Recent headlines announced the “piercing” of Swiss banking secrecy laws to reveal many Americans owning huge, unreported income offshore.

But it’s not just the big guys who are subject to reporting: Any US citizen with ownership or control over an account or accounts worth more than $10,000 during the year must report them to the IRS. The purpose of these reports is to help the government identify folks who may have income from foreign sources that they are not reporting, as well as tracking money used or produced in illegal acts.

One customer of ours didn’t realize that since she and her brother had inherited an apartment building in Italy, and they had control of the bank account for the management of the building, that she was subject to the requirements even though the brother was an Italian citizen and she was only a “silent partner” in the business.

The deadline for filing the 2009 “Report of Foreign Bank and Financial Accounts” (FBAR) is June 30th. The penalty for not reporting can be very heavy, including criminal penalties – so see a tax professional right away to determine if you need to file, and for help in correctly submitting the forms, or read more at http://www.irs.gov. Penalties range from a $10,000 fine to $100,000 or half the value of the account(s) and criminal penalties of up to $500,000 and 10 years in Federal prison — so make sure you are in compliance.

(originally posted at http://www.dennyllp.com)


May 10th, 2010 at 1:50 pm | Comments & Trackbacks (0) | Permalink

The IRS has released an 80-page document outlining many commonly-used tax dodges. Remember, if something sounds too good to be true (like slave reparation credits) — it probably isn’t.

Anyone who tries to avoid paying taxes by claiming a slave reparation credit, or that paying taxes is voluntary or that an IRS agent’s badge was the wrong color can probably expect an unpleasant experience, according to the Internal Revenue Service.

The IRS issued an 80-page publication outlining some common tax dodges and the court cases disproving the attempts. To underscore the seriousness of the practice, the IRS said that anyone who uses such frivolous excuses and is convicted of avoiding paying their taxes will face fines of $25,000.

You can find the IRS publication THE TRUTH ABOUT FRIVOLOUS TAX ARGUMENTS here.

Originally posted at http://www.dennyllp.com


February 6th, 2010 at 1:59 pm | Comments & Trackbacks (0) | Permalink

One of our clients received an e-mail supposedly from the IRS — and it included two attachments; one a letter purporting to be from the IRS, and the other a form to be filled out and faxed back.

The letter reads, under a pretty silly looking IRS masthead:

Sir/Madam,

Our records indicate that you are a non-resident alien. As a result, you are exempted from United States of America Tax reporting and withholdings, on interest paid you on your account and other financial dealing to protect your exemption from tax on your account and other financial benefit in rectifying your exemption status.

Therefore, you are to authenticate the following by completing form W-4100B2, and return to us as soon as possible through the fax number: +1-646-731-6884.

If you are a USA Citizen and resident, please complete form W-4100B2 and fax it to us, please indicate “USA Citizen/Resident” on the form and return it to us.

When completing form W-4100B2, please follow the steps below

1. We need you to provide your permanent address if different from the current mailing address on your Form W-4100B2 , you must indicate if a non-USA resident, your country of origin to support your non-resident status (if your bank account or other financial dealing has a USA address for mailing purpose).

2. If any joint account holder are now USA residents or Citizen, or in any way subject to USA tax reporting laws, Please check the box in this section.

3. Please complete 1 through 19 and have all account holders, sign and date the form separately and fax it to the   above-mentioned number.

Please, complete Form W-4100B2 ‘attached” and return to us within 1 (one) week from the receipt of this letter by faxing it, to enable us update your records immediately if your account or any other financial benefits are not rectified in a timely manner, it will be subject to USA tax reporting and back up withholding (if back up withholding applies, we are required to withhold 30% of the interest paid to you).

We appreciate your cooperation in helping us protect your exempt status and also update our records.

Sincerely,

Laura Stevens
IRS .Public Relations.

The thing I love about this letter is that it’s not written in American English. Americans don’t refer to USA taxes, ever — they are Federal taxes. They also don’t “rectify” situations, they correct them. The other attachment is the form, “W-4100B2”, is nothing more than an elaborate phishing exercise including asking for your mother’s maiden name, and a list of all bank accounts, account numbers, and a copy of your passport. They would then use this information to drain your bank accounts.

The IRS.gov web site recommends the following actions when you receive e-mail purporting to be from the Service:

How to Report and Identify Phishing, E-mail Scams and Bogus IRS Web Sites

The IRS does not initiate taxpayer communications through e-mail.

  • The IRS does not request detailed personal information through e-mail.
  • The IRS does not send e-mail requesting your PIN numbers, passwords or similar access information for credit cards, banks or other financial accounts.

If you receive an e-mail from someone claiming to be the IRS or directing you to an IRS site,

  • Do not reply.
  • Do not open any attachments. Attachments may contain malicious code that will infect your computer.
  • Do not click on any links. If you clicked on links in a suspicious e-mail or phishing Web site and entered confidential information, visit our Identity Theft page.

How to report phishing, e-mail scams and bogus IRS Web sites
If you receive an e-mail or find a Web site you think is pretending to be the IRS,

  • Forward the e-mail or Web site URL to the IRS at phishing@irs.gov.
  • You can forward the message as received or provide the Internet header of the e-mail. The Internet header has additional information to help us locate the sender.
  • After you forward the e-mail or header information to us, delete the message.

How to identify phishing e-mail scams and bogus IRS Web sites

You may also report misuse of the IRS name, logo, forms or other IRS property to the Treasury Inspector General for Tax Administration toll-free at 1-800-366-4484.

Additional resources


December 5th, 2008 at 11:29 am | Comments & Trackbacks (0) | Permalink