Archive: March, 2015

failed FATCA repeal amendment

Budget amendment SA 621 was introduced as an amendment to repeal the Foreign Account Tax Compliance Act (FATCA). Passed in 2010 and effective in July 2014.  This amendment failed today on the floor of the Senate.  FATCA has created a storm of controversy over the last year.  Many predicted that foreign jurisdictions would not cooperate, but the opposite has been true.  With the first exchange deadline approaching (March 31st, 2015), FATCA will begin to make an impact on those Americans with undisclosed offshore accounts, further closing the loop on Offshore Tax Evasion.

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IRS discriminationLogic and good sense dictate that if an IRS employee is caught discriminating against a taxpayer, they should be fired. At the very least, given the bad press and scrutiny surrounding the IRS and this subject in particular, one would think that any hint of impropriety would lead to disciplinary action. However, as outlined in the below article this is still not the case, and Congress is considering legislation that would take some discretion out of the hands of the IRS.

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Umbrella LLC

This article describes the possibility and drawbacks of running multiple businesses under the umbrella of one LLC.

You can run any number of businesses in one LLC and those businesses can be substantially different in nature. There are multiple drawbacks to this approach. The article describes the most obvious drawback which is that each business’s income and assets will be subject to the claims and liabilities derived from the operations of the other business(es).

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Renounce CitizenshipThe articles details the most public figure to renounce U.S. Citizenship to date.  The combination of the Department of Justice/IRS offshore initiative and FATCA has spurned  a lot of “Accidential-Americans,” dual-citizens and expats to renounce their citizenship.  This reaction is in direct proportion to the complexity and cost of compliance in addition to the potential criminal liability.

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IRS tax codeFormer IRS Commissioner, Douglas Shulman, told C-SPAN in an interview back in 2010 that he does not prepare his own taxes; instead, he hires a preparer. You’d think, as the then-current IRS Commissioner, he would prepare his taxes himself just to see what other taxpayers experience, but he admitted he can’t. “It’s just too complicated,” Commissioner Shulman said. “The tax code is 14,000 pages long.” The man who oversaw the IRS from 2008 – 2012 couldn’t comprehend the tax code. That’s like saying the head of the FBI doesn’t know what’s illegal.

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IRS Seize Passport

This article details an order issued by a District Court called writ of ne exeat republica.  To convince a judge to issue this writ, the IRS must essentially prove that a taxpayer has transferred assets into a foreign jurisdiction for the purpose of avoiding the payment of tax owed to the IRS.  The IRS must demonstrate that it has attempted to collect on the debt using all of its power.  If the debt is not collected, the IRS can request that it be reduced to judgment and have the write issued to repatriate assets back to the US.  In this scenario, expats entered the United States from Ecuador to attend a wedding.  On their way back out of the country they were detained by US Marshals, forced to turn over their passports and given jail time (in lieu of paying a bond) because they were considered flight risks.

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IRS Audit

The IRS audit is a constantly developing process.  It’s history, which dates back to the industrial revolution and stock market crash of 1929, is extended and complex.  From the establishment of the Securities and Exchange Commission (SEC) in 1934 to the advent of Audit Technique Guides, which are basically industry-specific user’s manuals for modern-day auditors and tax practitioners alike, since the IRS audit is an ever-evolving living organism. (For more information on the history of the IRS audit, see Paul E. Byrnes et al., Evolution of Auditing: From the Traditional Approach to the Future Audit, Nov. 2012, available at aicpa.org.)

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German Bank Under Scrutiny

Commerzbank, Germany’s second largest bank, has agreed to pay the United States Government and New York State $1.45 billion for its role in money laundering schemes.  Internal Commerzbank employees were manually changing the transaction monitoring system that all banks must adhere so as to not report red flag transactions.

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irs-levyOver the past several years, we have all witnessed the drama stemming from federal budget negotiations, the resulting government shut down, and ultimately some significant cuts to various agencies and programs, including the IRS. These IRS budget cuts have resulted in a hiring freeze and ultimately a significant reduction in IRS staff. While a taxpayer’s gut reaction to this news might be ‘Great! They’re less likely to come after me!’ the ramifications are in fact more complicated than that.

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The full-service, U.S.-based tax firm opens Swiss branch to better serve clients with U.S. tax liability worldwide.

March 12, 2015, ZURICH, SWITZERLAND—Five Stone Tax Advisers opened a new branch for its International Tax Compliance & Advisory business in Zurich, Switzerland on Monday. This was done in order to provide geocentric tax solutions to expats, dual citizens and individuals with offshore accounts worldwide.

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