Archive: October, 2014
Whether they be a dual-citizen, legal permanent resident, etc., it is important for those persons that have attained status as a United States (U.S.) taxpayer to have a legal analysis completed under federal income tax law before either formally (mark-to-market expatriation) or informally renouncing citizenship.
A New Hampshire man pleaded guilty yesterday in the U.S. District Court for failing to report approximately $170,000 in income earned from offshore bank accounts from 2006-2009. He faces three years in prison, a criminal fine of $250,000 and must pay 50 percent civil penalty to the IRS based on the high balance account. This taxpayer had offshore accounts in tax havens such as Switzerland, Israel, and the UK. This is a prime example of a taxpayer that should have timely entered into one of the many Offshore Voluntary Disclosure Initiatives in play since 2009. It is also a benchmark example for behavior that the Department of Justice Tax Division and IRS deem as “willful.”
The 100 Swiss Category 2 banks that signed up for the Department of Justice non-prosecution agreement (NPA) deal last December (2013) have just received the details of what is needed to comply. The banks must report in full any information or knowledge of any activity relating to U.S. tax aspects of any American (or dual-citizen) including names and account details. There has been no end date issued yet, but the DOJ has made it very clear that failure to disclose any of these items in a timely manner will void the NPA and lead to prosecution of the bank.
The author of this article does a fantastic job at illustrating two points. First, Ms. Lougen touches on the lack of consistency between states when it comes to Safe Harbor provisions, Foreign Earned Income Exclusion, Foreign Tax Deductions and Tax Treaties. As cross-border tax planning comes more to the forefront (i.e. U.S. citizens working abroad), the American Bar Association (or similar institution) should take the lead on offering model or uniform rules that should be adopted by the states. Similar to the model rules of ethics or the uniform rules of evidence, probate or the commercial code, a uniform code of foreign income state taxation would make the analysis for state tax planning consistent and transparent. This in turn would lead to less confusion on the part of the taxpayer and smaller fees for planning and preparation as the research portion could easily be omitted or attributed a smaller defined scope.
Ireland is notorious for offering a United States tax shelter called the “Double Irish” to large U.S. companies. The structure is similar to a tax shelter known as the “Dutch Sandwich.” In essence there is a real company with real employees in Ireland. The profits from that company flow through to a second Irish company, though. The difference is that the second Irish company is based out of a tax haven in the Caribbean. This in effect helps the large U.S. companies complete an end-around and avoid paying substantial U.S. taxes.
Raoul Weil was the head of UBS AG’s global wealth management business and went into hiding after he was indicted in 2008 in a Federal Court in Florida. The indictment showed that Mr. Weil allegedly advised 17,000 U.S. taxpayers to hide $20 billion in income and assets. In 2012, Mr. Weil was finally arrested in Italy by Interpol on a red notice also known as an international arrest warrant and removed to the United States for trial.
FOR IMMEDIATE RELEASE
Five Stone Tax Advisers Uncovers Thousands of Overtaxed Travis Co. Commercial Properties That Could be Eligible for a 7% Reduction
Austin, TX (October 14, 2014) – Five Stone Tax Advisers uncovers that thousands of commercial properties in Travis County, Texas, may be eligible for an additional 7 percent reduction in appraised value. According to an employee of the appraisal district who wished to remain anonymous, the district erroneously used Abilene, Texas, cost multipliers to assess Travis County commercial properties.
The error resulted in an incorrect appraised property value for an unspecified number of commercial properties in Travis County.
Some taxpayers with undisclosed offshore accounts are attempting to either enter the Offshore Voluntary Disclosure Program (OVDP), indicating willful failure to disclose accounts, or adhere to the Streamlined Filing Compliance Procedures (SFCP), indicating non-willful failure to disclose accounts, without the aid of an experienced attorney. The reasons below outline why willfulness determination should be entrusted to an attorney.
Thomas Haider, former MoneyGram Compliance Chief, was actively anti-money laundering during his time at the company, but now he is facing multi-millions in charges of money laundering per the Bank Secrecy Act (BSA) and the Anti-money Laundering (AML) law. Haider is being prosecuted for the company’s underhanded activities, despite his anti-money laundering efforts.
The Department of Justice issued a press release detailing the sentencing of two Caribbean-based professionals, an investment advisor and an attorney, for laundering money through undisclosed offshore accounts.
As this latest release from the Department of Justice indicates, the focus on the use of undisclosed offshore accounts whether it be for tax evasion or money laundering is the highest priority action-item for the Tax Division and the IRS. Those taxpayers that continue to avoid compliance, deemed “ostrich taxpayers” by the IRS, should come forward immediately and disclose accounts through one of the various IRS programs.