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Partnership & LLC Agreements Need to be Reviewed and Revise for 2015 Tax Law Changes!

January 20, 2016

Read more at: Tax Times blog

Set up Your 2016 Calendar to Reflect New Filing Dates for US Tax Returns

January 20, 2016


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.


Revised Due Dates for Partnership, S &C Corporation Returns 

Under the new law, there is a major restructuring of entity return due dates, effective generally for returns for tax years beginning after Dec. 31, 2015:

  • Partnerships and S corporations will have to file their returns by the March 15th following the end of the tax year. This results in the filing deadline for partnerships being accelerated by one month with the filing deadline for S corporations staying as March 15. 

    • By having most partnership returns due one month before individual returns are due, taxpayers and practitioners will generally not have to extend, or scurry around at the last minute to file, the returns of individuals who are partners in partnerships.

  • C corporations will have to file by April 15th after the end of the tax year resulting in the filing deadline for C corporations being deferred for one month.

These changes to the filing deadlines generally go into effect for 2016 returns. Under a special rule for C corporations with fiscal years ending on June 30, the change is deferred for ten years and it won't apply until tax years beginning after Dec. 31, 2025. 
 


Revised Extended Due Dates for Various Returns

Taxpayers who can't file a tax form on time, can request an extension to file the requisite form. Effective for tax returns for tax years beginning after Dec. 31, 2015, the new law directs the IRS to modify its regulations to provide for a longer extension to file a number of forms, including the following:

 

  • Form 1065 - U.S. Return of Partnership Income will have a maximum extension of 6 months. The extension will end on Sept. 15 for calendar year taxpayers.

  • Form 1041 -U.S. Income Tax Return for Estates and Trusts will have a maximum extension of 5 1/2 months. The extension will end on Sept. 30 for calendar year taxpayers.

  • The Form 5500 - Annual Return/Report of Employee Benefit Plan will have a maximum automatic extension of 3 1/2. The extension will end on Nov. 15 for calendar year filers.

FinCEN Report Due Date Revised
Taxpayers with a financial interest in or signature authority over certain foreign financial accounts must file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR). Currently, this form must be filed by June 30 of the year immediately following the calendar year being reported, and no extensions are allowed.
Under 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.

Form 3520 And Form 3520-A Due Date Revised
Form 3520-A is now due on March 15th and will have a maximum extension of 6 months until September 15th.

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.

 Have a Tax Problem? 
 
 
 
Contact the Tax Lawyers at
Marini & Associates, P.A.
 
for a FREE Tax Consultation
at www.TaxAid.us or www.TaxLaw.ms
or Toll Free at 888-8TaxAid (888 882-9243).

 



Read more at: Tax Times blog

IRS Has Updated FAQs for SFOP and SDOP Streamlined Processes!

January 15, 2016

The US Internal Revenue Service has updated its guidance on its Streamlined Procedures for Voluntary Disclosure of Offshore Assets. The main changes relate to taxpayers' certification of their Non-Wilfulness and the treatment of joint returns requiring amendment where the other spouse does not desire to cooperate.

1. IRS Has Provided Some Detail Regarding the Supportive Narratives for the Form(s) 14653 & 14654 Certification of Non-Willfulness.  (SFOP FAQ #6 - SDOP FAQ #13)  
Taxpayers using either the Streamlined Foreign Offshore Procedures (SFOP) or the Streamlined Domestic Offshore Procedures (SDOP), will be required to certify, in accordance with the specific instructions set forth below, that the failure to report all income, pay all tax and submit all required information returns, including FBARs (FinCEN Form 114, previously Form TD F 90-22,1) was due to non-willful conduct. The IRS on numerous occasions has indicated that they were getting narratives that did not contain enough detail to support the taxpayers' certifications of Non-Willfulness. 

 New SFOP FAQ #6

Q6.
What facts do I need to include in completing the narrative statement of facts portion of the Form 14653?
Provide specific reasons for your failure to report all income, pay all tax, and submit all required information returns, including FBARs. Include the whole story including favorable and unfavorable facts. Specific reasons, whether favorable or unfavorable to you, should include your personal background, financial background, and anything else you believe is relevant to your failure to report all income, pay all tax, and submit all required information returns, including FBARs. Additionally, explain the source of funds in all of your foreign financial accounts/assets. For example, explain whether you inherited the account/asset, whether you opened it while residing in a foreign country, or whether you had a business reason to open or use it. And explain your contacts with the account/asset including withdrawals, deposits, and investment/management decisions. Provide a complete story about your foreign financial account/asset.
The following points address common situations that may apply to you:
  • We realize that many taxpayers failed to acknowledge their financial interest in or signature authority over foreign financial accounts on Form 1040, Schedule B. If you (or your return preparer) inadvertently checked “no” on Schedule B, line 7a, simply provide your explanation.
  • We realize that some taxpayers that owned or controlled a foreign entity (e.g., corporation, trust, partnership, IBC, etc.) failed to properly report ownership of the entity or transactions with the foreign entity. If you (or your return preparer) inadvertently failed to report ownership or control of the foreign entity or transactions with the foreign entity, explain why and include your understanding of your reporting obligations to the IRS and to foreign jurisdictions.
  • If you relied on a professional advisor, provide the name, address, and telephone number of the advisor and a summary of the advice. Also provide background such as how you came into contact with the advisor and frequency of communication with the advisor.
  • If married taxpayers submitting a joint certification have different reasons, provide the individual reasons for each spouse separately in the statement of facts. 

New SDOP FAQ #13

Q13
What facts do I need to include in completing the narrative statement of facts portion of the Form 14654?
Provide specific reasons for your failure to report all income, pay all tax, and submit all required information returns, including FBARs. Include the whole story including favorable and unfavorable facts. Specific reasons, whether favorable or unfavorable to you, should include your personal background, financial background, and anything else you believe is relevant to your failure to report all income, pay all tax, and submit all required information returns, including FBARs. Additionally, explain the source of funds in all of your foreign financial accounts/assets. For example, explain whether you inherited the account/asset, whether you opened it while residing in a foreign country, or whether you had a business reason to open or use it. And explain your contacts with the account/asset including withdrawals, deposits, and investment/management decisions. Provide a complete story about your foreign financial account/asset.
The following points address common situations that may apply to you:
·         We realize that many taxpayers failed to acknowledge their financial interest in or signature authority over foreign financial accounts on Form 1040, Schedule B. If you (or your return preparer) inadvertently checked “no” on Schedule B, line 7a, simply provide your explanation.
·         We realize that some taxpayers that owned or controlled a foreign entity (e.g., corporation, trust, partnership, IBC, etc.) failed to properly report ownership of the entity or transactions with the foreign entity. If you (or your return preparer) inadvertently failed to report ownership or control of the foreign entity or transactions with the foreign entity, explain why and include your understanding of your reporting obligations to the IRS and to foreign jurisdictions.
·         If you relied on a professional advisor, provide the name, address, and telephone number of the advisor and a summary of the advice. Also provide background such as how you came into contact with the advisor and frequency of communication with the advisor.
·         If married taxpayers submitting a joint certification have different reasons, provide the individual reasons for each spouse separately in the statement of facts.

2. IRS Also Provides Advice Regarding the Treatment of Joint Returns Requiring Amendment Where the Other Spouse does not Desire to Cooperate. (SFOP FAQ #7 - SDOP FAQ #14.) 

 SFOP FAQ #7
Q7.
In one or more of the most recent 3 years for which the U.S. tax return due date (or properly applied for extended due date) has passed, I filed joint income tax returns. But my spouse/former spouse will not sign joint amended returns or a joint certification on Form 14653 for a Streamlined submission. What can I do? Am I precluded from using the Streamlined Foreign Offshore Procedures?
We understand that in certain cases (including but not limited to separation or divorce), your spouse/former spouse may not be willing to sign joint amended income tax returns or a joint certification on Form 14653.
You may submit a joint amended income tax return with only your signature to Streamlined Foreign Offshore Procedures so long as your joint amended return shows a net increase in tax. Please explain your inability to secure your spouse’s/former spouse’s signature in the narrative statement of facts on Form 14653. And write “SFO FAQ 7” in red ink in the area for your spouse’s signature on the amended returns and Form 14653.
As a matter of routine processing, the Service will request the other spouse’s signature on joint amended returns with only one signature. If at the time the Service makes a request for your spouse’s/former spouse’s signature on a joint amended return or joint certification you are still unable to secure your spouse’s/former spouse’s signature, please respond to the inquiry by referencing this FAQ.
You may not submit a joint amended income tax return with only your signature to Streamlined Foreign Offshore Procedures showing a net decrease in tax or an increase in credit.

SDOP FAQ #14

 
Q14  In one or more of the most recent 3 years for which the U.S. tax return due date (or properly applied for extended due date) has passed, I filed joint income tax returns. But my spouse/former spouse will not sign joint amended returns or a joint certification on Form 14654 for a Streamlined submission. What can I do? Am I precluded from using the Streamlined Domestic Offshore Procedures?
We understand that in certain cases (including but not limited to separation or divorce), your spouse/former spouse may not be willing to sign joint amended income tax returns or a joint certification on Form 14654.
You may submit a joint amended income tax return with only your signature to Streamlined Domestic Offshore Procedures so long as your joint amended return shows a net increase in tax. Please explain your inability to secure your spouse’s/former spouse’s signature in the narrative statement of facts on Form 14654. And write “SDO FAQ 14” in red ink in the area for your spouse’s signature on the amended returns and Form 14654.
As a matter of routine processing, the Service will request the other spouse’s signature on joint amended returns with only one signature. If at the time the Service makes a request for your spouse’s/former spouse’s signature on a joint amended return or joint certification you are still unable to secure your spouse’s/former spouse’s signature, please respond to the inquiry by referencing this FAQ.
You may not submit a joint amended income tax return with only your signature to Streamlined Domestic Offshore Procedures showing a net decrease in tax or an increase in credit.
Do You Have Undeclared Income from A Foreign Bank?

Want to Know Which OVDP Program is Right for You? 

Contact the Tax Lawyers at 
Marini & Associates, P.A.  
 
for a FREE Tax Consultation
at: www.TaxAid.us or www.TaxLaw.ms or
Toll Free at 888-8TaxAid (888) 882-9243

 

 

 

 

 

Read more at: Tax Times blog

U.S FinCEN Will Track Secret Buyers of Luxury Real Estate in Manhattan and Miami

January 14, 2016

The Financial Crimes Enforcement Network (FinCEN) today January 13, 2016 issued a Geographic Targeting Orders (GTO) that will temporarily require certain U.S. title insurance companies to identify the natural persons behind companies used to pay "all cash" for high-end residential real estate in the Borough of Manhattan in New York City, New York, and Miami-Dade County, Florida.
 
FinCEN is concerned that all-cash purchases – i.e., those without bank financing – may be conducted by individuals attempting to hide their assets and identity by purchasing residential properties through limited liability companies or other opaque structures. To enhance availability of information pertinent to mitigating this potential money laundering vulnerability, FinCEN will require certain title insurance companies to identify and report the true "beneficial owner" behind a legal entity involved in certain high-end residential real estate transactions in Manhattan and Miami-Dade County.

With these GTOs, FinCEN is proceeding with its risk-based approach to combating money laundering in the real estate sector. Having prioritized anti-money laundering protections on real estate transactions involving lending, FinCEN’s remaining concern is with the money laundering vulnerabilities associated with all-cash real estate transactions. This includes transactions in which individuals use shell companies to purchase high-value residential real estate, primarily in certain large U.S. cities.

 

"We are seeking to understand the risk that corrupt foreign officials, or transnational criminals, may be using premium U.S. real estate to secretly invest millions in dirty money," said FinCEN Director Jennifer Shasky Calvery. "Over the years, our rules have evolved to make the standard mortgage market more transparent and less hospitable to fraud and money laundering. But cash purchases present a more complex gap that we seek to address. These GTOs will produce valuable data that will assist law enforcement and inform our broader efforts to combat money laundering in the real estate sector."

Under specific circumstances, the GTOs will require certain title insurance companies to record and report to FinCEN the beneficial ownership information of legal entities purchasing certain high-value residential real estate without external financing. They will report this information to FinCEN where it will be made available to law enforcement investigators as part of FinCEN’s database.

The information gathered from the GTOs will advance law enforcement’s ability to identify the natural persons involved in transactions vulnerable to abuse for money laundering. This would mitigate the key vulnerability associated with these transactions – the ability for individuals to disguise their involvement in the purchase.

FinCEN is covering certain title insurance companies because title insurance is a common feature in the vast majority of real estate transactions. Title insurance companies thus play a central role that can provide FinCEN with valuable information about real estate transactions of concern. The GTOs do not imply any derogatory finding by FinCEN with respect to the covered companies. To the contrary, FinCEN appreciates the assistance and cooperation of the title insurance companies and the American Land Title Association in protecting the real estate markets from abuse by illicit actors.

The GTOs will be in effect for 180 days beginning on March 1, 2016. They will expire on August 27, 2016.

It is the first time the federal government has required real estate companies to disclose names behind all-cash transactions, and it is likely to send shudders through the real estate industry, which has benefited enormously in recent years from a building boom increasingly dependent on wealthy, secretive buyers.

The initiative is part of a broader federal effort to increase the focus on money laundering in real estate. Treasury and federal law enforcement officials said they were putting greater resources into investigating luxury real estate sales that involve shell companies like limited liability companies, often known as L.L.C.s; partnerships; and other entities.

The Treasury’s program will affect billions of dollars in real estate transactions. In Manhattan, the initiative requires buyers in sales of more than $3 million to be reported; in Miami-Dade County, it requires reporting on sales of more than $1 million. In Manhattan, 1,045 residential sales cost more than $3 million in the second half of 2015, worth some $6.5 billion in aggregate, according to PropertyShark, a real estate data company.

In addition to starting in only two markets, the requirement runs from March through August. If Treasury officials find that many sales involved suspicious money, they may develop permanent reporting requirements across the country.
 

Need Experience Legal Advice for
Your US Real Estate Investments?

 
 
 

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


for a FREE Tax Consultation

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

 

 
Sources
Treasury Department 

The New York Times 

 

 

 

 

 

 
 


 


  


 

Read more at: Tax Times blog

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