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October 2012 Archives

IRS Examiner Seeks Payoff

Being examined by the IRS may be a financial institution's worst nightmare, so when former IRS International Examiner Dennis Lerner offered to influence a favorable outcome for the bank he was auditing in exchange for a high-paying private sector job, it may have seemed like a dream come true. Just over one year after the audit concluded, however, there was a rude awakening for all parties involved.

Chasing Away Tax Dollars?

The IRS's concerted efforts to bring tax dollars on foreign-earned income back into the system may have some unforeseen outcomes. Between the increasingly strict penalties imposed by the various Offshore Voluntary Disclosure Programs and U.S. efforts to establish Foreign Account Tax Compliance Act (FATCA) agreements with other countries - taxpayers are starting to resent the U.S.'s ability to tax them on their worldwide income and the resulting consequences. In response, some U.S. taxpayers are choosing to give up their U.S. passports, green cards, and citizenship.

IRS's Fast Track Settlement Program

Anyone who has ever been audited by the IRS knows that the process can be a long and frustrating series of document requests, meetings, and waiting. The Fast Track Settlement Program, initiated in certain locations as a pilot program by the IRS in early 2011, is now available to all taxpayers who meet the program's requirements. Participation in the program does not waive any traditional appeal rights.

IRS Group Scrutinizes High Wealth Individuals

The IRS's Global High Wealth Industry Group (GHW), a division of the IRS's Large Business and International Group, was formed to specifically target and audit high net worth individuals and their related business and entities. Currently, the 100+ Revenue Agents in the group are examining over 100 individual cases, involving more than 500 tax returns.

US and UK Agree to Share Information

In a bilateral agreement signed by the U.S. and the U.K. on September 14, 2012, the two countries agreed to implement the cooperative information reporting and tax withholding provisions of the Foreign Account Tax Compliance Act (FATCA). The agreement imposes common reporting and due diligence standards on financial institutions within the two countries.

Streaming Video Providers Subject to Texas Sales Tax

On July 31, 2012, the Texas Comptroller issued a letter ruling concluding that businesses that stream videos over the internet to customers in Texas are subject to state and local sales tax as a cable television service provider. The letter ruling can be found on the Comptroller's State Tax Automated Research database (STAR), indexed as STAR Accession No. 201207532L.

Your Foreign Bank Account Statements Are Not Privileged in the Fifth Circuit

Joining the Seventh and Ninth Circuits, the U.S. Court of Appeals has held that taxpayers have no Fifth Amendment privilege against self-incrimination when the government subpoenas their offshore bank account records. In re: Grand Jury Subpoena, No 11-20760 (5th Cir. September 21, 2012), the Fifth Circuit reversed the District Court's order quashing the government's grand jury subpoena on the grounds that the Required Records Doctrine excepted the bank records from the privilege against self-incrimination.

The IRS and Your Credit Report

In response to a request from Senators Baucus, Hatch, and Grassley, the Government Accountability Office (GAO) released a report regarding factors that Congress should consider in implementing a bill that would allow the IRS to report tax debts to credit bureaus such as Equifax, Experian, and TransUnion. The September 2012 report can be found here: (www.gao.gov/assets/650/647988.pdf).

Home sales and tax consequences: myth and reality

Selling a house is not as easy as it once was, before the real estate crisis. Amid the landscape of underwater mortgages, foreclosures and other pain points, actually closing the deal to sell your home is definitely an accomplishment.

Offshore account reporting rules force hard decisions

A financially strapped U.S. government is going after the taxation of offshore accounts like never before. The goal is supposedly to prevent tax evasion. But there is legitimate concern that the IRS is being so aggressive that financial dealings with the rest of the world could be harmed.

Failure to File Can Result in Criminal Charges

There are a number of very good reasons to be accurate and prompt when filing one's tax returns and the Internal Revenue Service attempts to motivate us with either a stick or a carrot. Some people prefer the carrot approach and file electronically early to get a tax refund quickly. Others forgo the carrot and either file late, or don't file a return at all.

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