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Tag Archive for quiet disclosures

Renewing Your United States Passport? BEWARE!

iStock_passportXSmallState Department Turns Over Your Social Security Number & Location To The IRS

Non-compliant United States taxpayers living abroad are getting nervous. If an informant seeking a hefty IRS reward or FATCA doesn’t rat them out first, then the State Department will. This can happen when the non-compliant taxpayer renews his or her US passport.

Traditionally, the functions of the US Treasury and the Department of State were completely separate. However, we are seeing a continued erosion of this distinction as troubling economic times continue. The US passport renewal form mandates that the applicant supply his Social Security Number (SSN) if he has one. 

This is authorized by Internal Revenue Code Section 6039E, enacted in 1986. The legislative history to that section makes clear that over 25 years ago Congress was aware that US persons residing overseas were not filing US tax returns even though required to do so. Congress intended to increase tax compliance of US citizens living outside the United States through its enactment of this tax provision. The IRS has continued to drag its feet in promulgating Treasury Regulations that can offer more guidance. Recently, the IRS has renewed its interest in the topic. In January of 2012, the IRS withdrew old proposed Regulations that had been issued in 1992 and issued new ones dated January 26, 2012. We are still waiting for these Regulations to be finalized over one year later! Read more

“Quiet Disclosures” – Is the Jig Up?

iStock_tax evasionXSmallCertain findings and recommendations by the Government Accountability Office (GAO) about offshore tax evasion and the IRS efforts to combat it have many taxpayers worried. The GAO is an independent, nonpartisan agency that works for Congress and is often referred to as the “congressional watchdog.” It investigates how the federal government spends taxpayer dollars and makes recommendations as to how a governmental agency can be more efficient and effective.

Recently issued GAO report, Offshore Tax Evasion: IRS Has Collected Billions of Dollars, but May be Missing Continued Evasion, provides key information about the IRS’ offshore voluntary disclosure initiatives. More importantly, however, GAO indicates its review of IRS data shows that the IRS is missing what appear to be rampant “quiet disclosure” and “new account” filings.

“Quiet Disclosures” / “New Account” Filings

With a “quiet disclosure”, taxpayers quietly amend past tax returns and FBARs reporting previously unreported income and accounts. With “new account” filings, taxpayers report the existence of any offshore accounts as well as income from the accounts on the current year tax return, without amending any prior years’ returns. They often also disclose the existence of the accounts by filing FBARs for the current calendar year making it appear as if the account was just newly opened.

GAO takes the IRS to task for not finding enough “quiet disclosures” and “new account” filings which lose billions of Read more