Virginia La Torre Jeker | TaxConnections

17 Jul 2013

Can I Be Extradited For Commiting A Tax Crime?

Extradition, the formal surrendering of a person by one country to another country in order that the fugitive may be prosecuted or punished, often depends on the existence of an extradition treaty. While the United States has attempted extradition proceedings in the absence of a treaty, the US courts have generally not supported these attempts and so, the bite of law enforcement may be somewhat limited in the absence of an appropriate extradition treaty.

An extradition treaty is in the nature of an agreement or contract between its signatory countries. Extradition treaties have been signed between the US and over one hundred nations throughout the world.

Most treaties contain a list of crimes for which extradition may be granted such as murder; voluntary manslaughter; rape; unlawful abortion; kidnapping; burglary; larceny; embezzlement; fraud; bribery and so on.

Modern Treaties Permit Extradition For Felony Offenses

The more modern extradition treaties embrace a so-called “dual criminality approach”. Under this approach the act in question must be a crime under the laws of both the USA and the country where the fugitive is taking refuge. Under these treaties, generally speaking, all felonies are extraditable offenses. Such modern treaties also delineate various classes of offenses the commission of which would not be grounds for extradition (these include for example, military and political offenses; offenses carrying capital punishment; crimes that are punishable under only the laws of one of the treaty signatories; crimes committed outside the country seeking extradition; instances when the fugitive is a national of the country in which extradition is sought and so on). Read More

Written by Virginia La Torre Jeker, J.D. | Posted in Individual • OECD • Tax Fraud/Evasion/Crimes

16 Jul 2013

Overseas Taxpayers — When Can I Destroy My Tax Documents?

Many of us wish to clear out old papers and files and this includes getting rid of old tax returns and supporting documentation. The problem is that we never know when it is quite safe to destroy the old tax documents. Unfortunately, there is no bright line rule to answer this question. Taxpayers with foreign (non-US) assets have particular rules to pay special attention to. Overseas taxpayers may also find it more difficult to obtain records from financial institutions located abroad and thus, they should be even more careful with record retention.

General Guidelines

Below are some general guidelines to help determine when it may be permissible to destroy tax paperwork.

First and foremost, I remind clients that in the event of an IRS or State tax audit, the burden of proof is on the taxpayer to provide support for a tax position he has taken on the return. This is especially important when claiming tax deductions. As such, the premature destruction of documents could mean you lose in a tax audit.

The different rules contained in the tax statutes of limitation are very helpful in providing guidance as to the minimum retention periods for tax documents. It is critical that records such as receipts or canceled checks supporting an item of income or a deduction be kept until the statute of limitations expires for that year’s tax return. With this in mind it is important to remember that often, banking records and trading accounts are online and if one closes out the Read More

Written by Virginia La Torre Jeker, J.D. | Posted in Individual • Tax Tips

12 Jul 2013

FATCA Interview With Bill Yates – Former Attorney, Office Of Associate Chief Counsel (International), IRS – Continued

This Post continues the interview with Bill Yates:

Jeker: By the way, where are all of these FBARS kept, anyway?

Yates: Let’s talk about that later, OK?

Jeker: OK. Now go on, please.

Yates: Anyway, we ran into trouble from the start. In general, section 6038D requires any individual who holds an interest in a foreign financial asset or assets which an aggregate value that exceeds $50,000 (or such higher dollar amount as the Secretary may prescribe) to report the interest on a form attached to the individuals tax return for the year for taxable years beginning after or March 18, 2010. We had just been assigned the project. We knew there was no way we were going to have a form ready for anyone who had a short taxable year beginning after March 18, 2010. That was totally unrealistic. So, we had to come up with transition rules for people that had a reporting requirement, but no form to satisfy the reporting requirements. In the end, Form 8938 didn’t get released until November, 2012.

Jeker: Why was it going to take you so long? Read More

Written by Virginia La Torre Jeker, J.D. | Posted in FATCA • IRS

11 Jul 2013

FATCA Interview With Bill Yates – Former Attorney, Office Of Associate Chief Counsel (International), IRS

Today’s blog post is the first of a several-part interview that provides valuable insight from Willard (Bill) Yates, who recently retired from the Office of Associate Chief Counsel (International), Internal Revenue Service after 31 years of service. During his tenure as a Chief Counsel Attorney, Bill was the recipient of 10 awards, including the Albert Gallatin Award, Treasury’s highest career service award. The Gallatin is awarded only to select federal employees who served twenty or more years in the Department and whose record reflects fidelity to duty. Bill received the Gallatin award for his work throughout his IRS career, including his work on implementation of some of the compliance requirements of the Foreign Account Tax Compliance Act (FATCA).

Most of Bill’s career at IRS focused on offshore compliance, including his participation in a massive overhaul of outdated foreign trust reporting requirements Bill was the principal drafter of the regulations under section 679, covering foreign trusts with US beneficiaries, Notice 2003-75, RRSP and RRIF Information Reporting and Notice 2009-85, Guidance for Expatriates Under Section 877A.

Our focus today will be on Bill’s experience as part of the three-person team charged with the responsibility for creating Form 8938 concerning reporting of so-called “specified foreign financial assets”, as well as gleaning his overall opinion about FATCA , from a policy and practical perspective.

Jeker: Bill, one of the most important aspects of your work as an IRS attorney in the Office of Chief Counsel (International) was drafting Treasury Regulations and other forms of guidance that implement tax laws enacted by Congress. Many readers don’t understand much about Treasury Regulations and how they work. Can you explain the force of Treasury Regulations, the particular challenges Chief Counsel attorneys experience and what they go through when drafting these Regulations? Read More

Written by Virginia La Torre Jeker, J.D. | Posted in FATCA • IRS

28 Jun 2013

Foreign Housing Exclusion –IRS Announces Housing Cost Limits for Tax Year 2013

Overview

A foreign housing exclusion is available for certain overseas housing expenses that exceed a “base housing amount”. Generally, the allowable housing expenses are the reasonable expenses (such as rent, utilities other than telephone charges, and real and personal property insurance) paid or incurred during the year by the taxpayer, or on his behalf, for foreign housing. The housing costs include those of the spouse and dependents if they lived with the taxpayer. Allowable housing expenses do not include the cost of home purchase or other capital items, wages of domestic servants, or deductible interest and taxes. Some taxpayers mistakenly believe if they use only a portion of the employer-provided housing amount, they can still deduct the full amount permitted under the foreign housing exclusion rules. This is not so. To be eligible for exclusion, the taxpayer must actually incur these amounts in rental payments (for example, paid to the landlord on his behalf by the employer or paid by the taxpayer to the landlord from his employer-provided housing amount).

Calculation Rules

To be eligible for exclusion from tax, the allowable housing expenses must exceed a so-called “base housing amount”. The base housing amount is 16 % of the maximum Foreign Earned Income Exclusion amount (FEIE). For 2013, this “base housing amount” is US$15,616 (computed as follows: 16% x US$97,600 – the 2013 FEIE amount). Reasonable foreign housing expenses in excess of the ”base housing amount” are eligible for the exclusion, but such Read More