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We previously posted on November 10, 2014, IRS Seizure of Assets Using Anti-Structuring Laws where we discussed thatthere were reported a series of cases in which the IRS has seized money from innocent Americans based on purported violations of so-called “anti-structuring” laws, which make it a crime to deposit less than $10,000 cash in the bank in order to evade bank reporting requirements.
Now the Internal Revenue Service has established a special procedure for people whose assets were involved in structuring to request a return of their forfeited property or funds. The new process follows a change of IRS policy on structuring cases in October 2014 and ongoing discussions with members of Congress.

The IRS will begin mailing letters this week to potentially eligible property owners to participate in this initiative.  Since 2014, the IRS has already considered a number of petitions from property owners.  The new mailing is being taken to ensure that eligible property owners in this category are aware of this option.

Background on Structuring
The special procedure to request a return of funds or property applies to a specific category of property owners whose assets were forfeited because they were involved in “legal source” structuring, in which their regular cash transactions fell below the $10,000 reporting threshold established under the Bank Secrecy Act.

The October 2014 policy change meant the IRS would no longer pursue the seizure and forfeiture of funds associated solely with “legal source” structuring, unless there are exceptional circumstances justifying the seizure and forfeiture.  The 2014 policy change -- and the new special procedure -- does not affect funds involving "illegal source" structuring violations, including those cases where structuring activity is indicative of serious crimes ranging from tax and money laundering violations to drug dealing.

Details on Who May Be Eligible to Participate
The IRS will be mailing letters to those property owners it has identified as potentially having an interest in assets that were forfeited because they were involved in structuring violations prior to the change in the IRS policy.  Property owners who participate in this process to seek a return of their funds or property must qualify by establishing that the underlying funds came from a legal source and there is no evidence the requesting party engaged in structuring to conceal other criminal activity.

In those "legal source" structuring cases which were “administrative” and did not involve a formal judicial proceeding, the IRS has authority in appropriate cases to remit funds directly to the affected property owner.  In judicial cases involving "legal source" structuring, the IRS can make recommendations in appropriate cases to the Department of Justice, but the Department of Justice has final authority on any decision to be made.

The IRS is considering certain cases dating back to Oct. 1, 2009 and certain property owners should receive a letter from the IRS this month. If property owners are in this category and do not receive a letter, the IRS encourages them to contact the IRS at [email protected] to get more information.

“The IRS recognizes that seizure and forfeiture are powerful law enforcement tools, and must be administered in a fair and appropriate manner,” IRS Commissioner John Koskinen told the House Ways and Means Committee on May 25, 2016. “We understand we have a duty not only to uphold the law, but to protect the rights of individuals as well.  We look forward to working with property owners who come forward, and we will continue working to ensure that we handle all cases with fairness and respect for taxpayer rights in every instance.”

 

We previously posted on April 25, 2016 that Over 20 Countries Join UK-led Pilot for Automatic Data Sharing! where we discussed the international expansion of a UK-led deal to automatically share information on the ultimate owners of companies as over 20 jurisdictions, including British crown dependencies, overseas territories and EU member states sign up.

Now HM Treasury has published a list of 41 countries which have committed to sharing beneficial ownership information. 

Shortly after the leak of the “Panama Papers,” the G5 countries, spearheaded efforts to take such collective action, unveiling a new agreement to do so at the International Monetary Fund (IMF) meeting in Washington, D.C. in April 2016. 

Belgium, Bermuda, Cayman Islands, Cyprus, Gibraltar, Isle of Man, Jersey, Luxembourg, Malta and Netherlands, are countries where many trusts and companies are established for worldwide tax planning based upon their favorable local tax laws and there confidentiality laws; have also joined the list of other countries that have agreed to take collective action on increasing beneficial ownership transparency, including disclosing the real person associated with each company or trust. 

The list include the following countries which support the initiative for Automatic Exchange of Information on Beneficial Ownership:

1. Afghanistan
2. Anguilla
3. Austria
4. Belgium
5. Bermuda
6. Bulgaria
7. Cayman Islands
8. Croatia
9. Cyprus
10. Czech Republic
11. Denmark
12. Estonia
13. Finland
14. France
15. Gibraltar
16. Germany
17. Greece
18. Hungary
19. Iceland
20. India
21. Ireland
22. Isle of Man
23. Italy
24. Jersey
25. Latvia
26. Lithuania
27. Luxembourg
28. Malta
29. Mexico
30. Montserrat
31. Netherlands
32. Nigeria
33. Poland
34. Portugal
35. Romania
36. Slovakia
37. Slovenia
38. Spain
39. Sweden
40. United Arab Emirates
41. United Kingdom

US Taxpayers living abroad qualifying for an automatic two-month extension must file their 2014 federal income tax returns by Monday, June 15, 2015according to the Internal Revenue Service.

The June 15 deadline applies to U.S. citizens and resident aliens living overseas, or serving in the military outside the U.S. on the regular April 15 due date.

To use the two-month extension, taxpayers must attach a statement to their tax return explaining which of these two situations applies. See U.S. Citizens and Resident Aliens Abroad for more information.

Taxpayers who cannot meet the June 15 deadline can get an automatic extension until Oct. 15, 2015. This is an extension of time to file, not an extension of time to pay. Interest, currently at the rate of three percent per year compounded daily, applies to any payment made after April 15, 2015. In some cases, a late payment penalty, usually 0.5 percent per month, applies to payments made after June 15, 2015.

Taxpayers abroad, regardless of income, can use Free File to request a tax-filing extension. Alternatively, eligible taxpayers can download and file Form 4868, available on IRS.gov.

In some cases, an additional extension beyond Oct. 15 may be available. Additional extension of time for taxpayers out of the country. In addition to the 6-month extension, taxpayers who are out of the country can request a discretionary 2-month additional extension of time to file their returns (to December 15 for calendar year taxpayers). To request this extension, you must send the Internal Revenue Service a letter explaining the reasons why you need the additional 2 months. 

Details are in Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad. In addition, members of the military and others serving in Afghanistan and other combat zone localities normally have until at least 180 days after they leave the combat zone to file their returns and pay any taxes due. For details, see Extension of Deadlines in Publication 3, Armed Forces Tax Guide.

Federal law requires U.S. Citizens and Resident Aliens to report any Worldwide Income, including income from foreign trusts and foreign bank and securities accounts on their federal income tax return.

Additionally, U.S. persons with foreign accounts whose aggregate value exceeded $10,000 at any time during 2014 must file electronically with the Treasury Department a Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (FBAR).

Form 114 replaces TD F 90-22.1, the FBAR form used in the past. It is due to the  Department by Tuesday, June 30, 2015 must be filed electronically, and is only available online through the Treasury BSA E-Filing System website. This June 30 due date cannot be extended and tax extensions do not extend the FBAR filing due date. For details on FBAR requirements, see Report of Foreign Bank and Financial Accounts (FBAR).