax cheat has millions of dollars flowing into an account, but isn't reporting that money on their tax return," she said. "Their wealthy clients are outright lying about this proposal, claiming that it would give the IRS information on individual transactions."

This mandate could reach anyone who accepts cryptocurrency for goods or services, leaving those who fail to properly complete their paperwork facing ruinous fines and even prison. Imposing it is unnecessary, ill-advised and possibly unconstitutional.

The ostensible purpose of this requirement is to enhance tax collection. Those who share detailed personal and financial information with their bank cannot complain, when the bank shares some of that information with the government.

Person-to-person crypto transactions are fundamentally different. They involve no third party. Recipients of cryptocurrency have no reason to gather the sender's personal information and senders have no reason to offer it.

Have an IRS Tax Problem?

     Contact the Tax Lawyers at

Marini & Associates, P.A. 

for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888 8TAXAID (888-882-9243)

Read more at: Tax Times blog

According to Law360, Top Senate Republicans on three committees want details on how President Joe Biden's administration could bypass the tax treaty process to reallocate U.S. taxing rights as part of a global minimum tax agreement, according to a letter dated October 8, 2021.

U.S. Treasury Secretary Janet Yellen should explain by Oct. 15 how the Biden administration proposes to enact the Organization for Economic Cooperation and Development's so-called Pillar One proposal without the tax treaty process, the senators wrote.

The letter was sent by Republican Sens. Pat Toomey of Pennsylvania and Mike Crapo and James Risch of Idaho. Toomey is the ranking member of the Senate Banking Committee, while Crapo serves as top Republican on the Finance Committee and Risch is the ranking member of the Senate Foreign Relations Committee.

Pillar One, which would reallocate taxing rights to countries where companies have customers but no physical presence, would require changes to U.S. tax law that must go through the Senate's tax treaty process, which requires a vote with two-thirds approval, the senators said. 

"We are especially concerned, given Treasury has failed to meaningfully consult our members on the potential treaty or legislative action that would be necessary to fully carry out the Pillar One agreement," the senators said.

They added that Republicans on the Foreign Relations Committee, which has jurisdiction over tax treaties, have received no correspondence from the Biden administration, according to the letter.

Have an IRS Tax Problem?

     Contact the Tax Lawyers at

Marini & Associates, P.A. 

for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888 8TAXAID (888-882-9243)

Read more at: Tax Times blog

According to Law360, A comprehensive overhaul of the international corporate tax system was finalized on October 8, 2021 by 136 jurisdictions, including the United States, who agreed to a global 15% minimum tax rate and rules that would rewrite how the profits of large multinational businesses are allocated among jurisdictions.

The global pact will also reallocate earnings from about 100 of the world's largest and most profitable companies to countries worldwide, "ensuring that these firms pay a fair share of tax wherever they operate and generate profits," the OECD said.

Discussions appeared close to the finish line when Ireland, which had previously signaled commitment to its 12.5% rate, on October 7, 2021 agreed to the global pact after successfully lobbying for the term "at least" to be removed from the 15% minimum rate language. Two other holdout countries, Estonia and Hungary, also recently signed on to the agreement, including the minimum rate — a measure that will see countries collect around $150 billion in new revenues annually, according to the OECD.

Sri Lanka, Kenya, Pakistan and Nigeria have declined to endorse the deal, according to the OECD. (The next tax havens? -Not very safe.)

Specifically, the rules will apply to multinational corporations with global sales above €20 billion and profitability above a 10% ma a baby with the rgin companies that "can be considered as the winners of globalization," according to the OECD.

For companies that fall within this scope, 25% of profit above the 10% threshold will be reallocated to market jurisdictions, according to the OECD, which said the new rules will reallocate more than $125 billion in total profits.

The OECD also outlined the implementation process for the profit allocation rules and global minimum tax, called Pillars One and Two of its overhaul, including a multilateral treaty that will be used to implement Pillar One's new taxing rights. Countries are aiming to have the treaty implemented in 2023, when domestic legislation for Pillar Two is also planned to be effective, according to the OECD.

The global agreement also entails "the standstill and removal" of digital services taxes, according to the OECD. Several countries had pursued unilateral measures in the absence of global rules, prompting trade tensions with the U.S. government, which argued the taxes unfairly targeted American tech companies.

The deal has drawn criticism from some advocacy groups, which have contended that neither the minimum rate nor the profit allocation rules go far enough. Oxfam's Tax Policy Lead Susana Ruiz said in a statement Friday said the 15% minimum rate has "practically no teeth" after the last-minute addition of a 10-year grace period for full implementation of the measure.

As for the profit allocation agreement, Alex Cobham, chief executive at the Tax Justice Network, said in a statement Friday that new rules are "a tokenistic measure" that affects "only a sliver of the profits of just 100 multinationals."

Negotiations began at the OECD four years ago to address concerns that large multinational corporations were shifting income from where it was generated to low-tax jurisdictions. The OECD also took on the task of retooling a century-old international tax system, which the organization said fails to fairly allocate taxing rights now that many companies can earn substantial profits in a country without needing a physical presence.

Ursula von der Leyen, president of the European Commission, said Friday that the agreement's details will be finalized later this month during the summit of the Group of 20 industrial and emerging-market nations.

Have an IRS Tax Problem?

     Contact the Tax Lawyers at

for a FREE Tax HELP Contact us at:
www.TaxAid.com or www.OVDPLaw.com
or Toll Free at 888 8TAXAID (888-882-9243)

Read more at: Tax Times blog

According to Law360, an American couple owe the government almost $1 Million in FBAR Penalties and interest for willfully failing to report their overseas bank account, the U.S. told a federal court in a civil action to collect tax penalties.

Juan and Catherine Reyes did not file the report, commonly known as an FBAR, for 2010, 2011 and 2012 for a foreign bank account containing over $2 million, the U.S. said in a complaint filed in U.S. v. Juan Reyes and Catherine Reyes, case number 1:21-cv-05578, in the U.S. District Court for the Eastern District of New York on October 7, 2021.

Juan Reyes was born in Nicaragua but has lived in the U.S. for more than 60 years and is a naturalized American citizen, the U.S. said in its complaint. His parents opened an account for him at Banco de Londres y America del Sur in 1972. Catherine Reyes became a joint owner of the account around 2000, it said. 

 Do You Have Undeclared Offshore Income?

 

Want to Know Which
Voluntary Disclosure Program
is Right for You? 

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

Read more at: Tax Times blog