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From The Front Line: How A Routine Form 3520 Filing Can Easily Go (Eye-Watering Expensively) Wrong – And Did

HELEN BURGGRAFF

It is perhaps not surprising to hear that non-U.S. (or “foreign”) trusts with U.S. owners can be tricky…

Individual U.S. citizens who hold such foreign trusts, for example, are expected to file a Form 3520, “Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts,” and the trusts themselves are required to file a Form 3520-A, “Annual Information Return of Foreign Trust With a U.S. Owner,” every year. If the trust doesn’t file a Form 3520-A, the U.S. owner of the trust is required to file a “substitute” Form 3520-A with their Form 3520. Definitely not for beginners.

Still, Gary W. Carter, a certified public accountant based in Minnesota, with decades of experience as a tax adviser, professor and revenue agent, knew all this. So he filed such forms on behalf of some of his overseas clients last year without a further thought.

Below, Carter explains, in his own words, how easily – and disastrously – things went wrong for five of his clients (“so far”, he says), and speculates that the scale of similar penalty notices could be huge: and consequently, a huge, if not a particularly tax-payer-friendly, money-maker for the IRS.

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IRS Offers Settlement For Micro-Captive Insurance Schemes; Letters Being Mailed To Groups Under Audit

IRS On Captive Insurance Schemes

The Internal Revenue Service announced  the mailing of a time-limited settlement offer for certain taxpayers under audit who participated in abusive micro-captive insurance transactions. 

 

Taxpayers eligible for this offer will be notified by letter with the applicable terms. Taxpayers who do not receive such a letter are not eligible for this resolution.

 

Abusive micro-captives have been a concern to the IRS for several years. The transactions have appeared on the IRS “Dirty Dozen” list of tax scams since 2014. In 2016, the Department of Treasury and IRS issued Notice 2016-66, which identified certain micro-captive transactions as having the potential for tax avoidance and evasion.

 

Following wins in three recent U.S. Tax Court cases, the IRS has decided to offer settlements to taxpayers currently under exam. In recent days, the IRS started sending notices to up to 200 taxpayers.

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Form 5471: Information Return Of U.S. Persons With Respect To Certain Foreign Corporations

IRS Forms

Certain U.S. citizens and residents who are officers, directors, or shareholders in certain foreign corporations file Form 5471 and schedules to satisfy the reporting requirements of sections 6038 and 6046, and the related regulations.

We have received several inquiries regarding the changes on the IRS Form 5471 regarding information return of U.S. persons with respect to certain foreign corporations. You will find it useful to go to this link to find updated 5471 Forms, Instructions and Updates.

You can also access current Form 5471 Here.

 

How To Get Rid Of An IRS Tax Lien

How To Get Rid Of An IRS Tax Lien

IRS tax liens interfere with your ability to sell or borrow against your property. If you need to get around the tax lien, you have several options at your disposal.

First and foremost, you can eliminate the lien by paying your tax bill in full. However, this may be unrealistic if you owe $25,000, $50,000, or $100,000 to the IRS. In these cases, you’ll need to consider your other options.

Tax Lien Withdrawals

A lien withdrawal completely removes the tax lien from public records. The IRS will only agree to withdraw the lien in specific circumstances.

First, the IRS should withdraw the lien if it was filed prematurely or in violation of IRS procedures. This reason could apply if the IRS failed to send you the correct notices or made some type of clerical error.

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Refinancing Your House: Pros and Cons In The U.S.

Refinancing Your Home

If you’ve owned your home for a couple of years, you might have started thinking about refinancing. Maybe interest rates have dropped, and you want to save money, or you want to tap into your home’s equity to remodel your kitchen.

Learn about the pros and cons of refinancing your house and how it could impact your financial situation so you can make the best decision for your family.

Pros of Refinancing Your House

Here are some of the reasons why you might consider refinancing.

  • Lock in a lower interest rate and lower monthly payment
  • Refinance into a better loan product
  • Free up equity for a remodel or other purposes

Interest rates fluctuate over time. If rates have dropped significantly since you first bought your home, it could be worthwhile to refinance. Since you’ll pay fees to refinance, most financial advisors recommend that you plan on staying in your home for at least five years after the refinance.

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Have You Ever Considered The Importance Of A Virtual Mailbox?

VIRTUAL MAILBOX AT TaxConnections

If you are moving or traveling a lot, you will want to consider the value and importance of having a Virtual Mailbox. Many people are unaware of an amazing new mailbox resource that has all your mail scanned and emailed to you. The trusted service will even deposit checks for you! They take a picture of the envelopes and email them to you first so you can determine what you want the service to open, scan and email to you or send the letter to the location you are at any given moment.

The Virtual Office resource is great if you are planing on extended travel or find yourself moving around a lot. What if you are caring for a parent and cannot get to their mailbox easily to handle matters for them. The Virtual Mailbox team is a trusted and proven resource that is providing a valuable service to many people today. It is an important component to building a virtual remote office.

Learn More About A Virtual Mailbox

Build Your Virtual Office With TaxConnections Membership

We  are adding new resources each month to work virtually.

 

Find The Good. It’s All Around You. Find It, Showcase It…

MOTIVATIONAL QUOTES

There are amazing professionals in the world who inspire us. Four time gold medalist track and field star Jesse Owens stated:

Find the good. It’s all around you. Find it, showcase it and you’ll start believing in it.

Also, remember the words of these inspirational leaders:

“Be kind whenever possible.It is always possible.”
~ Dalai Lama

“Victory belongs to the most persevering.”
~ Albert Einstein, Theoretical Physicist

“Believe you can and you are halfway there.”
~ Theodore Roosevelt, 26th U.S. President

“Strength does not come from physical capacity. It comes from indomitable will.”
~ Mahatma Gandhi

“An investment in knowledge pays the best interest.”
~ Benjamin Franklin, Inventor, Author, Politician

“The person who says it cannot be done should not interrupt the person who is doing it.”
~ Chinese Proverb

Request Our Complimentary eBook Of 250+ Inspirations

 

American Citizens Abroad Unveils Online Tax Fairness Campaign To Urge Congressional Hearings

AMERICAN CITIZENS ABROAD

The American Citizens Abroad has unveiled a major online campaign it says is aimed at ensuring U.S. lawmakers hold hearings this fall on the “wide range of tax compliance issues” currently affecting Americans resident overseas – including the Tax Fairness for Americans Abroad Act.

The online write-in campaign, entitled “Tax Fairness for Americans Abroad: An Idea Worth Fighting For!”, is needed because hearings need to be held, the ACA explains, “so that the US House Ways & Means Committee can hear about the wide range of tax compliance issues facing the overseas Americans community from stakeholders and citizens.”

“With knowledge from hearings, the tax-writing committees and legislators will start to look at specifics of the legislation for refinement,” the ACA continues, in a statement issued on Thursday as part of its official launch of the new campaign.

“Treatment of items like Social Security income, income associated with the new “transition tax” and GILTI, and different types of PFIC income, will need more consideration, and details will need to be worked out to determine how these income streams will be taxed under a new residency-based regime.

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Netherlands: Dutch Tax Authorities And Dutch Tax Rulings

Jimmy Cox - Dutch Tax Rulings

In the Netherlands it is possible to discuss your specific tax position with the Dutch tax authorities and mutually agree on the tax consequences thereof. The Dutch tax authorities and the taxpayer are bound by the agreement they make. The agreement has to be regarding the interpretation and qualification of facts. The ruling has to be in conformity with the Dutch tax legislation. In other words the agreement cannot be in conflict with the Dutch tax legislation (contra legem). In August 2004, the Dutch ruling policy was formalized in an advance tax ruling (ATR) policy and an advance pricing agreement (APA) policy.

Dutch advance pricing agreement (APA)

An APA covers the agreement on an at arms’ length remuneration or on the transfer pricing methodology. The basis for an APA is a transfer pricing study. The Dutch tax authorities and the tax payer agree that the outcome of the transfer-pricing study would form the basis for the determination of the income for Dutch corporate income tax purposes.

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IRS Expanding The Compliance Assurance Process For 2020, Accepting New Corporate Applicants

IRS LOGO - BLOG

The Internal Revenue Service announced today the opening of the application period for the 2020 Compliance Assurance Process program. For the first time since 2015, new corporate applicants who meet eligibility requirements can apply for CAP. The application period runs September 16 to October 31, 2019. The IRS will let applicants know if they’re accepted into the program around January 31, 2020.

Launched in 2005, CAP employs real-time issue resolution, through transparent and cooperative interaction between taxpayers and the IRS, to improve federal tax compliance by resolving issues prior to the filing of a tax return.

To be eligible to apply for CAP, new applicants must:

  • Have assets of $10 million or more,
  • Be a U.S. publicly traded corporation with a legal requirement to prepare and submit SEC Forms 10-K, 10-Q, and 8-K, and
  • Not be under investigation by, or in litigation with, any government agency that would limit the IRS’s access to current tax records.

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Learn How TaxConnections Helps Tax Professionals In Corporations, Tax Services Firms, Law Firms And Academia

Marketing For Tax Professionals

TaxConnections is a platform designed to provide a sophisticated online presence for tax professionals. We offer connections and marketing services for professionals who want to engage with executives at large to medium sized corporations, partnerships, closely held corporations, family offices and high net worth individuals.

Our members consist of tax experts in public accounting firms, legal firms, independent tax services firms, corporations, software companies, government and academia worldwide.

TaxConnections grew out of a track record of stellar performances in executive search services for Fortune 500 to Fortune 5000 companies. For over three decades, we have studied how tax professionals in corporations, public accounting firms, law firms and independents with a similar set of technical tax skills would attain very different levels of success in their tax careers. What was the difference? The difference was how a tax professional promoted themselves throughout their careers that determined their success.

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Taxpayer Advocate Service(TAS) Advocacy Helps Taxpayer Get Refund Using Wire Deposit To A Foreign Bank Account

Taxpayer Advocate Service

Every year, the Taxpayer Advocate Service (TAS) helps thousands of people with tax problems. This story is only one of many examples of how TAS helps resolve taxpayer’s tax issues. All personal details are removed to protect the taxpayer’s privacy.

The mission of TAS is to help taxpayers resolve problems with the IRS and recommend changes to prevent the problems. When constituents contact their congressional office for help with tax matter, TAS works closely with the congressional staff member to assist in the resolution.

In this case, the taxpayer was living overseas where their foreign bank had changed its policy for cashing checks, and consequently the taxpayer could not cash his IRS refund check. The taxpayer returned the refund check to the IRS but wasn’t successful in getting it reissued as a direct deposit. The taxpayer then contacted his congressional office for help.

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