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Everything You Wanted to Know About and Offer in Compromise

November 2, 2015

Offer in Compromise

ALERT
Please use the most current revision of Form 656-B in preparing and submitting your Offer in Compromise. Use of outdated forms and instructions may cause a delay in the processing of your offer application.

An offer in compromise allows you to settle your tax debt for less than the full amount you owe. It may be a legitimate option if you can't pay your full tax liability, or doing so creates a financial hardship. We consider your unique set of facts and circumstances:

  • Ability to pay;
  • Income;
  • Expenses; and
  • Asset equity.

The IRS will generally approve an offer in compromise when the amount offered represents the most which they can expect to collect within a reasonable period of time. Explore all other payment options before submitting an offer in compromise. The Offer in Compromise program is not for everyone.

If you hire a tax professional to help you file an offer, be sure to check his or her qualifications.

Make sure you are eligible

Before the IRS can consider your offer, you must be current with all filing and payment requirements. You are not eligible if you are in an open bankruptcy proceeding. Use the Offer in Compromise Pre-Qualifier to confirm your eligibility and prepare a preliminary proposal.

Submit your offer

You'll find step-by-step instructions and all the forms for submitting an offer in the Offer in Compromise Booklet, Form 656-B (PDF).  Your completed offer package will include:

  • Form 433-A (OIC) (individuals) or 433-B (OIC) (businesses) and all required documentation as specified on the forms;
  • Form 656(s) - individual and business tax debt (Corporation/ LLC/ Partnership) must be submitted on separate Form 656;
  • $186 application fee (non-refundable); and
  • Initial payment (non-refundable) for each Form 656.

Select a payment option

Your initial payment will vary based on your offer and the payment option you choose:

  • Lump Sum Cash: Submit an initial payment of 20 percent of the total offer amount with your application. Wait for written acceptance, then pay the remaining balance of the offer in five or fewer payments.
  • Periodic Payment: Submit your initial payment with your application. Continue to pay the remaining balance in monthly installments while the IRS considers your offer. If accepted, continue to pay monthly until it is paid in full.

If you meet the Low Income Certification guidelines, you do not have to send the application fee or the initial payment and you will not need to make monthly installments during the evaluation of your offer. See your application package for details.

Understand the process

While your offer is being evaluated:

  • Your non-refundable payments and fees will be applied to the tax liability (you may designate payments to a specific tax year and tax debt);
  • A Notice of Federal Tax Lien may be filed;
  • Other collection activities are suspended;
  • The legal assessment and collection period is extended;
  • Make all required payments associated with your offer;
  • You are not required to make payments on an existing installment agreement; and
  • Your offer is automatically accepted if the IRS does not make a determination within two years of the IRS receipt date.

If your offer is accepted If your offer is rejected
  • You must meet all the Offer Terms listed in Section 8 of Form 656, including filing all required tax returns and making all payments;
  • Any refunds due within the calendar year in which your offer is accepted will be applied to your tax debt;
  • Federal tax liens are not released until your offer terms are satisfied; and
  • Certain offer information is available for public review at designated IRS offices.
  • You may appeal a rejection within 30 days using Request for Appeal of Offer in Compromise, Form 13711 (PDF).


Have A Tax Problem?
 


  Want to Know if Your Qualify for an Offer?
 
 


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

for a FREE Tax Consultation

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

Read more at: Tax Times blog

2 More Swiss Banks, 57 in Total, Are Turning Over Your Names to the IRS – What Are Your Waiting For?

November 2, 2015

We previously posted OVDP Penalty Increased To 50% For 55 Foreign Banks Asset Management Firms! well now make 57 (54 Banks +1 Asset Management Firm) including "The 1st Swiss Asset Management Firm To Turn Over Names of US Clients Over to the IRS!" 

The IRS announced on October 16, 2015 that BBVA Suiza S.A. and on October 23, 2015 that et Galland & Cie SA Reaches Resolution under Swiss Bank Program.

"The multiplier effect that these agreements have on tax compliance cannot be underestimated," said Chief Richard Weber of IRS-Criminal Investigation (CI).
 
"The magnitude of the data provided by each of these agreements leads us to: more & more Banks, more Countries and more Individuals.
 
IRS-CI will continue to use all of the information we gather from these agreements to vigorously pursue individual U.S. taxpayers who illegally conceal assets offshore and to develop innovative strategies to combat international tax evasion worldwide."
The IRS keeps updating its list of foreign banks where the holders of these offshore accounts are subject to a 50% (rather than 27.5%) penalty in the IRS’s Offshore Voluntary Disclosure Program (OVDP). This penalty is based on the highest account balance measured over up to eight years.
 
The complete list is as follows, as of 10/23/15:

  1. UBS AG (effective 8/4/14)
  2. Credit Suisse AG, Credit Suisse Fides, and Clariden Leu Ltd. (effective 8/4/14)
  3. Wegelin & Co. (effective 8/4/14)
  4. Liechtensteinische Landesbank AG (effective 8/4/14)
  5. Zurcher Kantonalbank (effective 8/4/14)
  6. swisspartners Investment Network AG, swisspartners Wealth Management AG, swisspartners Insurance Company SPC Ltd., and swisspartners Versicherung AG (effective 8/4/14)
  7. CIBC FirstCaribbean International Bank Limited, its predecessors, subsidiaries, and affiliates (effective 8/4/14)
  8. Stanford International Bank, Ltd., Stanford Group Company, and Stanford Trust Company, Ltd. (effective 8/4/14)
  9. The Hong Kong and Shanghai Banking Corporation Limited in India (HSBC India) (effective 8/4/14)
  10. The Bank of N.T. Butterfield & Son Limited (also known as Butterfield Bank and Bank of Butterfield), its predecessors, subsidiaries, and affiliates (effective 8/4/14)
  11. Sovereign Management & Legal, Ltd., its predecessors, subsidiaries, and affiliates (effective 12/19/14)
  12. Bank Leumi le-Israel B.M., the Bank Leumi le-Israel Trust Compay Ltd., Bank Leumi (Luxembourg) S.A., Leumi Private Bank S.A., and Bank Leumi USA (effective 12/22/14)
  13. BSI SA (effective 3/30/15)
  14. Vadian Bank AG (effective 5/8/15)
  15. Finter Bank Zurich AG (effective 5/15/15)
  16. Societe Generale Private Banking (Lugano-Svizzera) SA (effective 5/28/15)
  17. MediBank AG (effective 5/28/15)
  18. LBBW (Schweiz) AG (effective 5/28/15)
  19. Scobag Privatbank AG (effective 5/28/15)
  20. Rothschild Bank AG (effective 6/3/15)
  21. Banca Credinvest SA (effective 6/3/15)
  22. Societe Generale Private Banking (Suisse) SA (effective 6/9/15)
  23. Berner Kantonalbank AG (effective 6/9/15)
  24. Bank Linth LLB AG (effective 6/19/15)
  25. Bank Sparhafen Zurich AG (effective 6/19/15)
  26. Ersparniskasse Schaffhausen AG (effective 6/26/15)
  27. Privatbank Von Graffenried AG (effective 7/2/15)
  28. Banque Pasche SA (effective 7/9/15)
  29. ARVEST Privatbank AG (effective 7/9/15)
  30. Mercantil Bank (Schweiz) AG (effective 7/16/15)
  31. Banque Cantonale Neuchateloise (effective 7/16/15)
  32. Nidwaldner Kantonalbank (effective 7/16/15)
  33. SB Saanen Bank AG (effective 7/23/15)
  34. Privatbank Bellerive AG (effective 7/23/15)
  35. PKB Privatbank AG (effective 7/30/15)
  36. Falcon Private Bank AG (effective 7/30/15)
  37. Credito Privato Commerciale in liquidazione SA (effective 7/30/15)
  38. Bank EKI Genossenschaft (effective 8/3/15)
  39. Privatbank Reichmuth & Co. (effective 8/6/15)
  40. Banque Cantonale du Jura SA (effective 8/6/15)
  41. Banca Intermobiliare di Investimenti e Gestioni (Suisse) SA (effective 8/6/15)
  42. bank zweiplus ag (effective 8/20/15)
  43. Banca dello Stato del Cantone Ticino (effective 8/20/15)
  44. Hypothekarbank Lenzburg AG (effective 8/27/15)
  45. Schroder & Co. Bank AG (effective 9/3/15)
  46. Valiant Bank AG (effective 9/10/15)
  47. Bank La Roche & Co AG (effective 9/15/15)
  48. Belize Bank International Limited, Belize Bank Limited, Belize Corporate Services Limited, their predecessors, subsidiaries, and affiliates (effective 9/16/15)
  49. St. Galler Kantonalbank AG (effective 9/17/15)
  50. E. Gutzwiller & Cie, Banquiers (effective 9/17/15)
  51. Migros Bank AG (effective 9/25/15)
  52. Graubundner Katonalbank (effective 9/25/15)
  53. BHF-Bank (Schweiz) AG (effective 10/1/15)
  54. Finacor SA (effective 10/6/15)
  55. Schaffhauser Kantonalbank (effective 10/8/15)
  56. BBVA Suiza S.A. (effective 10/16/15)
  57. Piguet Galland & Cie SA (effective 10/23/15)

Outside of these banks, the norm within the OVDP remains 27.5%. That is far better than prosecution or much bigger civil penalties. Some taxpayers can opt for the easier and less costly Streamlined program. This list does not impact the Streamlined programs because you must be non-willful to qualify. All of this is part of the June 2014 improvements to the OVDP, which sparked new interest in cleaning up offshore accounts.

With roughly 96 Swiss banks taking the DOJ deal and FATCA requiring the entire world to report to the IRS resulting in increasing disclosures, everyone American is eventually going to be discovered.

Banks worldwide want to know if there US clients are compliant with the IRS.

Within the OVDP, people who pre-cleared before the various effective dates are generally safe from the higher 50% penalty. As additional banks are added to the list, only those American taxpayers that request pre-clearance before their bank is listed, will get the 27 1/2% OVDP penalty. The 50% penalty now applies to all taxpayers with accounts at financial institutions or with facilitators which are named, are cooperating or are identified in a court filing such as a John Doe summons.

Although the 50% penalty is high, willful civil violations can result in tax, penalties and interest totaling 325% of the highest balance in the account for the  most recent six years period. Recent guidance suggests that the IRS could be more lenient in the future, but the IRS’s definition of leniency can still make the OVDP a very good deal that provides certainty.

Do You Have Undeclared Income from a Swiss Bank
 Who Is Handing Over Names to the IRS?

 
Want to Know if the 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

Director of Company that Used Its NOL's to Offest FIRPTA Gains from Acquired Target Co.'s Cleared In $200M Corporate Tax Fraud Charges

October 31, 2015

According to Law360,  an ex-managing director at corporate acquisition business MidCoast Financial Inc. was found not guilty by a Pennsylvania federal jury on Wednesday over his alleged involvement in a complex $200 million corporate tax fraud scheme.

Donald Stevenson of North Palm Beach, Fla., 58, was cleared after a six-day trial on charges that he conspired to defraud the U.S. and corruptly endeavored to obstruct and impede the due administration of Internal Revenue Service laws. Stevenson, the only defendant to be acquitted in the scheme, faced 8 years in prison.

Federal prosecutors alleged that Stevenson and others conjured up and participated in an elaborate scheme between 2003 and 2011 to evade more than $200 million in corporate taxes by buying companies with taxable gains and using fraudulent losses to wipe out the gains.

The group pocketed the companies’ cash, filed fraudulent returns and, in some cases, sought and received IRS refunds for prior years, prosecutors claimed. To implement the tax scheme, the U.S. Department of Justice said that the defendants used a four-step process.

The initial purchasers, including MidCoast Financial, owned by Chandrakant Shah and Samyak Veera, bought target companies with cash assets and huge anticipated corporate income tax liabilities, then transferred the companies to straw buyers controlled on paper by Andrew Ahn and Aviel Faliks.

The group then evaded income taxes by using fraudulent transactions designed to create the illusion that the companies had incurred capital and ordinary losses and ultimately distributed the proceeds through hidden means, according to the DOJ.

As part of the scheme, prosecutors alleged that Stevenson, as the head of MidCoast Financial’s acquisition team and the company’s successor, Private Capital Resource Group, Inc., led the effort to identify target companies. Others involved in the scheme have either pled guilty or are fugitives.

Have a Tax Problem?

 



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


 for a FREE Tax Consultation Contact US at 
www.TaxAid.us or www.TaxLaw.ms

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

Read more at: Tax Times blog

Republican and Democratic Lawmakers Vow to Push Tax Treaties Delayed by Sen. Paul!

October 31, 2015

Over a year ago, we posted U.S. Senator Rand Paul Continues To Block 5 Important Tax Treaties where we discussed that the U.S.-Switzerland tax treaty remains stuck in the Senate after Sen. Rand Paul (R-Ky.) blocked an effort to propel it forward by Senate Foreign Relations Committee Chairman Robert Menendez (D-N.J.)

 When a bipartisan Senate panel lambasted Swiss bank Credit Suisse for helping rich Americans evade billions in taxes, some watching the high-profile hearing couldn’t help but notice that Sen. Rand Paul sticks out like a elephant in the room. Senator Rand Paul on Wednesday June 4, 2014 again blocked the U.S. Senate from moving toward ratifying five pending tax treaties, saying they would make it easier for foreign governments to invade the privacy of Americans.

The Kentucky libertarian, defying business interests that favor the agreements, cited concerns the treaties would allow more inter-government sharing of financial information on citizens. The United States has tax treaties with more than 60 countries, ranging from China to Kyrgyzstan. Their main purpose is to prevent double-taxation of corporate profits.
  • No new tax treaties or treaty updates have been approved by the Senate since 2010, when Paul was first elected on a wave of support from supporters of the Tea Party movement.
  • Before Paul's election, tax treaties were routinely approved by the Senate.
Under the New Treaties, Foreign Governments intent on Combating Tax Avoidance could Too Easily Access Americans' Personal Tax Information, Paul said. "We can't forget about the innocent Americans who are not breaking the law and do have a right to privacy," Paul said, adding that he wants the treaties rewritten to eliminate information-sharing provisions.

 Under Senate rules, one senator can place a "hold" on a motion for a vote, preventing it from reaching the Senate floor.
Earlier this year, the Senate Foreign Relations Committee approved the five tax treaties with:
  • Chile,
  • Hungary,
  • Switzerland,
  • Luxembourg and
  • the Organisation for Economic Co-operation and Development.
Senate approval is needed for them to take effect. Business lobbyists said that Senate Democrats likely would continue to bring up the tax treaties for debate to draw attention to Paul's objections.
In debate on the Senate floor, Democratic Senator Benjamin Cardin said food-maker McCormick & Co Inc has been hurt by the Senate's inaction on the treaties.
 

Now Republican and Democratic lawmakers vowed on October 28, 2015 to push for the ratification of eight tax treaties which have been held up for years because of one Republican senator's objections, despite support from companies that want consistency in rules for how to do international business.

objects to the agreements for privacy reasons, saying they would allow more inter-governmental sharing of financial information on citizens.

"The Treaties Don't Grant Access
 
 to Taxpayer Records that are Beyond
 
What are Provided in U.S. law," 
 
said Thomas Barthold, chief of staff of the government's Joint Committee on Taxation.
October 28, 2015's hearing discussed tax treaties with Switzerland, Luxembourg, Hungary, Chile, Spain, Poland and Japan and the international convention on mutual assistance on tax matters.
 
Paul, who is running for his party's nomination in the 2016 presidential election, delayed by several hours the chamber's vote on a major budget deal negotiated by congressional leaders and the White House, which he sees as doing too little to control spending.
No new tax treaties or treaty updates have been approved by the Senate since 2010, when Paul was first elected on a wave of support from supporters of the Tea Party movement. Before Paul's election, tax treaties were routinely approved by the Senate.
 
US taxpayers who have undeclared accounts in Credit Suisse or other Swiss banks, may now want to consider applying for the US Offshore Voluntary Disclosure Program (OVDP), which sets a limit to the penalties imposed on them by the Internal Revenue Service (IRS) for failing to declare foreign assets and earnings.
 
Once either:
  • The Swiss Banks disclose an account holder's name to the IRS under the non prosecution agreement or 
  • Mr. Andreas Bachmann or Josef Dorig or Markus Walder or Susanne Ruegg-Meier or Roger Schaerer discloses an account holder's name to the IRS or
  • Any 1 of the other 11 Credit Suisse Bankers, who were indicted in 2011 along with Mr. Dorig, discloses an account holder's name to the IRS 
the OVDP election is no longer available to that account holder!!!
 
Taxpayers Who Wish To Take Advantage
Of The OVDP Must Act Quickly! 

 
Have Un-Reported Income From a Swiss Bank?
 
Value Your Freedom?

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

 

 

 

Read more at: Tax Times blog

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