Blog

Wajsfelner’s former Swiss adviser, Beda Singenberger, was indicted last year on a charge of conspiring to help more than 60 U.S. taxpayers hide $184 million from the Internal Revenue Service in offshore accounts.

Wajsfelner admitted that he held an account in his own name at Credit Suisse in 1995, and Singenberger helped him open one there in 2006 in the name of Ample Lion Ltd. At the end of 2007 the account held almost $5.7 million, court records show.
 

If you have have Unreported Income From a Foreign Bank, contact the Tax Lawyers at Marini & Associates, P.A. for a FREE Tax and/or Criminal Consultation at www.TaxAid.usor www.TaxLaw.msor Toll Free at 888-8TaxAid (888 882-9243).

Sources:

Business Week

This change signals a new direction in the government's focus on tax compliance, Deloitte said. Taxpayers now are confronted with a variety of new reporting responsibilities, including those required under the Foreign Account Tax Compliance Act, Deloitte said.

“The information reporting compliance environment has changed,” the report stressed, noting that in the past, IRS enforcement efforts focused less on information reporting compliance than on income tax compliance.

Accordingly, many companies did not devote extensive resources to compliance in the information reporting area, Deloitte said.

But this has changed. “The IRS and Treasury Department are now firmly focused on the payment and reporting of income paid by companies to U.S. recipients on a worldwide basis,” the report said.

Until IRS clarifies a Feb. 24 memorandum in which it determined that a gift was complete, even though the grantor had retained a power of appointment exercisable at his or her death, donors are in danger of making gifts that IRS says are taxable, the officials said.

In chief counsel advice memorandum (CCA201208026), IRS said donors made completed gifts of term interests in a trust upon their transfer of property to the trust, and their retained testamentary limited powers of appointment relate only to the trust remainder.

Under the trust agreement, the Settlors retained testamentary limited powers of appointment, presumably with the intent that these retained powers would render contributions to the trust incomplete under Treas. Reg. § 25.2511-2(b), and thus not subject to immediate gift taxation. The Settlors then commenced funding the trust each year with interests in a family entity (the nature of which is not specified in the Memorandum) in amounts equal to the couple's annual gift tax exemption amounts with respect to the trust beneficiaries.

The Memorandum, however, concludes that, under established case law, a testamentary power of appointment relates only to the remainder of the trust and not to the interest held for the benefit of the current beneficiaries. As a result, each gift to the trust has to be thought of as consisting of two parts, a current interest (which is complete for gift tax purposes) and a remainder interest (which is incomplete for gift tax purposes).

In this case, the value of the gift of the current interest is equal to the entire fair market value of the transferred property, for two reasons: (1) since the Trustee of the trust has the power to terminate the trust at any time by distributing all of the principal to one or more of the current beneficiaries, the present value of any remainder interest is negligible and (2) because the incomplete gifts of the remainder interests are not "qualified interests" under the special valuation rules of § 2702, the value of the retained interest is treated as zero.

As a result of this analysis, practitioners wishing to ensure that a gift is incomplete should not rely on a retained testamentary power and should make certain that the grantor is also given an applicable lifetime power, such as a lifetime limited power of appointment or a power to veto trust distributions.

The Memorandum concludes that the beneficiaries have no means of enforcing their withdrawal rights under state law, since the Other Forum is not bound by state law and no beneficiary would be willing to petition the state court for relief at the risk of terminating his or her beneficial interest in the trust. Because these withdrawal rights are therefore deemed unenforceable, the Settlors were not allowed to use their annual gift tax exemption amounts to shield any portion of their
contributions to the trust.