Archive for June 28, 2014

Standards For Prosecuting Tax Crimes And What They Mean For The Public

The government is not required to prosecute persons whom it believes has violated the law. Certainly, in the tax context, only a small percentage of people who are known or reasonably suspected to have committed a tax crime are investigated and prosecuted. Judgment calls abound – from the first discovery of information through prosecution.

Given the limited resources that can be applied to tax prosecutions, the government must be highly selective. The ability to “pick and choose” which cases it prosecutes is the reason why it has such a high conviction rate. The message from Uncle Sam to taxpayers is this: “Sure, we don’t prosecute all tax cheats, but if we get you in our prosecution cross-hairs, you are dead.” Read More

Written by | Posted in Tax Fraud/Evasion/Crimes

Taxpayers Rights When Audited By Tax Authorities In South Africa (Chapter 3 – 3.4.1)

Posted in sections, this is my Doctoral Thesis on taxpayers rights when audited by the tax authorities in South Africa – equally applicable to many English-based law systems in Africa and abroad (eg. India). This will be of particular use to any tax practitioners doing work in Africa and in other English-based legal systems around the world.

Analysis Of Challenging The Commissioner’s Discretionary Powers In Auditing Taxpayers under The Constitution Of The Republic of South Africa

CHAPTER 3 – LIMITATIONS TO INVOKING SECTIONS 74A AND 74B OF THE INCOME TAX ACT

3.4.1 Rationality Read More

Written by | Posted in Africa • Audit

Audit Tips – Case Resolution

The most important thing about representing a client is – know at least as much about them as the IRS does.

Don’t ever put yourself in the position of being embarrassed, after putting together your client’s financials or tax audit workpapers – only to learn that the IRS knows about income or assets your client has not disclosed to you.

How do you make sure this never happens?

1) Get a signed power of attorney from the client and/or spouse and/or partner
2) USE the POA to request every possible kind of transcript there is for the year(s) in question – third party reports of income and expenses, master file records, account Read More

Written by | Posted in Audit • Tax Tips

Discharging Taxes in Bankruptcy – Part 7

The Bankruptcy Petition

We, as tax professionals, do not file the paperwork for our clients. (In Louisiana that is called practicing law without a license.) But we can help them gather and organize the information they will need. If any of you have been involved in OIC applications you will see the similarities in the process here.

It is important that you understand the basics of the bankruptcy petition and various attachments in order to assist your client in gathering the necessary documents to file with the court or provide his attorney.

See the Appendix for a sample of the bankruptcy paperwork your client may have to file. As Read More

Written by | Posted in Individual

Ironclad Defenses To Tax Crimes – Part IV

IV. Fifth Amendment Defense

Criminal tax cases are chock full of constitutional claims made by defendants. The tax protest movement, in particular, has spawned many constitutional defenses, from the sublime to the ridiculous.

A valid constitutional defense is the Fifth Amendment right against self-incrimination. In United States v. Sullivan, 274 U.S. 259 (1927), the Supreme Court of the United States held that the privilege against self-incrimination is not a defense to prosecution for failure to file. In other words, a defendant may not rely on the Fifth Amendment to not file at all.

However, the Court said that the privilege could be asserted, in appropriate Read More

Written by | Posted in Tax Fraud/Evasion/Crimes

The Basics of Offshore Tax Planning For Canadian Corporations – Part 10

Canada Revenue Agency Reporting Requirements

A Canco which controls a Forco will have an obligation to submit certain special returns to the Canada Revenue Agency annually.

Failure to file such returns on a timely basis will expose Canco to significant penalties.

Form T1134

Any Canadian resident, whether a corporation or individual, with respect to which there is a “foreign affiliate” (“FA”) in a taxation year, must file form T1134 within 15 months after the end of that year with the CRA. An exception applies in connection with “dormant” FAs. Read More

Written by | Posted in Corporate • Expatriate • International

Taxpayers Rights When Audited By Tax Authorities In South Africa (Chapter 3 – 3.4)

Posted in sections, this is my Doctoral Thesis on taxpayers rights when audited by the tax authorities in South Africa – equally applicable to many English-based law systems in Africa and abroad (eg. India). This will be of particular use to any tax practitioners doing work in Africa and in other English-based legal systems around the world.

Analysis Of Challenging The Commissioner’s Discretionary Powers In Auditing Taxpayers under The Constitution Of The Republic of South Africa

CHAPTER 3 – LIMITATIONS TO INVOKING SECTIONS 74A AND 74B OF THE INCOME TAX ACT

3.4 REASONABLENESS Read More

Written by | Posted in Africa • Audit

IRS Finally Gets It Right – This Is The Penalty-Free Path Forward American Late Filers Have Been Waiting For

Big Data and an ever aggressive approach by the IRS toward ferreting out Americans living abroad who are not current with their US tax filing has, so far, not yielded the results that the US government hoped for. With a tax system that is based largely upon voluntary compliance, the United States wields a big stick, and yet they realize that in reality a carrot may yield a much better result. The big stick in this circumstance is FATCA, the Foreign Account Tax Compliance Act, which so far has signed on 77 thousand banks worldwide and 70 countries to report to the US where Americans reside and what accounts they hold. The carrot, on the other hand is the New Streamlined Procedure …

Come See The Softer Side Of Having Your Own Streamlined Procedure!

Read More

Written by | Posted in FATCA • FBAR • IRS

Overcoming The Pitfalls of Certifying Non-Willfulness When Applying To The Streamlined Compliance Program

Of the recent changes made to OVDP and the streamlined procedures, none have received as much attention – or created as much debate – as the new rule requiring certification of non-willfulness as a condition for gaining entry. This blog focuses on the requirement of the new streamlined procedures that the failure to report income from a foreign financial asset not be willful. This requirement cuts to the heart of penalty mitigation offered by the new procedures.

As a way of background information, in order to qualify for the streamlined compliance procedures, U.S. taxpayers must certify that “the failure to file tax returns, report all income, pay all tax, and submit all required information returns, including FBARs, resulted from non-willful conduct.” There are now two streamlined procedures: (1) the “Streamlined Read More

Written by | Posted in FBAR • Individual • OVDP • Tax Fraud/Evasion/Crimes

A Brief Introspection of Repair vs. Improvement: IRS Revenue Procedures 2014-16 and 2014-17

That’s right Y’all this is another one of those quite game changers for owners of tangible property concerned about keeping the IRS at bay by actually adhering to the specific US Tax Code and subsequent IRS Revenue Procedures.

My apologies for being so brazen but I more than most appreciate the fact the the IRS compliance and enforcement functions demonstrated segregated profiling beyond reproach in these regards and that in deference to flaccid attempts at enforcement historically to date a ‘hide your head in the sand’ approach stood more than a coin toss chance of being successful as up until recently the IRS has been a day late and a dollar short assessing tax within the time frame allowed by statute. Read More

Written by | Posted in IRS • Tax Policy

Discharging Taxes in Bankruptcy – Part 6

Bankruptcy and Retirement Accounts:

If the debtor can access the funds in a retirement account, so can the IRS. Unless the account is listed as exempt (§6334), the fiduciary of the account will yield to an account collection by the IRS.

If the lien is against an exempt asset, such as a retirement account, the IRS can and will pursue the lien for the remainder of the tax liability not paid off in the bankruptcy. This will remain attached until the taxpayer can access the funds or the CSED runs out unless the debt is settled prior to that time. (I.R.M. 5.11.6.2)

The IRS will not usually levy a retirement account unless the taxpayer meets the definition Read More

Written by | Posted in Individual
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