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Tag Archive for Offshore Accounts

IRS Amnesty; The Offshore Voluntary Disclosure Program Explained In Less Than 5 Minutes

Richard Lehman, Tax Connections

American citizens and residents often have placed funds in “foreign bank accounts” in banks all over the world. There is a requirement that all of these foreign bank accounts be reported to the United States on an annual basis and that United States income taxes be paid on all of these bank deposit funds.

Many American taxpayers who have been unaware of this requirement are now being pursued for taxes and penalties for not reporting their foreign bank deposits. There are two Internal Revenue procedures that will permit American taxpayers, who have not properly reported their foreign bank deposits, and the income therefrom, to come forward and report their foreign bank deposits. This avoids significant fines and penalties on a United State taxpayer who has not reported foreign bank deposits. Read more

Panama Papers – Global Effects Thus Far & Continuing Impact

Ron Marini

In April 2016, we posted “Huge Leak From the Panamanian Law Firm Mossack Fonseca!” where we discuss that the offshore planning world was set on fire with the news that 11 million documents were leaked from the Panamanian law firm Mossack Fonseca.

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The Choice: Amnesty Or Quiet Disclosure For Foreign Bank Accounts: Criminal Tax Evasion, Negligence, Or Ignorance?

Preliminary Introduction For TaxConnections Global Internet Tax Summit, September 21-25, 2015

The most recent IRS push to close “the Gap” between collected U.S. tax revenue and the total tax revenue which should be reported by U.S. citizens and alien residents of the United States has focused on offshore income concealed in foreign or offshore accounts.

U.S. citizens are liable for U.S. taxation on all income realized globally, regardless of the foreign jurisdiction in which their funds are deposited in foreign accounts.  U.S. citizens are not only liable for U.S. tax on such foreign sources of income, they are required to report all funds in excess of $10,000.00 on deposit in foreign accounts over which they have “signature authority” even if they only have a nominal “financial interest” in the Read more

Bank Leumi Enters Into Non-Prosecution Agreement With DOJ; Agrees To Release More Than 1,000 U.S. Account Holder Names

In order to avoid a fate similar to UBS, Bank Leumi recently admitted to engaging in some tax “hanky panky.” One of the largest banks in Israel, Leumi admitted that it helped U.S. taxpayers evade their taxes. How so? By helping these individuals to hide their income and assets in offshore accounts in Israel and in other parts of the world.

This did not come without a price – a steep one. To account for its criminal conduct, Bank Leumi Group will pay the IRS a whopping $270 million in fines and an additional $ 130 million to New York’s Department of Financial Services. The terms of the deal are strikingly similar to the one that UBS entered into a while ago with the United States – an admission of wrongdoing in exchange for immunity from prosecution. This is what is referred to colloquially as a “deferred prosecution agreement.” Read more

Playing Russian Roulette With The IRS: Zwerner Learns The Cost of Hidden Offshore Accounts

Whether you have chosen to hide your account willingly or failed to file an FBAR by mistake, you may not know the full ramifications of your activities or your best course of action now. If you haven’t heard the horror stories yet, you’re about to have a couple to remember. For those who have kept an offshore account secret, there are three options: quiet disclosure, OVDP, or the streamlined offshore procedures. Some may even feel they have a fourth option: keeping the account a secret. The average person may have a hard time deciding what course of action they should take. It may not seem to matter much, but Charles Rettig gives us two frightening examples in his articles, “Jury Determines 150-Percent FBAR Penalty” and “U.S. Seeks FBAR Related Forfeiture of $12 Million!” These stories teach an important lesson, but first, let’s discuss proper offshore account Read more

Got’cha! Delinquent Taxes Owed to IRS, Now Owed Indefinitely? What About Tax Non-Compliant Expatriates?

It was recently reported in the press that the Social Security Administration was collecting old debts of many deceased persons by intercepting the tax refunds of their children. After much unwanted publicity, the Social Security Administration announced it would stop doing this with regard to debts that were over ten years old. What implications does this case raise for tax noncompliant expatriates?

The case of the Social Security Administration is quite alarming and raises serious concerns for persons with unpaid US tax liabilities. It is widely reported and recognized that there has been a vast increase in expatriations. I suspect that some expatriations will involve taxpayers who were not fully tax compliant and I foresee that this area is ripe for IRS audit and controversy. Read more

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

Transitional Treatment Under OVDP

1. What is the purpose of transitional treatment under OVDP?

Transitional treatment under OVDP allows taxpayers currently participating in OVDP who meet the eligibility requirements for the expanded Streamlined Filing Compliance Procedures announced on June 18, 2014, an opportunity to remain in the OVDP while taking advantage of the favorable penalty structure of the expanded streamlined procedures.

2. When am I considered to be currently participating in an OVDP for purposes of receiving transitional treatment?

A taxpayer is considered to be currently participating in an OVDP for purposes of receiving Read more

OVDP — IRS Commissioner Offers Hope For The Minnow

On June 3, 2014 the new IRS Commissioner, John A. Koskinen indicated there may be hope for the numerous US persons who “non-wilfully” did not properly report their offshore assets and financial accounts. The relevant text of his remarks, is reproduced below. The full report can be accessed here. Maybe there is hope for the sea of minnows! Let’s stay tuned. I will be curious to know whether the contemplated “modifications” to the OVDP will address recompense for those taxpayers who have completed OVDP and paid the penalties now viewed as inappropriate.

“Now, while the 2012 OVDP and its predecessors have operated successfully, we are currently considering making further program modifications to accomplish even more. We are considering whether our voluntary programs have been too focused on those willfully Read more

“Foreign” Online Gambling Accounts – IRS Says FBAR Filing Is Required

Given all the press surrounding “Report of Foreign Bank and Financial Accounts” or so-called FBARs, by now we all know about what should be reported on an FBAR, right? Well, given the Internal Revenue Service’s latest assertion in United States, v. John C. Hom, maybe we had better start studying once again.

Online Gambling Accounts

In the Hom case, the taxpayer was an avid and professional internet gambler with online gambling accounts maintained with overseas entities: FirePay.com (based in London), PokerStars.com (based in Isle of Man), and Partypoker.com (based in Gibraltar). Overseas gambling accounts were necessary because of US laws that prohibit the interstate operation of betting businesses in the United States, making online gambling technically illegal. The Read more

IRS Targets Americans Living In Israel!

According to Jewish Daily Forward, this upcoming tax season could entail some unpleasant surprises for United States citizens who either live in Israel or who hold bank accounts there.

Filing requirements for these Americans have become more rigorous and the odds of being audited by the Internal Revenue Service are higher than they’ve ever been. In fact, tax accountants working in Israel estimate that almost every American expatriate living in Israel and filing for a child tax credit in their annual return can expect an audit.

“I’ve seen more audits in the past year or two than I’ve seen in the previous 30 years combined,” said Philip Stein, an American CPA working in Israel. “It created a difficult atmosphere both for honest tax preparers and for honest families filing their returns.” Read more

The IRS Will Soon Be Asking Questions PART I — Nominees and FATCA

In my tax practice in the Middle East, it is very common for family members to have legal title to assets they do not own. For example, it is common for a parent to have the eldest son hold legal title to property in which the child has no beneficial interest whatsoever; sometimes the nominee relationship is entered into in an attempt to circumvent forced inheritance shares of Sharia law, or to avoid probate.

What is a Nominee and How Does a Nominee Relationship work?

A nominee is a person or entity named by another party (called a “nominator”) to hold title to a certain property. The nominee is the registered owner of the property but he is not the beneficial owner. All rights and incidents of true ownership belong to the beneficial owner and essentially, the nominee stands in a position of trust to follow the orders of the Read more

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