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Tag Archive for IRS

Tax Havens And The IRS

The term “tax haven” is a bit of a misnomer, for the places that are considered tax havens don’t just offer an escape from taxes. They also offer secrecy and a place for U.S. citizens and corporations to keep their money far from the government’s grasp.  What is a tax haven, and how does the IRS think of them?

The IRS actively fights against tax havens via their The Abusive Tax Scheme Program, which actively attempts to prevent abusive behavior by would-be taxpayers. Avoiding paying taxes via hiding money in tax havens is a white-collar crime.

What Is A Tax Haven?

A tax haven is any country, state, or territory that offers foreign individuals and businesses with little or no tax liability. It usually refers only to countries that are politically and economically stable. Tax havens fall into one of three categories:

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The IRS’s Continued Refusal To Exclude Already Open TAS Cases From The Passport Certification Program Violates Taxpayer Rights

Nina Olson, National Taxpayer Advocate

In January, I wrote my third blog about the IRS’s new program to certify the seriously delinquent tax debts of taxpayers for the purposes of passport denial, limitation, or revocation. At that point, the IRS had just begun implementing the program, and I expressed serious concerns about how the IRS’s refusal to exclude taxpayers with already open TAS cases would infringe upon their rights. As of the writing of this blog, the IRS has still refused to exclude these taxpayers from certification. Today, I want to walk through what my office has been doing over the last few months to elevate this issue to the highest levels of IRS leadership and how the IRS has responded.

As background, Section 7345 of the Internal Revenue Code (IRC) authorizes (but does not require) the IRS to certify a taxpayer’s seriously delinquent tax debt to the Department of State for the purposes of passport denial, limitation, or revocation. A seriously delinquent tax debt is an assessed, individual tax liability exceeding $51,000 (adjusted for inflation) for which either a notice of federal tax lien has been filed or a levy has been made. IRC § 7345(b)(2) provides exceptions for current installment agreements (IAs), offers in compromise (OICs), and Collection Due Process hearings. Because the statute provides the IRS with discretion to not certify taxpayers who meet the definition of a seriously delinquent tax debt, the IRS has created some certification exclusions, such as for taxpayers in currently not collectible (CNC) hardship status and those with pending IAs and OICs. See IRM 5.19.1.5.19.4 for a full list.

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Sentencing Guidelines For A Taxpayer Charged with FBAR Violations

Do You Have Foreign Income?

In case you have foreign income or assets, you might be under an obligation to file a Report of Foreign Bank and Financial Accounts (FBAR) disclosing your assets and income to the IRS. The FBAR filing requirements specifically apply to US taxpayers with financial interest in, or signature authority over a financial account or foreign bank with a value of at least $10,000 at any point.

These FBAR requirements extend to U.S. residents, U.S. citizens and various kinds of business entities, such as limited liability companies (LLCs), corporations and partnerships. Keep in mind that FBAR violations, which usually involve failure to maintain relevant financial records or failure to file an FBAR, could result in severe penalties, especially if these violations are “willful.”

Failure To File

Since 2017, any failure to file can lead to harsh sentencing; this depends on how much you or your business has in foreign financial institutions or offshore accounts. A failure to disclose and furnish the information is usually an intentional act to deceive the IRS. You have to file the FBAR paperwork, as long as your accounts have over $10,000.

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What Taxpayers Should Know About Tax Return Copies And Transcripts

IRS, TaxConnections

The IRS recommends that taxpayers keep a copy of tax returns for at least three years. Doing so can help taxpayers prepare future tax returns or even assist with amending a prior year’s return. If a taxpayer is unable to locate copies of previous year tax returns, they should check with their software provider or tax preparer first. Tax returns are available from IRS for a fee.

Even though taxpayers may have a copy of their tax return, some taxpayers need a transcript. These are often necessary for a mortgage or college financial aid application.

Here is some information about copies of tax returns and transcripts that can help taxpayers know when and how to get them:

Transcripts
To get a transcript, taxpayers can:

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No More Hide N’ Seek For Taxpayers’ Overseas Assets

IRS Is Ending Its Offshore Voluntary Disclosure Program

The IRS is ending the Offshore Voluntary Disclosure Program (OVDP) this September 28th. This program has given U.S. taxpayers an opportunity to come forward with ‘previously undisclosed foreign income, accounts or assets with the promise and certainty that they will not face criminal prosecution.

Since the program’s inception in 2009, over 56,000 US taxpayers have paid over $11.1 billion in back taxes, interest, and penalties through the OVDP, but the number of participants has steadily declined over the past few years – from 18,000 in 2011 down to only 600 in 2017.

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How Can You Remove An IRS Tax Lien?

What is a Tax Lien?

The Internal Revenue Service frequently files tax liens (federal) against taxpayers with unpaid tax obligations. Federal tax liens are documents that are filed with county governments (often where the relevant taxpayer lives or conducts business) informing the public that the taxpayer owes money to the IRS.

Liens are attached to a taxpayer’s property (both personal property and business property). This means that the IRS will have first dibs on the proceeds of your property such as your home or car. The tax lien can also impair your crediting rating.

However, the good news is that you can remove the IRS lien by following these strategies.

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It Matters In Determining If The Accuracy Penalty Applies – Negligence  VS. Disregard

It matters in determining if the accuracy penalty applies when negotiating with the IRS. Section 6662(c) and Reg. §1.6662-3(b) provide the following definitions and guidance.

Negligence includes any failure to make a reasonable attempt to comply with the rules or regulations or to exercise ordinary and reasonable care in the preparation of a tax return.

It also includes any failure by the taxpayer to keep adequate books and records or to substantiate items properly.

Negligence Is Strongly Indicated Where:

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How To Avoid Tax Evasion Penalties In Michigan

Tax evasion penalties in Michigan are no laughing matter. It’s easier than you might expect to get yourself into trouble with the Internal Revenue Service (IRS). The main thing is not to be negligent, because legally speaking, it’s no excuse. Stay on top of your taxes.

Don’t procrastinate and don’t avoid opening the mail for fear of what you might find. If you live in Michigan and find yourself in tax trouble, call Ayar Law today at (248) 262-3400 for a free and confidential consultation.

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Effect Of Sequestration On The Alternative Minimum Tax Credit For Corporations

Pursuant to the requirements of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended, refund payments issued to, and credit elect and refund offset transactions for, corporations claiming refundable prior year minimum tax liability, are subject to sequestration.

This means that refund payments and credit elect and refund offset transactions processed on or after Oct. 1, 2017, and on or before Sept. 30, 2018, will be reduced by the fiscal year 2018 6.6 percent sequestration rate, irrespective of when the IRS received the original or amended tax return.

The sequestration reduction rate will be applied unless and until a law is enacted that cancels or otherwise affects the sequester, at which time the sequestration reduction rate is subject to change.

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The Flood That Didn’t Materialize When The IRS Removed The Two-Year Period For Requesting Equitable Innocent Spouse Relief And Granted Relief More Frequently

Innocent spouse relief, which has been available under IRC § 6015 since 1998 (and was available prior to that, in a more limited way, under IRC § 6015(e)), provides three avenues of relief. Section 6015(b) provides “traditional” relief for deficiencies.

Section 6015(c) also provides relief for deficiencies for certain spouses who are divorced, separated, widowed, or not living together, by allocating the liability between the spouses. Section 6015(f) provides “equitable” relief from both deficiencies and underpayments, but only applies if a taxpayer is not eligible for relief under IRC § 6015(b) or (c).

As I reported in my 2001 Annual Report to Congress, the IRS received 46,619 claims for innocent spouse relief in fiscal year (FY) 1999 (i.e., from October 1, 1998, to September 30, 1999). The IRS received 54,402 claims for relief in FY 2000.

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Plug-In Electric Drive Vehicle Credit (IRC 30D)

Internal Revenue Code Section 30D provides a credit for Qualified Plug-in Electric Drive Motor Vehicles including passenger vehicles and light trucks.

For vehicles acquired after December 31, 2009, the credit is equal to $2,500 plus, for a vehicle which draws propulsion energy from a battery with at least 5-kilowatt hours of capacity, $417, plus an additional $417 for each kilowatt hour of battery capacity in excess of 5-kilowatt hours. The total amount of the credit allowed for a vehicle is limited to $7,500.

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IRS Announces Six Large Business And International Compliance Campaigns

The IRS Large Business and International division (LB&I) has announced the approval of six additional compliance campaigns. LB&I announced on January 31, 2017, the rollout of its first 13 campaigns, followed by an additional 11 on November 3, 2017, and five more on March 13 of this year.

LB&I is reviewing legislation enacted on December 22, 2017, to determine which existing campaigns, if any, could be impacted as a result of a change in the controlling statutory framework. Information regarding any identified impact will be communicated after that analysis has been completed.

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