The Tax Wars Blog

WHEN IS A JOINT RETURN DEEMED TO HAVE BEEN FILED?

Posted on October 30, 2017 by taxpenaltylawyer

The Tax Court decision in Victor A. Edwards v. Commissioner, TC Summary Opinion 2017-52 contains an instructive discussion of the rules applicable to determining whether a valid joint return has been filed. Bear in mind that this is a summary opinion and therefore may not be cited as precedent. The case analysis may, nonetheless, be helpful.

Victor and Sharon Edwards divorced in 2014, although they lived together until divorced on September 5, 2014. They had adopted two minor children who lived with them while they remained married. Their divorce decree did not address whether they would file a joint income tax return or separate returns. They had e-filed joint returns for past years, both Sharon and Victor having signed the e-file authorizations, presumably on Form 8879, although the form number is not mentioned in the Tax Courts statement of facts. In the past Victor had delivered their tax information to the return preparer who never met or had spoken to Sharon.

On February 8, 2014 Sharon sent Victor a text message proposing that they file a joint return for 2013 and split the anticipated tax refund. They agreed to discuss that possibility when she returned to their shared home that evening. There is no mention in the opinion whether they ever had that discussion.

On February 12, 2014 Victor filed a joint return for 2013. Sharon did not give her tax information (W-2) to Victor and authorize him to deliver it to the return preparer. Rather, Victor delivered the W-2, which had been mailed to the house, along with his tax information to the return preparer and had her prepare a joint return. Sharon did not sign an e-file authorization for 2013. It is not stated whether Victor forged her signature on the Form 8879, or, if not, how the return preparer submitted the return to IRS without an authorization for Sharon.

The joint return reported wages of $26,777 for Sharon and $3,937 for Victor. IRS issued a joint refund check in the amount of $6,240 which Victor cashed even though most of the tax paid had been withheld from Sharon’s wages.

Victor did not immediately tell Sharon that he had filed a joint return for both of them or that he’d received and cashed the refund. He did not share any of the refund with Sharon.

On April 5, 2014 Sharon sent Victor an additional text message inquiring about whether they should file a joint return for 2013. Victor responded with a cryptic message, “talk to the judge about it.”

On April 15, 2014 Sharon e-filed Form 4868 to automatically extend her 2013 return due date to October 15, 2014.

Throughout the summer divorced attorneys for Victor and Sharon were exchanging messages regarding the divorce proceedings. During that time Sharon believed that Victor had filed a married filing separately return on his own behalf for 2013 on which he had claimed both of the couple’s children as his dependents.

The parties were finally divorced on September 5, 2014.

On October 6, 2014, Sharon filed a married filing separately return for 2013 reporting her W-2 wages and claiming a refund. IRS rejected the return. Sharon wrote to IRS stating that she now believed her former husband had filed a 2013 joint return for her.

She also sent Victor a text message asking whether he’d file a return using her Social Security Number. Victor responded, “you don’t need to file.’

On October 18, 2014 the IRS received a married filing separately return from Sharon in which she claimed both children as dependents. IRS asked Sharon to explain whether she’d filed two returns for 2013 and to indicate her filing status. She replied to IRS that she’d filed only one return using the filing status of married filing separately but that her former husband, without her knowledge, had filed a joint return using her Social Security number. At the time, she’d also submitted Form 14039, ID Theft Affidavit, to IRS.

IRS then issued a Notice of Deficiency to Victor changing his filing status to married filing separately, removing the children as dependents and removing Sharon’s wages. The Notice indicated a deficiency of $6,244 and proposed to assess the accuracy related penalty.

Victor petitioned the Tax Court for a redetermination of the deficiency and penalty.

The Court’s decision summarizes the law on determining whether a joint return has been filed. The general rule is that filing of a joint return is an election made by both spouses. Section 6103(a).

A return will be accepted by IRS as a joint return only if both spouses had intended to make the joint return election. Although both spouse must generally sign the joint return, the failure of one spouse to sign does not necessary mean that the return will not be treated as a joint return if IRS, or, the court finds that both spouses intended to make a joint return. A joint return is considered desirable in most cases since rate-splitting results generally in a lower tax liability for the couple. The other side of the coin, however, is that filing a joint return imposes joint and several liability on the spouses, unless one qualifies for relief from joint and several liability under Section 6015 (commonly called “the innocent spouse” rules). Thus, whether a return filed is treated as a joint or separate return is a matter of great consequence and one of the most frequently litigated tax disputes.

Whether a filed return will be treated as a joint return is a question of fact. The Tax Court considers the following factors in deciding these cases:

Was the return in question prepared in accordance with an established practice of preparing and filing a joint return?
Did the non-signing spouse fail to object to filing of the purported joint return?
Did the non-signing spouse perform an affirmative act indicating an intention to file a joint return?
Was only one spouse historically relied upon to prepare and see to the filing of the return and, if so, did that spouse handled the filing in question?
Did the non-signing spouse examine the return before it was filed?
Did the non-signing spouse file a separate return?
Did the return include the income and deductions of the non-singing spouse?
Was the non-signing spouse aware of the content of the purported joint return?

Generally, the IRS Notice of Deficiency is presumed correct and the taxpayer carries the burden of proving that it is incorrect. Tax Court Rule 142. Thus, the presumption is against the court finding that Sharon intended to file a joint return. Moreover, the petitioner, in this case Victor, had the overall burden of proof with regard to the above facts. IRC Section 7491 (a). That burden may, however be shifted to IRS, if petitioner introduces credible evidence with regard to an issue.

The Court found that no joint return had been filed as Sharon did not intend to file jointly with Victor for the following reasons:

There was no credible testimony from either party, and Victor, not having adduced credible evidence, retained the burden of proof on the issue.
The preparer had interfaced only with Victor and never met or spoke to Sharon in earlier years or before e-filing the 2013 purported joint return.
Normal practice was not followed in 2013 as Sharon did not sign the e-file authorization form.
Sharon did not review the return prior to filing.
Sharon continued to message Victor about possibility filing a joint return after Victor had already submitted the purported joint return.
Sharon requested her own extension of time to file on April 15, 2014.
Sharon was therefore unaware that Victor had filed a purported joint return and likely believed that he had filed a married filing separately return.
Finally, Sharon, after the divorce was final, filed her own married filing separately return.

The court did not discuss whether a signature purporting to be Sharon’s appeared on the Form 8879. If a signature had been affixed to the return, the question of a forged signature would be the natural relevant inquiry. If Victor had forged Sharon’s signature, the return could not have been a valid joint return. If there was no spouse’s signature on the Form 8879, then the return preparer was not legally authorized to submit the return, and would have a potential problem with both the IRS Practice Office and malpractice liability or even fraud liability to Sharon, depending on additional facts being found.

RSS ADDITIONAL COMMENTS

Noteworthy, is that the court found that Victor had established reasonable cause for filing the joint return and claiming the kids as dependents and therefore reduced the 20% accuracy related penalty to zero. Victor had argued that he’d informed Sharon of the joint return and had kept the refund of $6,240 to compensate him for her alleged failure to contribute to the joint housing expenses. The court did not find his argument tenable. I find it disingenuous. I believe Victor was pulling a fast-one: filing an early joint return, while the attorneys were still discussing the case, and, telling Sharon, “Go ask the judge,” than later, “You don’t have to file.” In both instances when she’d inquired about filing a joint return, he did not directly respond to her question, but gave her a cute cryptic answer.
Divorce attorneys should make clear early in the proceedings to both clients and opposing counsel that no joint return is to be filed without the express written agreement of the other spouse.
Spouses should be mindful that filing a joint return is a double-edged sword. While some tax may be saved, the non-income producing spouse is subjecting his or her separate assets (even non-marital assets) to possible adverse collection procedures by IRS in the event that tax due on the joint return is not paid or a later audit produces a deficiency. Relying on the innocent spouse escape-hatch can be an expensive mistake. Remember, when you are divorcing your spouse, from in whole or part, a lack of trust, why in the world would you trust a now former spouse, to file a return for you? Be cautious and do not sign a joint return without having the matter reviewed by a divorce-tax attorney who will know how to protect you.

Posted in DIVORCE, DIVORCE TAX | Tagged INNOCENT SPOUSE, INTENT TO FILE JOINT RETURN, JOINT RETURN, SIGNATURE ON JOINT RETURN | Leave a comment

U.S. EXPATRIATES FEEL ABUSED BY FATCA AND OPPRESSIVE TAX REPORTING REGIME

Posted on October 20, 2017 by taxpenaltylawyer

I receive calls every day from U.S. Citizens living abroad who have recently learned that they are not compliant with U.S. tax filing and reporting obligations. They are angry, confused and frustrated. They’ve never heard of these requirements before getting the bad news that they could be subject to draconian penalties for not filing an obscure FBAR form. They are incredulous and dumbfounded by this news. After a while most calm down and opt to deal with the problem. Below is testimony from one U.S. expat living in Canada who eloquently expresses this universal frustration with the system and opts-out by renouncing her U.S. Citizenship. This may be a viable, although not less expensive solution, for many Canadian expats. But, the many living in less stable or more exposed parts of the world, may find a bid scary surrendering their U.S. Passport and safe-haven security blanket. After all only 75 years ago, Europe was in flames and people there would have given all that they owned for a U.S. Passport. The world today is not a bastion of stability and peace. In any event, I’m sure many of my readers will identity with the problems and feelings expressed below.

Testimony of Marilyn Ginsburg before the United States Senate Finance Committee
International Tax Section
April 9, 2015

Good morning and thank you for the opportunity to speak with you today. My name is Marilyn Ginsburg. I will be 70 years old next month and I renounced my U.S. citizenship, with great regret, in my 69th year.

I was born in St. Louis, grew up in Denver, and moved to Canada when I was 26 years old. My husband and I left the United States in June, 1971, a month after we had both finished graduate school, I with a law degree and my husband with a PhD. in American history. We both obtained jobs teaching in our fields at a Canadian University. We assumed we would stay in Canada for a few interesting years, living in another country, and then return to hearth and home. One thing led to another and this never happened, and we have now lived in Canada for 44 years.

In 1977 our daughter was born in Toronto and we registered her at the U.S. consulate as an American citizen. In 1985, in order to become a member of the Ontario Bar, I was required to become a Canadian citizen. I delivered an affidavit to the U.S. Consulate indicating that I did not intend to relinquish my U.S. citizenship by the act of acquiring Canadian citizenship. Eventually my husband also became a Canadian citizen because it was clear we were there to stay and he wanted to be able to vote in Canadian elections.

However, he and I also continued to vote in U.S. elections and we traveled on our U.S. passports. We have never failed, in 44 years of living outside the country, to file U.S. tax returns. I don’t remember why I knew to do this, but clearly we were among the lucky ones. In other words, we have been model U.S. citizens in every way. Nevertheless, all three of us have since renounced our U.S. citizenship. Why?

First, there is the expense of continuing to be tax compliant. We have to use the services of a specialized and expensive tax accountant who can complete and reconcile our tax returns for both countries. This service is not cheap. As a matter of fact, our accountant estimates that it costs at least twice as much for Americans living in Canada to file their U.S. returns than an American living in the U.S., due to the complexity and number of forms that must be filed.

Last year I had to retain the services of a second highly qualified tax accountant because we owned Canadian mutual funds. I had no idea this was an issue, and apparently neither did my first tax accountant. I chose not to be the one to pay him to do his first IRS form 8621, which according to the IRS website can take 41 hours to complete. Therefore, I found the second accountant, with experience in completing this form, to bring us up to date. Of course, we also must pay taxes to both countries.

Since we are both retired now, and the tax treaty does not address pension income in the same way it addresses employment income, we now owe taxes to the U.S. in addition to our sizable tax bill to Canada. Some of this is covered by the foreign tax credit on our Canadian returns, but not all.

If we combine the cost of accounting fees, and U.S. taxes, including the higher tax rate on any gains from our Canadian mutual funds, we estimate that just to remain U.S. citizens would cost us more than $125,000 of our retirement money over the next 15-20years.

Please note that we are not entitled to any U.S. Social Security or Medicare. We moved to Canada when we were too young to have accumulated sufficient credits, so we have been filing tax returns all those years for no future economic benefit whatsoever. The second reason we renounced our U.S. citizenship was because we felt the U.S. was treating us unfairly. I will cite one example of many.

Why should our Canadian mutual funds be treated as Passive Foreign Investment Corporations, requiring us to pay higher taxes on any gains than my sister in New York pays on her U.S. mutual funds?

Why should I have to pay an accountant for 41 hours of work to try to figure out how to report my small gains on every Canadian mutual fund I own?

Mutual funds are an important part of most peoples’ retirement savings because they spread the risk, and, as a resident of Canada, I am not allowed to own U.S. mutual funds. The law makes no sense.

I live in Canada so a Canadian mutual fund is not a foreign investment for me; it is a local investment like a U.S. mutual fund is for my sister. Is it fair for the United States to make it more expensive and more difficult for its citizens living abroad to save for their retirements than citizens living in America? That is discriminatory treatment and one reason why U.S. citizens living abroad feel like they are treated as second class citizens.

The third reason that I renounced is because I wanted to sleep better at night. I am not saying this jokingly. I am quite serious.

When I read that the penalty for a non-willful failure to properly file our FBAR forms was $10,000 I decided it was simply no longer worth the worry. These forms require me to give our tax account very detailed information for every bank, retirement, savings, checking and investment account we own. My accountant relies totally on what I tell him. What if, as I get older, I forget? Some days I go to our downstairs pantry and can’t remember why I went. However, no one is fining me $10,000 for forgetting that I went downstairs for a bag of sugar.

These forms are filed with the Financial Crimes Enforcement Network of the Department of the Treasury. They were originally, in 1970, intended to uncover criminal activity by those who were using secret bank accounts for money laundering, securities manipulation, insider trading, and other illegal activities. But ordinary Americans living abroad are not criminals using secret bank accounts to hide illegal activity.

I was recently made aware of the horrendous experience of an American woman, living in Canada, who, in an attempt to be totally tax compliant, entered into an IRS “amnesty” program. This was not because she was a tax cheat, or was hiding money off shore; it was just because she had not known, when filing her yearly U.S. tax returns that she also had to file the annual FBAR form. The manner in which this woman was treated by the IRS is enough to make one weep.

Any member of Congress who truly wishes to understand the damage being done to Americans abroad by the present tax regime, and the way in which it is being enforced by the IRS, must read Ms. d ’Addario’s complete letter to House Representatives Adrian Smith and John Larson.

While discussing the disproportionate nature of fines under FATCA, including the filing of these FBAR forms, Nina Olson, the U.S. Taxpayer Advocate, asked in October, 2014, “…why are we doing this to folks? Why are we tormenting them in this way”?

I wish I knew the answer to that question. What would have happened if I hadn’t, by chance, read in a seniors’ magazine that Americans living in Canada, who own Canadian mutual funds, are in big trouble? I lost sleep about that until I found our second accountant who brought us into compliance on that form, the IRS instructions for which are 13 pages long/ .I just can’t afford this amount of time and money and this level of anxiety trying to remain tax compliant any longer.

I have never been anything other than a loyal and law abiding American and yet I really began to worry. I have read horror stories about how the IRS treats people and frankly, I did not ever want to be one of those people. In 2014, even former IRS Commissioner, Steven Miller, when discussing his cost benefit analysis of FATCA and its reporting requirements, concluded that the costs may well outweigh the benefit.

Americans all over the world are doing their own personal analyses and they are not just about dollars and cents. They are about the stresses involved for non-American spouses, for children who have inherited American citizenship and must now make important tax and citizenship decisions; they are about fear and feelings of being treated unjustly.

I have many American friends living in Canada, most of whom have or will be renouncing their U.S. Citizenship. Others would like to, but for one reason or another, find it impossible to do so. I can tell you today that not one single dual citizen I know is hiding money off shore or has ever knowingly cheated the United States out of a single penny. Most of them didn’t realize, until recently, that they were still U.S. citizens, or they did know, but did not understand they had to file U.S. tax returns while living abroad. They are now caught in the cross hairs of a tax weapon that was meant to catch wealthy Americans hiding money outside the country, not my lovely neighbor, who married a Canadian 45 years ago and is now a retired teacher living on a pension.

Was it easy for me to renounce? I cried when signing the renunciation oath at the U.S. consulate in Quebec City, where we flew because the wait time to renounce at the consulate in Toronto is now over a year. It hurt then and it still hurts. My mother, who is nearly 93, was terribly upset that I renounced my citizenship, other relatives didn’t understand, and I am bitter and angry that a country my family has lived in since before the Civil War is treating its own citizens abroad like criminals and tax cheats and making their lives miserable because of an unfair tax regime. I believe that my earliest known American ancestor, who settled in Bowling Green, Kentucky in 1848, would understand my predicament.

Ms. Olson, the U.S. Taxpayer Advocate, when speaking about the possible future consequences of FATCA and all of its related reporting requirements, said, I don’t think we’ll know [what they are] for years. And by that point we’ll actually be a little too late to go, ‘Oops, my bad move, we shouldn’t have done this,’ and then try to unwind it.” In the meantime, how many Americans living abroad, who have represented this country proudly all over the world, will have renounced their U.S. citizenship?

Is this what you want?

RSS further comments

The above testimony was first published by John Richardson in American’s Abroad as “Testimony: The Effects of the Current Tax System on Americans Abroad.”.

For most expats renouncing U.S. citizenship is an unwise decision. Apart from the reasons stated above, the initial cost of tax compliance to renounce can be greater than the cost of coming into compliance and remaining a citizen. Once an expat has caught up with filing, annual U.S. filings are not too burdensome for most.

For most expats, the safest path to come back into the tax filing system or correct errors in previous filings is through the Streamlined Filing Compliance Procedures. The advantages and disadvantages are fully explained in other blog posts which can be found by searching under “Streamlined Filing Compliance Procedures, or, Streamlined Filings.”

It is important to remember, however, that each case is unique. The specific facts and circumstances of your particular situation need to be reviewed and evaluated by an experienced offshore tax attorney. Only then can the safest path to follow be determined.

Robert S. Steinberg, Esquire www.steinbergtaxlaw.com rss@steinbergtaxlaw.com

Posted in STREAMLINED FILING COMPLIANCE PROCEDURES, STREAMLINED FILINGS | Tagged EXPATRIATE TAX RETURNS, IMPACT OF FATCA ON EXPATRIATES, PFIC PROBLEM FOR EXPATRIATES, STREAMLINED FILINGS FOR EXPATRIATES, U.S. EXPATRIATES TAX BURDEN | Leave a comment

SOME COMMON MISCONCEPTIONS ABOUT THE STREAMLINED FILING COMPLIANCE PROCEDURES

Posted on September 29, 2017 by taxpenaltylawyer

I receive many inquiries about Streamlined Filings from U.S. citizens or Green Card holders living outside the U.S. as well as from recent immigrants to the U.S. or work visa holders living inside the U.S. In all of these cases, the individuals have read a good deal about Streamlined Filings and often OVDP submissions on the internet. They frequently have spoken to any number of other professionals about these alternatives for coming into compliance. And, most often they are totally confused, misinformed or have misunderstood what they have read or been told.

Let me try to clear up some common misconceptions:

Nature of Streamlined Filing Compliance Procedures (SFCP). The OVDP is an offspring of the IRS general Voluntary Disclosure Procedures found in the Internal Revenue Manual IRM), with added features that include prescribed FBAR penalty and income tax penalty provisions along with the grant of amnesty from criminal prosecution for disclosed criminal conduct related to the offshore accounts. The SFCP on the other hand do not represent a formal voluntary disclosure program and do not grant amnesty from criminal charges. Rather, the SFCP are procedures for filing delinquent returns and foreign reporting forms of non-willful taxpayers under a filing process that offers penalty relief. Unlike the OVDP there is no upfront screening of candidates for the Streamlined Process and the process does not end with the signing of a closing agreement, a contract between IRS and the taxpayers, resolving all tax issues for the years covered. Streamlined Filings, after a preliminary facial review by IRS Streamlined personnel in Austin Texas, are processed like other tax returns but subject to Streamlined relief as to penalties. Because the Streamlined Procedures do not offer criminal amnesty taxpayers whose conduct borders on criminal or could be viewed as criminal, should not attempt to come into compliance under the Streamlined Process. Yet some comfort may be taken from the likelihood that a Streamlined Filing which IRS considers to flow from willful noncompliance, nonetheless may qualify as a Voluntary Disclosure under the Voluntary Disclosure policies stated in the IRM. This could be a vital fallback argument should IRS disagree with the conclusion of the Non-willful Certification.
Streamlined returns are not ordinary returns: Streamlined returns may be processed like other delinquent or amended returns but they are not ordinary tax filings. Because there is no criminal amnesty grant, IRS could still treat the taxpayer’s conduct as willful or even criminal. Therefore, streamlined returns must be prepared with much greater care and due diligence than would be required for a timely filed original return. All items of income, deduction and credit should be verified by the return preparer. It is imperative that no mistakes or errors appear in the Streamlined returns. Normally, a return preparer need not review underlying source documents but can take the taxpayer’s word for amounts of income, deduction and credit that do not appear unreasonable on their face. Not so in a Streamlined filing. The return preparer must examine all source documents and make sure that the items are properly reported both as to amount, year and character of the item being reported. Being cavalier about a Streamlined filing can lead to disastrous results. As a result, Streamlined returns will be more costly than timely filed returns or most amended returns that do not seek to correct offshore noncompliance.
Streamlined filings have a legal component: Streamlined Filings required submission of Form 14653 or Form 14654, Non-willful Certifications. The forms, signed under penalties of perjury contain some tax and foreign account information but also require a detailed statement of the reasons why the taxpayer believes his or her conduct is non-willful. Characterizing a taxpayer’s conduct as negligent, grossly negligent, inadvertent, ignorant, reckless, willful, willfully blind, non-willful or criminal is a legal determination. It requires that an attorney experience in these matters who must:
1. Obtain documents concerning the foreign financial accounts from the client, foreign financial institutions, others and IRS records on the taxpayer;
2. Interview the client and other individuals having knowledge of the facts.
3. In all of this gathering of facts attempt to preserve, in so far as may be possible, attorney-client privilege, the client’s Fifth Amendment Privilege against self-incrimination, and attorney work product privilege.
4. Draw legal conclusions as to the character of the client’s conduct based on all of the evidence obtained.
5. CPAs or Enrolled Agents, usually are capable return preparers, but they are not licensed or trained as attorneys and therefore commit malpractice and do clients a serious disservice when attempting, as some do, to complete the legal component of Streamlined filings.
Husbands, Wives and the 330 day rule: Taxpayers who spend 330 days outside of the U.S. in any one of the three most recent years for which the filing due date has passes are treated as residing outside of the U.S and may file under the Streamlined Procedures for persons residing outside of the U.S. A husband and wife are tested separately for this rule. Thus, if a couple live outside of the U.S., have no U.S. abode but the husband spent more than 35 days in the U.S. during all three most recent delinquent return years, the couple will not be able to file delinquent joint returns under the Streamlined Process. Nor will the husband be able to file Married Filing Separately returns under the Streamlined Process. Rather, the choices available are:
1. Assuming as stated above that no returns have previously been filed for the three most recent years for which the due date has passed:
  - Wife files a Married Filing Separately Streamlined return under the Streamlined Foreign Procedures; and, Husband files a Married Filing Separately returns outside of the Streamlined process. Under this approach:
    - Wife pays no Miscellaneous Offshore Penalty on the penalty base representing her interest in the highest balance of couples’ foreign financial accounts for the most recent six years for which the FBAR due date has passed.
    - Husband will pay no penalty if he establishes in a statement attached to his delinquent returns that he has reasonable cause for the delinquency. Such a filing should be made only if a compelling argument can be made for reasonable cause because IRS will carefully examine amended returns with offshore disclosures made outside of the Streamlined Process of OVDP.
    - Husband and wife both enter the OVDP. Note that is wife makes a Streamlined filing the husband will be ineligible for the OVDP. According to the OVDP Hotline neither must have made a Streamlined Filing for either to be eligible to enter the OVDP.
2. Assuming joint returns have been filed for the three most recent years for which the due date has passed:
  - Streamlined filing: File a joint Streamlined filing for persons living inside the U.S. and pay a 5% penalty on the highest balance of their combined foreign financial accounts.
  - Wife cannot file a MFS Streamlined return as in (1) above because a joint return can only be amended by a joint return.
  - If compelling case for reasonable cause can be made, file amended returns outside of the Streamlined Process understanding again that such a filing shines a light on the taxpayers and offers neither protection from penalties nor criminal amnesty.
Husbands, Wives and Non-willfulness: Be mindful that husbands and wives often act in concert but also often act independently of one another. Determinations of willful versus non-willful conduct are specific to each taxpayer. Legal determinations of the culpability of each spouse will play a large part in deciding how to proceed with coming into compliance. Refer to paragraph 3 above.
Calculation of the offshore penalty for Streamlined Domestic Offshore filings:
1. Under the OVDP regime the penalty base is expansive and includes all assets connected to the noncompliance on which income was not reported. Thus, the value of a rental property on which the rental income was not reported, is included in the penalty base.
2. For Streamlined filings the penalty base is much narrower and includes only foreign financial assets required to be reported in an FBAR or foreign financial assets reported on those forms but on which the income was not reported. Thus, not reporting rental income does not result in the value of the rental property being included in the Streamlined Domestic penalty base.
Most compelling reasons for entering the OVDP:
1. You have committed a tax crime or may be viewed as having committed a tax crime and want to avoid being charged.
2. You fear that the maximum FBAR willful penalty may be assessed against you.
3. You feel you were non-willful but had very large foreign accounts and want the certainty of not being charged with a crime and more time to consider opting-out of the OVDP penalty regime to argue for a lower FBAR penalty amount on audit.
4. Taxpayers not falling into the above categories do not belong in the OVDP.
Most compelling reasons for filing returns under the Streamlined Filing Compliance Procedures:
1. You committed no overt acts that would tend to evidence, “the intentional violation of a known legal duty,” such as by hiding your identify behind a non-operating, nominee entity, using mail-holds or other incriminating means of deception, programmed repatriation of funds in amounts under $10,000 and so on. Again, these determinations must be made by a tax attorney experienced in such matters.
2. Your tax filing history, educational background, investment experience, financial sophistication, work experience and other detailed facts establish that your failure to property file or report was due to negligence, inadvertence, mistake or good faith ignorance of the law but was not reckless, willful, or, conduct seeking to willfully avoid knowledge of the FBAR reporting requirement; and, also establish that, upon gaining such knowledge, that you promptly began to rectify the noncompliance. Other facts might include:
  1. That the amounts of income not reported are relatively small compared to the income reported in your filed returns.
  2. That the value of assets offshore not reported is relatively small compared to the value of U.S. based assets.
  3. That the assets and income were located in a country from which you immigrated to the US or in which you now live and were not located in a known tax haven country to which you had no connection other connection apart from owing the foreign financial asset.
  4. You’ve lived outside of the U.S. for a long period of time.
  5. Circumstances in your life such as illness prevented you from timely filing or reporting.
  6. Any other facts and circumstances tending to negate willfulness.

Conclusion

The Streamlined Filing Compliance Procedures may seem simple to the uninformed. In reality however, Streamlined filings are very risky to navigate and require specific legal tax expertise as well and sound legal judgment. A Streamlined filing that should not have been made may subject the taxpayer to both criminal prosecution and potentially draconian FBAR and income tax penalties. Thus, taxpayers should carefully select tax counsel seeking legal tax knowledge, experience and mature judgment. Taxpayers should be suspicious of promised results or unreasonably low fees. The wise man sayeth: “When the stakes are high, seek the best advice available.”

Posted in 2014 OVDP, AMENDED RETURNS, FBARS, OFFSHORE BANK ACCOUNTS, STREAMLINED FILING COMPLIANCE PROCEDURES, STREAMLINED FILINGS, Uncategorized | Tagged LEGAL COMPONENT OF STREAMLINED FILINGS, OVDP AND STREAMLLINED MISCONCEPTIONS, STREAMLINED 330 DAY RULE FOR NON RESIDENCY, STREAMLINED FILINGS NOT SIMPLE, STREAMLINED FILINGS RISKY, WHY DO I NEED AN ATTORNEY FOR A STREAMLNED FILING? | Leave a comment

FEATHER THEME

Posted on August 29, 2017 by taxpenaltylawyer

Source: FEATHER THEME

Posted in Uncategorized | Leave a comment

RIVERBOAT GAMBLERS, THE OVDP, AND UNREPORTED OFFSHORE ACCOUNTS

Posted on July 26, 2017 by taxpenaltylawyer

Prospective clients often ask me, “What is the likelihood of my unreported offshore bank account being discovered?” My answer is always: “Very likely if you are caught.”
I don’t mean to be cute by answering thus. What I am emphasizing is that the likelihood of being caught and whether you can sleep at night (risk tolerance) is not the proper test. What those with unreported foreign financial accounts should be asking is: “Can I accept and live with the consequences if I do get caught, no matter how likely that may be.” This is called “risk capacity.” If your answer is “No” to that question, you should enter the OVDP. You should never assume a risk when you lack the capacity, be it financial or emotional, to absorb the consequences.
For example, a U.S. Green Card holder cannot accept the risk of being deported should he or she be convicted of a tax crime. A U.S. attorney cannot not accept the risk of being disbarred should he or she be convicted of a tax crime. An 80 year old man or woman would not find federal prison, even a minimum security prison a palatable way to spend “these precious days” of their later years. (Lyric line from “September Song,” by Kurt Weill with lyrics by Maxwell Anderson. Complete lyric line is, “These precious days I’ll spend with you.” Of course, Riverboat gamblers will often proceed in the face of risks they should not undertake, because they thrive on danger. But, such behavior is rather adolescent and adults should make grown-up decisions based on rational and considered choices.
Despite over 55,000 non-compliant taxpayers choosing the OVDP as the course through which to come into compliance, many have chosen to remain out in the cold in the hope of not being caught before the statute of limitations runs on (1) civil income tax assessments; (3) civil FBAR penalties; (3) Income tax related criminal sanctions under Title 26 or Title 18 of the United States Code; and (4) criminal charges under the Bank Secrecy Act, Title 31 of the United States Code.

Those remaining at odds with compliance are laboring under faulty reasoning in two respects: First – it is becoming increasingly likely that they will come to the attention of the IRS or DOJ sooner than later; and, Second – some or all of various statutes of limitations upon which they place their hope for escaping civil and criminal liability may be tolled for any one of a number of reasons. For a complete discussion of tax statutes of limitations read my blog posts “Statutes of Limitations and Streamlined Filings or File-Forward Strategies (8-10-15); and, “18 USC 3287, The Statute without Limitations – Impact on OVDP Decisions (11-3-16).

It is becoming more likely that one will be caught. Here are some of the reasons:
• OECD CRS (Common Reporting Standard) – 100 countries are on board with about 60 to begin reporting in 2017.
• Heightened pressure on tax haven countries by G20 nations to adopt the CRS.
• Swiss Bank Settlement Program – DOJ obtaining information from which to make treaty requests for specific taxpayer information.
• .IRS data base from OVDP and Streamlined filings (Over 100,000 combined participants)
• Investigations extending beyond Switzerland – Caribbean, Asia, Middle East
• FATCA (Foreign Account Tax Compliance Act) – Information Sharing Agreements have been signed and banks are asking for W-9s as part of their due diligence obligations.
• Panama Papers – DOJ opened investigation
• John Doe summonses continue to be obtained which seek information from foreign banks about the identity of U.S. account holders.
• Summons or subpoena issued to taxpayer – Courts have uniformly held there is no Fifth Amendment defense to act of production of documents concerning accounts under Required Records doctrine.
• Under examination disqualifier – Receipt of an audit letter ends eligibility for both programs until audit is closed.
When is audit considered closed? Per my conversations with OVDP Hotline personnel:
 Receipt of Form 987 in agreed case officially closes audit after which a Code 300 series entry will appear on the taxpayer’s account transcript.
 Signing Form 4549 is not official end of audit
 But if the taxpayers fears his or her name is about to be disclosed, the individual can fax names to CI with copy of the signed 4549 and CI might accept that person into the OVDP. But, there is no guarantee of acceptance.
They can hunt you longer than you think. Statutes of limitations are not equally effective as a shield to assessment or conviction.
The big scary one: Title 18 of the United States Code Section 3287 – Wartime Suspension of Limitations Act (WSLA), provides as follows:
When the United States is at war or Congress has enacted a specific authorization for the use of the Armed Forces, as described in section 5(b) of the War Powers Resolution (50 U.S.C. 1544(b)), the running of any statute of limitations applicable to any offense (1) involving fraud or attempted fraud against the United States or any agency thereof in any manner, whether by conspiracy or not (emphasis added), or (2) committed in connection with the acquisition, care, handling, custody, control or disposition of any real or personal property of the United States, or (3) committed in connection with the negotiation, procurement, award, performance, payment for, interim financing, cancelation, or other termination or settlement, of any contract, subcontract, or purchase order which is connected with or related to the prosecution of the war or directly connected with or related to the authorized use of the Armed Forces, or with any disposition of termination inventory by any war contractor or Government agency, shall be suspended until 5 years after the termination of hostilities as proclaimed by a Presidential proclamation, with notice to Congress, or by a concurrent resolution of Congress. (Emphasis added).
Definitions of terms in section 103  [1] of title 41 shall apply to similar terms used in this section. For purposes of applying such definitions in this section, the term “war” includes a specific authorization for the use of the Armed Forces, as described in section 5(b) of the War Powers Resolution (50 U.S.C. 1544(b)).

Some individuals who have unreported foreign financial accounts may be thinking to continue to hide and out-wait the Department of Justice and IRS to the statute of limitations for crimes under Title 26 (tax), Title 31 (Bank Secrecy Act) and Title 18 (General federal criminal statute).
Apart from the increasingly heightened risk of discovery and other events that toll the various statutes of limitations (continuing conspiracy or concealment of conspiracy, out of the country, fleeing felon – see below.) 18 USC 3287 is perhaps the scariest tolling provision. While the statute does not apply to Title 26 crimes, such as tax evasion under IRC Section 7201, it does apply to Klein conspiracy crimes under 18 USC 371.
The SOL on conspiracy, six years, is extended when it is a continuing conspiracy or when a conspirator commits acts to conceal the crime. But, 18 USC 3287 eliminates the need for the government to prove these extending elements. The SOL under the WSLA is suspended until 5 years after the “termination of hostilities” as proclaimed by the President with notice to Congress or by a concurrent resolution of Congress.
To trigger the SOL suspension the U.S. does not require a formal declaration of war although that would trigger the section’s application. It is triggered when Congress enacts a specific authorization for the use of the Armed Forces as described in section 5(b) of the War Powers Resolution (50 USC 1544 (b).

Presently there are two active authorizations for the use of the Armed Services that have not been revoked by Presidential proclamation with notice to Congress or by a concurrent resolution of Congress. These are:
• Congress authorizing on September 18, 2001,the use of military force against those tied to the attacks of September 11, 2001, and,
• Congress authorizing on October 11, 2002 the president’s use of military force relating to the weapons of mass destruction threat posed by Iraq.

The Fifth Circuit Court of Appeals in United States v. Pfluger, 685 F. 3d 481 (June 21, 2012) has held that the “termination of hostilities” test in the WSLA is a formal test that requires the specific action stated in the statute, that is a proclamation of the President with notice to Congress or a concurrent resolution of Congress. Termination of hostilities cannot be established as a result of termination of the conditions justifying the original authorization for the use of military force.
The U.S. Supreme Court unanimously held in Kellogg, Brown & Root Services Inc. v. U.S. ex rel Carter (576 U.S. __, 12-1497, slip op. at 11 (May 26, 2015). that the WSLA does not suspend the applicable statute of limitations (SOL) in civil litigation, in Kellogg Brown & Root a civil false claims act case. Kellogg Brown & Root, however, also confirms that the criminal statute of limitations in criminal fraud cases is indefinitely suspended as long as Congressional authorizations for military force in Afghanistan and Iraq continue in force.

Moreover, civil tax assessments may be made at any time by IRS if fraud is proved.
What is the implication of the WSLA? Rosa Brooks in her book “How Everything Became War and the Military Became Everything”, states that a global war on terror, “was a war that could by its nature have no boundaries; no geographic limits, no limits on who could be targeted, captured or killed and no end.”
Since almost all offshore tax fraud involves an implicit agreement between two or more persons (U.S. taxpayer and at least one enabler) and overt acts in furtherance of the agreement, the SOL on tax fraud will remain open and waiting will not make the problem go away. The tax fraud also vitiates the tax SOL on assessment of the tax and civil fraud penalty by IRS.

On the other hand the FBAR civil penalty SOL is not suspended by the WSLA and waiting can eliminate that penalty if the foreign financial accounts have been closed and funds repatriated to the U.S. or moved into non-reportable assets. Although in the latter case the criminal conspiracy SOL would be suspended by virtue of additional acts committed in furtherance of the tax fraud scheme. Such individual may think to wait and then enter the OVDP after the FBAR SOL has expired. He or she would then opt-out of the OVDP penalty regime while preserving the criminal amnesty feature of the OVDP. While FBAR penalties would be time barred if 6 years had elapsed since the last required FBAR filing, Title 26 penalties could still be assessed if fraud is proved. Presumably, such individual will have closed all foreign financial accounts and repatriated the funds to U.S. accounts to turn-off the FBAR filing requirement.

This plan may seem plausible but waiting is a very dangerous tactic because:
• The likelihood of discovery is growing exponentially (see above enumeration of reasons).
• There is no guarantee that the OVDP will continue in its present form although the commissioner has indicated it will continue at least through November 2017. (Comments of Commissioner John Koskinen on 12-12-16 during Tax Analysts Exclusive Conversation: Koskinen Looks to Future of Tax Administration. IRS Budget”. It should be noted however, that Mr. Koskinen was appointed by President Obama. President Trump has not yet nominated a replacement and Attorney General Steve Sessions, under fire from President Trump, has not indicated his intentions with regard to the present IRS Voluntary Disclosure programs.

• TIME IS ON IRS’ SIDE
Any one of a number of Statutes of Limitation (SOL) tolling provisions will suspend the running of the SOL and enable IRS to assess additional tax or the DOJ’s to bring criminal charges. For example:
As to Civil tax and penalty assessments:
 IRC 6501 (c) (8) – extends SOL on return to 3 years after the date that all required foreign reporting forms (not FBARs) are filed (limited to foreign items if failure to file due to reasonable cause). This is civil SOL.
• Reasonable Cause – “taking that degree of care that a reasonably prudent person would exercise.” CCA 200748006 (Chief Counsel Advisory). What it means? Basically, the absence of negligence.
• Likelihood of establishing reasonable cause decreased over time as more years go by.
 Unfiled returns – No SOL Sec. 6501 (c).
As to tax crime SOLs:
 Normal criminal SOL is 6 years / Title 31 crimes 5 years.
 Tolled:
• Outside U.S – Sec. 6531.
• Fleeing felon – 18 USC 3290
• During U.S. Gov’t request for evidence located in foreign country – 18 USC 3292
• Even worse – 18 USC 3287 – discussed above
• Possible Loss of Passport – IRC Sec. 7345. Seriously delinquent tax debt over $50K can lead to denial, revocation or limitation of a passport. If Sec. of State is notified by IRS, must not issue new passport and can revoke a passport previously issued.
Note well: Could be big problem for expats who do not necessarily receive all tax notices mailed to out of date addresses.
• Cost rising –
1. More banks, brokers, individual advisors being added to IRS enablers list that increased OVDP misc. offshore penalty to 50% – Now many individual and business enablers on list in addition to banks. As time goes by more names will inevitably be added. Waiting could significantly increase the cost of coming into compliance. There is also less warning to taxpayer that individual enabler will soon be added to list. Banks usually attract headlines when investigation begins before DOJ makes public.
a. Taxpayers connected to these individuals will pay the higher OVDP penalty of 50% on all non-compliant accounts, not just the one connected to the enabler.
b. Individuals – either under investigation or cooperating.
 Anyone who assisted with offshore arrangement.
 Mangers of offshore account
 Lawyers who set up nominee entity
 Bankers who assisted in hiding account

For all of these reasons waiting is generally not a safe plan as continued secrecy is a poor tax planning strategy. Someone always knows and someone is always willing to testify to save his or her own skin.

An offshoot of my 1960’s professional songwriting days, I write parody tax song lyrics for the American Bar Association Tax Section newsletter Tax Times. A recent submission, not yet published follows:
WHEN THEY CATCH YOU
(To the tune of “When You’re Smiling,” by Larry Shay, Mark Fisher and Joe Goodwin (1928) and made famous by Louis Armstrong)
When they catch you.
When they catch you.
They’ll take your offshore loot.

When they catch you.
And they’ll catch you.
Cause’ they’re in hot pursuit.

Mister Cunning.
You think you’re home free.
You keep shunning
That OVDP.

But when they catch you.
When they catch you.
Too late for amnesty.

The above discussion illustrates the complexity of these considerations. Obviously, individuals facing these concerns should consult with a tax attorney experienced in these matters.

Posted in OFFSHORE VOLUNTARY DISCLOSURE PROGRAM, Uncategorized | Tagged DANGER OF WAITING TO ENTER, IRS WILL FIND YOU, IRS WILL FIND YOUR OFFSHORE ACCOUNT, MORE LIKELY TO GET CAUGHT, STATUTES OF LIMITATIONS, TOLLING OF STATUTES OF LIMITATIONS | Leave a comment

COMPROMISE AND TAX REFORM – THE LOST ART

Posted on February 23, 2017 by taxpenaltylawyer

Departing from offshore tax issues, this post offers a philosophical discussion of the lost art of compromise and how ideology is hampering the ability of congress to govern. Even within the GOP, now in control of both houses, ideological differences are not easily overcome. Rigid, unchangeable positions are especially destructive to the passage of sensible legislation on complex matters such as tax-reform, health care and immigration.

THE LOST ART OF COMPROMISE
At the birth of our nation great men of character were able to forge historic compromises on the inflammatory issues of slavery and state’s rights in arriving at language for the Declaration of Independence and provisions in the U.S. Constitution. Our modern leaders seem to have lost the art, being motivated more by hubris and practical political realities than by character or wisdom. The hubris involves rejecting views apart from one’s own as unworthy of consideration and insisting on getting one’s own way at any cost. Regrettably, our new president appears to be afflicted with this malady. This lack of character extends to congress where cowards avoid votes on issues that are politically volatile or simply vote along party lines while ignoring the vital interests of the country. That is not to say that there are not legitimate concerns about the state of our country about which members rightfully may disagree. Such concerns are not new, however. In the 1945 Vincent Minnelli movie “The Clock” starring Judy Garland, a drunk, unable to obtain a drink in a diner because the establishment has no liquor license, blurts: “I have to have a license to buy a drink while this whole country is going to the dogs.” The Congressional two minute drill to push through tax decreases may lead to the passage of a “so-called” tax-reform bill but ideological victories for the GOP may secure nothing but disaster for the American people. The “border-tax” camouflage will upset existing economic stability, tax cuts will grow budget deficits while doing nothing to bring back ghost-jobs forever lost to automation. All while the “so-called” immigration reform will exacerbate a growing demographic problem, the aging population and need for more immigrants, not less.

THE ARROGANCE OF CERTAINTY
The mathematician and philosopher Alfred North Whitehead said, “Knowledge shrinks as wisdom grows.” In other words as we grow wiser we realize that we know less than we thought. Just hundreds of years past, scientists believed absolutely that the sun orbited our flat world. Recently, scientists reported discovering that the universe is not as they had believed, concluding now that there are three times as many stars as had previously been calculated. Other scientists were stunned to observe a microbe that lives in an arsenic environment thought previously to be inhospitable to life. Financial gurus and economists have performed no better: the former utilized faulty computer models that, in part, caused the Great Recession: and, the latter long relied on the now deflated theory of a rational market.

A wise friend and client once told me that 50% of what we know today will be proved false eventually. Despite being consistently wrong, humans continue to declare, “I absolutely know this to be so.” At the extreme, religious fanatics who claim to know what G-d demands commit mass murder in his name. More commonly, we all ignore Voltaire who admitted, “Doubt is not a pleasant condition, but certainty is absurd;” and, Nietzsche, “You have your way, I have my way. As for the right way, the correct way, the only way, it does not exist.”

In the 1985 entertaining film Insignificance (Dir. Nicholas Roeg), in which Marilyn Monroe (Theresa Russell), Albert Einstein (Michael Ermil) Joe Dimaggio (Gary Busy) and Joe McCarty (Tony Curtis), cross paths on a hot 1953 night in New York, Einstein says, “When we say ‘I know’ we close our minds to the truth. We are agreeing with someone else instead of turning over the possibilities. Turning over the possibilities is thinking and thinking is what ultimately leads us to the truth.” People thinking over the possibilities is what our founders had in mind in describing democracy as a process of reflection and decision but it is not what William James calls “rearranging their prejudices.”

CONGRESS AND TAX REFORM
Congress had decades to consider major tax reform, the last overhaul of the tax code having been made in 1986. Because agreement has been impossible the 2001 Bush tax cuts contained an automatic ten-year expiration date. Instead of debate and compromise, each party has continued to dig in heals over an admittedly complex and contentious subject. Each side declares that its position is correct and the other side is wrong. The estate tax was allowed to expire for 2010 only, an incredible feat of governing malfeasance. Now that the GOP controls both chambers of congress and the White House, we stand on the cusp of looming income tax rate decreases that will, as history indicates, increase the wealth disparity between wealthy and everyone else, but not accelerate economic growth. Thus, tax reform is no more than a ruse to hide a gift to the financially elite.

Meanwhile, instead of serious debate on the deficit (recall the Lincoln – Douglas debates on slavery; or, the William F Buckley – Norman Mailer debates on conservative versus liberal values) and related issues of Social Security, Medicare, Medicaid, a sane health insurance plan, immigration reform, improving education, deciding the future structure of our military, our decaying infrastructure, climate warming, the size of the federal government and division of powers between the federal and state governments amidst a dynamically growing population (2010 census expected to report almost 312.7 million up from 281.4 million in 2000), we hear demagoguery from both parties in the form of statements reeking of bias and misleading inference, bullying for the cause. Instead of intelligent and thoughtful information we are thrown meaningless slogans and derogatory personal characterizations. These political tactics are terribly polarizing and present the picture of an inoperative government more and more resembling a ship dead in the water at the mercy of oncoming storms.

CONCERN FOR THE FUTURE
Jean Renoir in his most highly regarded film, “The Rules of the Game” has the character Octave state: “The terrible thing about life today is this: Everyone has his reasons.” Republicans and Democrats are each certain its side is in the right. They each have reasons to believe that the other path will cause great harm to our country. The two sides cling to ideology and already held beliefs that are a roadblock to creative problem solving. They prove true what Abraham Maslow said, “If the only tool you have is a hammer, you tend to see every problem as a nail.” Those recently elected seem unable to rise above politics to govern but are already looking ahead to the next election. There is no longer social or collegial interaction between the two parties which caucus in clicks during the work week and flee home for fund raising on the weekends. Thus always locked in battle, alternative views go unheard and sound principles of governance are ignored as the deficit grows and structural problems in our economy and safety-net remain unresolved.

My general belief is that over time things work-out. I am, however, increasingly concerned with the level of political acrimony and use of fascist-like tactics to attack opposing views many of which are depicted in Sinclair Lewis’ scary book, “It Can’t Happen Here,” a fictional account of how despotism could happen here. Lewis describes a struggle between tolerance and bigotry against intellectuals, one in which normally generous citizens become dangerous fanatics.

Fred Siegel in his Miami Herald review of David Callahan’s book “Fortunes of Change: The Rise of the Liberal Rich and the Remaking of America” speaks of a well funded class conflict between “tea- party stalwarts” and “elites”, citing Callahan: “the most active donors hold the most ideological extreme views.” Irresponsible remarks like unsuccessful Nevada Senate candidate Sharron Angle, “if this Congress keeps going the way it is, people are really looking toward those Second Amendment remedies” could encourage violence among Americans holding the most extreme positions or harboring the most certainty about their own perspective. Were violence to erupt, foreign investors might lose confidence in our political system.

WHAT IS NEEDED: OPEN MINDEDNESS AND A TOUCH OF GENIUS
I recently watched an adult trying to show a few children a bowling game. The game consisted of a mat with numbered places for the pins, a ball and plastic pins. The adult kept setting up the pins in the correct places but the kids kept knocking them down and taking them up to use in some other imaginary play they had created for themselves. The adult finally gave up the effort a bit frustrated. What we need today is for adults to recapture the inventiveness and creativity of those children at play. Saul Bellow in his short story, “What Kind of Day Did you Have?” puts it: “Genius must be the recovery of the powers of childhood by an act of creative will…. By combining the strength of a man (analytic power) with the ecstasy of a child you could discover the New.” I see this miracle of creation every when I play with my four and eight year old daughters.

Contrariwise, in the “Lost World of Kalahari,” Laurens Van der Post, writes: “Human beings are perhaps never more frightening than when they are convinced beyond doubt that they are right.” Resolving the problems we face today will require a touch of genius or the Wisdom of Solomon but our problems will not be solved through rigid ideological thinking.

THE CHOICE IS OURS TO MAKE
Wilfred Sheed in the short novel, “The Blacking Factory” addresses the morality of a nation: “What (is) national morality all about? … It is the way we talk to each other in the street, the things we laugh at: I think it is a quality of the heart.”

As a nation, we need to get back to plain old conversation, begin to listen to one another again and give respectful consideration to the views of others, however divergent they may be from how we think we think. We need to disconnect from the viral emails that circulate telling us what we already know and seriously consider the opposing argument. Only then can one test the strength of his or her own convictions or opinions. Write to your congressman and demand civility and more governance over politics. If we allow the polarization in Washington to continue, our future may resemble what William Butler Yeats describes in his poem, “The Second Coming:

Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.

CONCLUSION
I am not suggesting here that every problem can be easily solved or that reaching consensus on tax-reform and other important issues is possible or even desirable. Margaret Thatcher felt, “Consensus seems to be the process of abandoning all beliefs, principles, values and policies.” We may not reach a consensus but compromise is a necessary part of any democratic government if that government is to survive as a democracy. We must demand that our leaders rise above petty grievances and arguments to govern. Governing means adopting the saying atop the magical brick in the tomb of Egyptian Pharaoh Tuthmosis IV (1400-1390 BC)) “You who come to pull my hair, I will not allow you to pull my hair.” My modern interpretation: our elected leaders must not allow themselves to be distracted from governing by political in-fighting and other petty annoyances. They must hunker down to the task of governing which includes addressing the myriad problems facing our generation among which is reforming our arcane, inefficient and overly complicated tax code.
The newspapers are resplendent with columns about possible provisions in the various tax reform proposals. I have refrained here from discussing details but welcome questions or inquiries about how these proposals, should they become law, will impact us.

Posted in TAX REFORM, Uncategorized | Tagged ART OF COMPROMISE ON TAX BILLS, COMPROMISE, CONGRESSIONAL STALEMATE, CONSENSUS, ECONOMICS VS IDEOLOGY, GOP IDEOLOGY, TAX LEGISLATION, TAX POLICY VS IDEOLOGY, TAX RATE CUTS | 1 Comment

IRS Committed to Stopping Offshore Tax Cheating; Remains on “Dirty Dozen” List of Tax Scams for 2017

Posted on February 16, 2017 by taxpenaltylawyer

IRS Newswire Issue No. IR-2017-35, February 16, 2017 is reproduced below in its entirety.

WASHINGTON — The Internal Revenue Service today said avoiding taxes by hiding money or assets in unreported offshore accounts remains on its 2017 list of tax scams known as the “Dirty Dozen.”

Since the first Offshore Voluntary Disclosure Program (OVDP) opened in 2009, there have been more than 55,800 disclosures and the IRS has collected more than $9.9 billion from this initiative alone.

In addition, another 48,000 taxpayers have made use of separate streamlined procedures to correct prior non-willful omissions and meet their federal tax obligations, paying approximately $450 million in taxes, interest and penalties. The IRS conducted thousands of offshore-related civil audits that resulted in the payment of tens of millions of dollars in unpaid taxes. The IRS has also pursued criminal charges leading to billions of dollars in criminal fines and restitutions.

“Offshore compliance remains a top IRS priority. We’ve collected $10 billion in back taxes in recent years with 100,000 taxpayers making use of our voluntary disclosure programs,” said IRS Commissioner John Koskinen. “The IRS receives more foreign account information each year, making it harder to hide income offshore. I urge taxpayers with international tax issues to come forward and get right with the system.”

Compiled annually, the “Dirty Dozen” lists a variety of common scams that taxpayers may encounter anytime, but many of these schemes peak during filing season as people prepare their tax returns or hire people to help with their taxes.

Illegal scams can lead to significant penalties as well as interest and possible criminal prosecution. The IRS Criminal Investigation Division works closely with the Department of Justice to shut down scams and prosecute the criminals behind them.

Hiding Income Offshore
Over the years, numerous individuals have been identified as evading US. taxes by attempting to hide income in offshore banks, brokerage accounts or nominee entities. Then access the funds using debit cards, credit cards or wire transfers. Others have employed foreign trusts, employee-leasing schemes, private annuities or insurance plans for the same purpose.

The IRS uses information gained from its investigations to pursue taxpayers with undeclared accounts, as well as bankers and others suspected of helping clients hide their assets overseas.

While there are legitimate reasons for maintaining financial accounts abroad, there are reporting requirements that need to be fulfilled. U.S. taxpayers who maintain such accounts and who do not comply with reporting requirements are breaking the law and risk significant fines, as well as the possibility of criminal prosecution.

Since 2009, tens of thousands of individuals have come forward to voluntarily disclose their foreign financial accounts, taking advantage of special opportunities to comply with the U.S. tax system and resolve their tax obligations. And, with new foreign account reporting requirements being phased in over the next few years, hiding income offshore is increasingly more difficult.

At the beginning of 2012, the IRS reopened the Offshore Voluntary Disclosure Program following continued strong interest from taxpayers and tax practitioners after the closure of the 2011 and 2009 programs. This program will be open for an indefinite period until otherwise announced.

Third-Party Reporting

Under the Foreign Account Tax Compliance Act (FATCA) and the network of intergovernmental agreements between the U.S. and partner jurisdictions, automatic third-party account reporting has entered its second year. The IRS continues to receive more information regarding potential non-compliance by U.S. persons because of the Department of Justice’s Swiss Bank Program. This information makes it less likely that offshore financial accounts will go unnoticed by the IRS.

Potential civil penalties increase substantially if U.S. taxpayers associated with participating banks wait to apply to OVDP to resolve their tax obligations.

RSS COMMENTS
1. The IRS and Department of Justice are relentlessly pursuing offshore tax scofflaws and their efforts will not subside.
2. In this endeavor IRS and DOJ are receiving large volumes of information about possible offshore tax violators from numerous sources of which some are:

a. Foreign Banks that have entered the Swiss Bank Settlement Program.
b. Major Swiss banks seeking to avoid criminal prosecution under Deferred Prosecution Agreements.
c. Data collected from entrants into the Offshore Voluntary Disclosure Program.
d. Information in Non-willful Certification affidavits of Streamlined filers.
e. Whistleblower claims filed by those seeking rewards.
f. Offshore violation enablers who have flipped on their clients and are providing information.
g. John Doe Summons issues to banks and others with information about the identity about possible offshore tax cheats. For example, the DOJ recently sought permission from the U.S. District Court in NY to issue a John Doe Summons to Federal Express in connection with its investigation of offshore merchant accounts.
h. Taxpayer information provided under FATCA agreements.
i. Taxpayer information obtained pursuant to the exchange of information provisions in various tax treaties and Tax Information Exchange Agreements.
j. Information obtained though IRS Criminal Investigation (CI) Country Attachés and Deputy Attachés stationed in permanent posts in Frankfurt, Mexico City, Bogota, Hong Kong, Beijing, London, Bridgetown (Barbados), Ottawa, Panama City and Sydney..

3. These information collection and investigative activities collectively are reducing the ability of taxpayers still out of compliance to avoid detection.
4. Taxpayers who have not taken advantage of the OVDP or Streamlined Filing Compliance Procedures to come into compliance with U.S. tax law should seriously reconsider their decision to remain out in the cold.
5. For a discussion of the OVDP compared to the Streamlined Filing Compliance Procedures see my blog post of May 19, 2016, “Comparison Chart: OVDP vs. Streamlined Filing Compliance Procedures found at: https://the-tax-wars.net/2016/05/19/comparison-chart-ovdp-vs-streamlined-filing-compliance-procedures/

Robert S. Steinberg, Esquire
http://www.Steinbergtaxlaw.com
AV Rated (Pre-eminent) by Martindale Hubbell

Posted in 2014 OVDP, OFFSHORE VOLUNTARY DISCLOSURE PROGRAM, STREAMLINED FILING COMPLIANCE PROCEDURES, STREAMLINED FILINGS, Uncategorized | Tagged FATCA, IRS CI COUNTRY ATTACHES., IRS INFORMATION SOURCES, JOHN DOE SUMMONS, SWISS BANK SETTLEMENT PROGRAM | Leave a comment

2016 FILING STRATEGY FOR OFFSHORE NONCOMPLIANT TAXPAYERS

Posted on February 2, 2017 by taxpenaltylawyer

I have previously posted on the need for those who are still out of compliance with U.S. tax law to become compliant with their 2016 tax and FBAR filings. “See post of 11/17/16 Taxpayers Must Become Compliant with U.S. Offshore Tax Filing Requirements and FBAR reporting by 2016 – Time May be Running out for Non-willfulness Claims .” https://the-tax-wars.net/2016/11/17/taxpayers-must-become-compliant-with-u-s-offshore-tax-filing-requirements-and-fbar-reporting-by-2016-time-may-be-running-out-on-non-willfulness-claims/

A strategy for coming into compliance should include the following:

1. File an extension for your 2016 income tax return.
2. Your 2016 FBAR, due April 15, 2017, has been automatically extended by FinCEN to October 15, 2017.
3. Retain an experienced offshore tax attorney to determine eligibility for the Streamlined Filing Compliance Procedures and whether your actions in failing to file or report require the greater protection from criminal charges and FBAR penalties offered by the Offshore Voluntary Disclosure Program. See post of 5/1*/16 “Comparison Chart: OVDP vs Streamlined Filing Compliance Procedures.” https://the-tax-wars.net/2016/05/
4. The tax attorney retained will prepare your Streamlined non-willful certification statement if he or she determines that it is safe for you to submit returns under the Streamlined Program.
5. Retain an experienced offshore tax preparer to prepare original or amended returns for the non-compliant years of 2013, 2014 and 2015 and e-file with FinCEN original or amended FBARS for 2010 through 2015. (Note that taxpayers residing in the U.S. cannot file delinquent returns under the Streamlined procedures).
6. File your Streamlined submission (unless it is determined that you must enter the OVDP).
7. It usually takes at least a couple of months to complete the tax return preparation, review and non-willful certification for a Streamlined filing and sometimes considerably longer. The tax attorney will conduct a due diligence inquiry to confirm your claim of non-willfulness.
8. Timely file your 2016 return and FBAR in full compliance with the income tax laws together with all required foreign reporting forms.

The accepted definition of willfulness for both criminal and civil penalty purposes is a voluntary and intentional violation of a known legal duty. Thus, willfulness requires both knowledge and a voluntary conscious act to not file or report.

Many offshore taxpayers have been contacted by foreign banks conducting FATCA due diligence inquiries to determine if customers are U.S. citizens or residents. These contacts may put the taxpayer on notice that there are offshore filing requirements to which they must attend. The failure to take corrective action, upon obtaining knowledge of the obligation to file returns, FBARS or other foreign reporting forms, is a fact that may weigh on whether IRS views conduct as non-willful. After knowledge of the tax filing and reporting obligations is obtained, failure to file a timely and correct 2016 income tax return, FBAR and foreign reporting forms, depending on other facts present, may also be viewed as a criminal violation or as conduct supporting the willful civil FBAR penalty.

Criminal willfulness must be proven by the government beyond a reasonable doubt while civil willfulness for the FBAR penalty need only be proven by a preponderance of the evidence (i.e., more than half of the evidence adduced at trial points towards willfulness).
Thus, the wise course of action for those still out of compliance is to address the problem before the 2016 return and FBAR become either delinquent or are incorrectly filed.
Filing returns and making a non-willful certification under the Streamlined program are serious matters that carry great risk if attempted by those who are not well versed in this specialized area of tax law.
© 2017 by Robert S. Steinberg, Esquire
All rights reserved
http://www.steinbergtaxlaw.com

Posted in STREAMLINED FILING COMPLIANCE PROCEDURES, STREAMLINED FILINGS, Uncategorized | Tagged 2016 TAX FILING FOR NONCOMPLIANT TAXPAYERS, CERTIFICAITON OF NON-WILLFULNESS, COMING INTO COMPLIANCE, FILING 2016 RETURNS AND STREAMLINED RETURNS, NONWILLFULNESS, STREAMLINED PERIOD | Leave a comment

DISTRICT COURT CONTINUE TO REQUIRE ONLY A PREPONDERANCE OF THE EVIDENCE TO SUPPORT A FINDING OF WILLFULNESS IN FBAR PENALTY ENFORCEMENT CASES.

Posted on December 18, 2016 by taxpenaltylawyer

The U.S. District Court for the Central District of California in U.S. v. August Bohanec and Maria Bohanec Case No. 215-CV-4347 ddp (FFMx) (filed 12/8/16) https://www.pacermonitor.com/public/case/8438973/United_States_of_America_v_August_Bohanec_et_al handed the IRS victories on two important issues:

1. Held that the standard of proof in civil FBAR cases is the lesser burden of “preponderance of the evidence,” and not the higher standard of “clear and convincing evidence,” and,
2. Held that the willful FBAR penalty may be assessed when the taxpayer’s conduct is reckless but not intentional.

Standard of Proof Issue

When the IRS assesses a willful FBAR penalty, it cannot collect the FBAR penalty assessed under the collection procedures employed to collect income taxes. Thus, IRS cannot levy on bank account, record liens or employ the usual summary collection procedures permitted under the Internal Revenue Code for collecting income tax assessments. Rather, generally within two years from the date of assessment, IRS must commence a suit in U.S. District Court to obtain a judgment for the amount of the FBAR penalty assessed. Once a judgment is obtained, IRS may collect the debt over the life of the judgment (generally 20 years with a renewal period of an additional twenty years).

Taxpayers have argued that the burden of proof required of IRS in proving willfulness should be the higher “clear and convincing evidence” standard. They argue that the Internal Revenue Manual (IRM) states that the standard should be the same as is applied for the civil fraud penalty, that is, “clear and convincing evidence.” This is a higher standard than the general burden of proof standard applied in civil tax matters, which is “by a preponderance of the evidence (POE).” Under the POE standard the fact at issue must be established by the weight of the evidence, that is, by more than 50% of the evidence admitted at trial.

This standard of proof required is a big deal because the government has the burden of proving willfulness in seeking to obtain a judgment for a civil willful FBAR penalty assessment. There is a lot at stake in these cases because the civil willful FBAR penalty is the greater of $100,000 or 50% of the value of the unreported foreign financial accounts on the due date of the FBAR in question.

The Court in Bohanec applied the lesser POE standard of proof as had the U.S. District Courts in the much commented on Williams and McBride cases.
In so holding the court noted that the IRM does not have the force of law and is not relevant to the case at hand.

The Bohanec Court cited the Supreme Court decision in Herman & MacLean v. Huddleston, 459 US. 375, 389 (1983) which held that the “clear and convincing” burden of proof applies in civil matters only, where particularly important individual interests or rights are at stake.” Such rights include parental rights, involuntary commitment and deportation. The lower more generally applicable preponderance of the evidence standard applies, however, where “even severe civil sanctions that do not implicate such interest are contemplated.”

The court held that “the monetary sanctions at issue here do not rise to the level of particularly important individual interests or rights.” Thus, the court applied the POE burden of proof in deciding the case.

Scope of “Willful” issue

The taxpayer had also argued in Bohanec.that IRS Chief Counsel Advice, CCA 200603026, establishes that “willful” for purposes of the civil FBAR penalty under 31 USC Sec. 5321 is the same as the criminal standard for “willful,” that is, an intentional violation of a known legal duty; and, that willful conduct therefore does not encompass conduct that is reckless but not intentional.

The Court held that the CCA may not be cited as precedent and that no court has adopted the view stated in the CCA or espoused by the taxpayer.

The Court cited Safeco Ins. Co. of America v. Burr, in which the Supreme Court explained that “willfully is a word of many meanings whose construction is often dependent of the context in which it appears.” 551 U.S. 47, 57 (2007).

The Court stated that “where willfulness is an element of civil liability, the Supreme Court generally understand the term as covering ‘not only knowing violations of a standard, but reckless ones as well.” Safeco 551 U&.S. at 57. Further citing Safeco at page 68, “Recklessness is an objective standard that looks to whether conducti entails and unjustifiably high risk of harm that is either known or so obvious that it should be known.”

Applying the law as stated, the Court found that the government had proved by a POE that August and Maria Bohanec were at least recklessly indifferent to ta statutory duty to file an FBAR for the following reasons:
• They were reasonably sophisticated people who ran a highly successful camera shop that for a time was the only exclusive Leica dealer in the world. They negotiated very lucrative deals with Leica.
• When other dealers protested that circumvented Leica’s supply restrictions through a negotiated agreement with Walter Kluck president of Leitz Canada, Leica’s subsidiary there. They had a worldwide reputation and sold and shipped to customers around the world.’
• August Bohanec was sophisticated enough to obtain two patents without the assistance of an attorney.
• They also managed the construction of a home along the coast of Mexico including the hiring of a contractor and the opening of Mexican bank accounts.
• They knew they had to pay taxes and had to file returns and yet did not file returns after 1998 until they attempted to enter the OVDP in January of 2010.
• In connection with the sales of Leica cameras Walter Kluck of Lietz opened a UBS Swiss bank account for them into which was deposited commissions or finders fees for steering international buyers to Kluck.
• They did not report the commissions on federal income tax returns.
• On at least two occasions they directed their international customers to directly deposit money into their UBS account.
• After closing the camera shop they sold used Leicas on EBay without reporting the income.
• The Bohanec’ did not provide UBS with their home address.
• The Bohanec told only their children about the Swiss account and no one else.
• They did not tell their return preparer for the camera shop returns about the account.
• They did not seek professional advice about reporting requirements.
• They never used a bookkeeper to keep books once the account was opened.
• Part II of Schedule B of their 1998 return put them on notice that they needed to file an n FBAR.
• Defendant’s credibility was damaged by their false statements and omissions in their submission to the OVDP which ultimately cause their application to be rejected, namely
o That all of the funds in the UBS account were after tax proceeds from their camera business.
o Omitted from their FBARS other foreign accounts in Mexico and Austria.
o Returns filed with OVDP omitted all income from E-bay sales

Although not specifically cited as a reason for the court’s finding of recklessness, the decision may also have been influenced by other findings of fact, namely:
•The UBS account was managed by Walter Kluck while he was alive and thereafter by UBS.
• They made occasional withdrawals from the account, for example, for their daughter, to transfer fronds to an account in Austria owned by August and to an account they had both opened in Mexico.
• The UBS account had a high value in 12/31/99 of $1,096,500 and a value on 6/30/2008 when the failure to file being alleged occurred of $643,662.
• They moved the entire account to Austria in 2009 when the balance was $523,677 and later repatriated the funds to their U.S. account Although not commented on by the court, this was following the UBS criminal investigation becoming public.
• Schedule B was included in their 1998 return (last return filed before the OVDP submission) included the following question: At any time during 1998 did you have an interest in or a signature or other authority over a financial account in a foreign country, such as a bank account, securities account or other financial account:? See page B-2 for exceptions an filing requirements for Form TD F 90-22.1.(Now FinCEN Form 114)
o Page B-2 of the instructions for Schedule B for 1998 states: See (FBAR) Form TD F 90-22.1 to find out if you are considered to have an interest in or signature or other authority over a financial account in a foreign country (such as a bank account, securities account or other financial account)”
o Page B-2 of the instructions for Schedule B of 1998 also states: “if you checked the Yes box on line 7a file Form TD F 90-22.1 by June 30, 1999, with the Department of the Treasury at the address shown on that form.”
• The IRS assessed additional tax for 2003, 2005-2010 in the amount of $172,291 and penalties including a civil fraud penalty. The taxpayers had not disputed the deficiency in Tax Court and owed IRS a total of $492,163 at the time of trial on the FBAR penalty assessment.

RSS Comments:
Regarding recklessness – We cannot look into someone’s mind to see what is going on his or her brain with regard to FBAR reporting obligations. Thus, evidence of knowledge or wanton disregard of warning signs will be deduced from circumstantial evidence. Thus, it appears to me that if facts would put a reasonably prudent person with the same education, background, experience and sophistication on notice that there is a danger of non-compliance with the tax law and the person proceeds in wanton disregard of the risk, the conduct is reckless. It is not difficult perhaps to distinguish reckless conduct from ordinary negligence or ignorance of the law. It may be more difficult to distinguish reckless conduct which makes one ineligible for a streamlined filing from gross negligence which IRS has stated does not disqualify one from the streamlined procedures..
Regarding Schedule B – The court spells out the language on the 1998 Schedule B which was the last personal return filed by the Bohanec before the OVDP filing. This return was filed 8 years before the 2007 FBAR on which the penalty is assessed was not filed.
Question: Was it reasonable to presume that the taxpayer’s recalled the 1998 return language and instructions in 2007, the year for which they are being assessed the FBAR penalty or on June 30, 2008 the FBAR due date

The IRS states in its Streamlined FAQ 6 for persons residing outside of the U.S., that:
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

I suggest perspective Streamlined filers read the entire case which has lengthy findings of fact that are instructive with regard to preparing streamlined non-willful certifications. The case may be found at https://www.pacermonitor.com/public/case/8438973/United_States_of_America_v_August_Bohanec_et_al
© 2016 by Robert S. Steinberg, Esquire
http://www.Steinbergtaxlaw.com

Posted in FBAR PENALTIES, Uncategorized | Tagged CLEAR AND CONVINCING EVIDENCE IN FBAR PENALTY CASES, PREPONDERANCE OF EVIDENCE IN FBAR PENALTY ENFORECEMENT, RECKLESSNESS, STREAMLINED NONWILLFUL CERTIFICATIONS, SUITS TO REDUCE FBAR PENALTY TO JUDGMENT, WILLFUL AS INCLUDING RECKLESS CONDUCT, WILLFULNESS | Leave a comment

CURRENT LIST OF U.S. EXHANGE OF TAX INFORMATON AGREEMENTS AND AUTOMATIC EXCHANGE OF TAX INFORMTION AGREEMENTS IN FORCE

Posted on December 6, 2016 by taxpenaltylawyer

Under various income tax treaties and other agreements a foreign country may make a treaty request for information about income earned in the U.S. by one of its citizens or residents. Other agreements provide for the automatic exchange of tax information. The IRS has just updated the list of countries with which it has tax information sharing agreements and those with which it has automatic exchange of information agreements regarding interest income.

Section 3 of Rev. Proc. 2016-56 IRS updates the list of countries with which it has Tax Treaties or other agreement that contains a provision relating to the exchange of tax information upon appropriate request. Section 3 of the Rev. Proc. is reproduced below.

SECTION 3. SUPPLEMENT TO SECTION 3 OF REV. PROC. 2014-64
Section 3 of Rev. Proc. 2014-64 is supplemented to read as follows:
The following are the countries with which the United States has in effect an
income tax or other convention or bilateral agreement relating to the exchange of tax
information within the meaning of section 6103(k)(4) pursuant to which the United
States agrees to provide, as well as receive, information and under which the
competent authority is the Secretary of the Treasury or his delegate:

• Antigua & Barbuda
• Aruba
• Australia
• Austria
• Azerbaijan
• Bangladesh
• Barbados
• Belgium
• Bermuda
• Brazil
• British Virgin Islands
• Bulgaria
• Canada
• Cayman Islands
• China
• Colombia
• Costa Rica
• Croatia
• Curacao
• Cyprus
• Czech Republic
• Denmark
• Dominica
• Dominican Republic
• Egypt
• Estonia
• Finland
• France
• Germany
• Gibraltar
• Greece
• Grenada
• Guernsey
• Guyana
• Honduras
• Hong Kong
• Hungary
• Iceland
• India
• Indonesia
• Ireland
• Isle of Man
• 4
• Israel
• Italy
• Jamaica
• Japan
• Jersey
• Kazakhstan
• Korea, Republic of
• Latvia
• Liechtenstein
• Lithuania
• Luxembourg
• Malta
• Marshall Islands
• Mauritius
• Mexico
• Monaco
• Morocco
• Netherlands
• Netherlands island territories: Bonaire, Saba, and St. Eustatius
• New Zealand
• Norway
• Pakistan
• Panama
• Peru
• Philippines
• Poland
• Portugal
• Romania
• Russian Federation
• Saint Lucia
• Slovak Republic
• Slovenia
• South Africa
• Spain
• Sri Lanka
• St. Maarten (Dutch part)
• Sweden
• Switzerland
• Thailand
• Trinidad and Tobago
• Tunisia
• Turkey
• Ukraine
• United Kingdom
• Venezuela

Section 4 of the Revenue Procedure updates the list of countries with which the U.S. has in effect provisions for the automatic exchange of information regarding the reporting of interest income. Section 4 of Rev. Proc.

SECTION 4. SUPPLEMENT TO SECTION 4 OF REV. PROC. 2014-64
Section 4 of Rev. Proc. 2014-64, as supplemented by Rev. Proc. 2015-50 and
Rev. Proc. 2016-18, is further supplemented to read as follows:
The following list identifies the countries with which the automatic exchange of
the information collected under §§ 1.6049-4(b)(5) and 1.6049-8 has been determined
by the Treasury Department and the IRS to be appropriate:

• Australia
• Azerbaijan
• Brazil
• Canada
• Czech Republic
• Denmark
• Estonia
• Finland
• France
• Germany
• Gibraltar
• Guernsey
• Hungary
• Iceland
• India
• Ireland
• Isle of Man
• Israel
• Italy
• Jamaica
• Jersey
• Korea, Republic of
• Latvia
• Liechtenstein
• Lithuania
• Luxembourg
• Malta
• Mauritius
• Mexico
• Netherlands
• New Zealand
• Norway
• Poland
• Saint Lucia
• Slovak Republic
• Slovenia
• South Africa
• Spain
• Sweden
• United Kingdom

Citizens or residents of other countries living in the U.S. should be aware of these agreements.

Robert S. Steinberg, Esquire
www.steinbergtaxlaw.com

Posted in AUTOMATIC EXCHANGE OF TAX INFORMATION, TAX TREATIES | Tagged US INTEREST REPORTED TO FOREIGN COUNTRIES | Leave a comment

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