Archive: September, 2014

FATCA for Federal Indictment-Offshore BankingOn September 9th, 2014, a multi-count indictment for securities fraud, tax fraud and money laundering was unsealed in federal court against six corporate executives and six corporate entities[1].  The indictment is based on an investigation conducted by multiple government enforcement agencies including IRS Criminal Investigation (CI), Federal Bureau of Investigation (FBI), U.S. Immigration and Customs Enforcement (ICE) and Homeland Security Investigations (HSI).

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PNST-00064180-001If one were to thoroughly review the available information detailing the options that are available to United States (US) taxpayers with undisclosed foreign financial accounts over $10,000, the results would be the offshore voluntary disclosure program, the streamlined filing compliance procedure, the delinquent FBAR or informational report procedure(s), and quiet disclosure.  The practice of quiet disclosure usually will come with a bold all caps statement indicating that the tax practitioner or person writing the article does not recommend this practice and it could lead to severe penalties and criminal liability.  But when asked why this is the case or for the basis on which these assertions are made, most practitioners cannot pinpoint exact reasoning.  Here is a quick, easy breakdown of why the practice of quiet disclosures are strongly discouraged by practitioners and the IRS.

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The Secretary of Treasury, Jacob Lew, signed off on changes to the current inversion tax rules in the Internal Revenue Code.  These new rules are not retroactive and only affect either pending or future inversions. Presently there are eight US companies with pending inversions, see Medtronic Inc., AbbVie Inc., etc.  Per the Department of Treasury, the following directives are in place:

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Audit Technique GuidesThis is an essay on Audit Technique Guides, how they are used, and how they can benefit taxpayers.

Audit Technique Guides are particularly useful to tax practitioners because they provide a strong foundation when advising clients of audit risk and they point out common areas for mistakes, provide a brief but inclusive overview about typical business practices within a market segment, and are perpetually being updated and changed. This article will discuss these reasons and also provide a quick overview of the ATG for cash intensive businesses, which is one of the most widely used ATGs.

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Filing Processes after FATCANew international filing laws and procedures have made having foreign assets a little more complicated.

If you have undisclosed accounts, this filing process becomes even more complicated. Thankfully the IRS has programs, including Offshore Voluntary Disclosure Program (OVDP) to help reach compliance.

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Brian Mueller & Mishkin Santa — Directors of International Compliance & Advisory for Five Stone Tax — discuss the ins and outs of offshore tax compliance for U.S. account holders with overseas accounts.

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Ten Swiss banks have requested to be removed from consideration for non-prosecution agreements offered by the Department of Justice.  Due to the complexity associated with tax haven bank secrecy issues, the legal teams that have given this advice to these banks better be sure that the foundation for withdrawal is airtight.  As the Department of Justice and IRS continue to gather data through John Doe Summons, FATCA, whistleblowers and data mining from those participating in the offshore voluntary disclosure program, this decision may come back to haunt them. 

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Streamlined Filing ComplianceThe eligibility requirements for expanded Streamline Filing were published on June 18th, 2014.  There are two ways for a taxpayer to engage in Streamline Filing.  First, if the taxpayer is engaged in the offshore voluntary disclosure program (OVDP) and has yet to complete the closing agreement or form 906, the taxpayer can request transitional treatment.  If the taxpayer has yet to enter OVDP, the taxpayer can directly engage the streamlined filing process.  Either way, to engage in streamlined filing compliance procedures (SFCP) the taxpayer will have to certify non-willfulness. The expanded streamline procedures have a more favorable penalty structure than OVDP, so if non-willfullness can be proved, this is the preferable option.

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