Jail and Draconian CRIMINAL PENALTIES for “victimless crime” of not filing required reports on time.
Scare tactics seem to be the MAIN weapon now. Better results than the 10% reward program for turning in friends, neighbors, ex-spouses and former employers.
Common Knowledge: Impossible to monitor or catch “offenders” _unless_one turns self in, or is turned in by outfits like UBS who blatantly set up & service many accounts If large scale scofflaws are compromised –as in the UBS case, some names are compromised.
BB bluffs and scares. with news releases like this. Making some people very nervous & creating a nice bonus payday for BB Based accountants and tax lawyers. The main object of news releases like the below is to bring in the “big fish” who set up and control offshore accounts of Americans.
“Lenient treatment for offenses.”
Same tactics as the Drug Czar uses to get marijuana smokers to turn in their suppliers! It is now a major crime– more serious than robbery, rape or manslaughter–To try and keep safe and confidential over $10,000 in (most) assets abroad –.
Some Solutions for straight arrows- who want to ensure survival by placing some assets beyond the reach of contingent fee plaintiff lawyers, etc.
1) Buy a house, collectibles or artworks that throw off no income and are non-reportable./for the moment/
2) Acquire a 2nd citizenship and move to a free country.
3) Buy Physical Gold Bullion that is not reportable. See How to Buy and Hide Gold Bullion Offshore by our friends at the Q.
BB says taxpayer still taxable for 12 years after doing this.
Legal experts ask: Can such Regulations (or any laws) still be enforced after former BB Inmates have legally escaped the country and reside permanently in countries having no such tax or reporting laws?
JULY 21, 2009
*IRS Gets Tougher on Offshore Tax Evaders
*By LAURA SAUNDERS
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The Internal Revenue Service has stepped up scrutiny of offshore accounts and foreign income, an enforcement campaign that could sweep up tens of thousands of taxpayers.
The push to recover some of the billions of dollars lost each year to offshore tax evasion goes beyond the government’s high-profile effort to force Swiss bank UBS AG to release the names of 52,000 American account holders in order to nab tax evaders.
The IRS is using a once-obscure tax form called the Foreign Bank Account Report, or FBAR, to force taxpayers to provide information on income they earn or bank accounts they hold overseas.
It is threatening tough action against taxpayers who don’t file the form and has greatly broadened those subject to filings beyond direct owners of offshore accounts.
The requirement applies to U.S. citizens and residents who have offshore accounts totaling $10,000 at any point during the year.
This spring, the IRS announced a Voluntary Disclosure program for people who haven’t been paying taxes on overseas income. The agency warned that those who don’t confess by Sept. 23 will be hit with far bigger penalties. Recently, the IRS has been asking for face-to-face interviews with many who have come forward.
*FBAR Quirks
*Because the FBAR technically is part of the bank secrecy act (Title 31)
Rather than the income tax code (Title 26), it contains traps for those who are used to tax law. Unlike income tax forms, FBAR forms must be received by the due date, not just mailed by it.
There is no electronic filing, and forms must be mailed to a special address in Detroit rather than a taxpayer’s usual IRS service center, although they may also be hand-delivered to a local IRS office.
Unless Congress changes the law, the normal FBAR due date will remain June 30, which is out of sync with the normal tax deadlines of April 15 and October 15 (for those on extension).
Taxpayers who want to challenge FBAR penalties cannot do so in Tax Court, where they don’t have to pay the tax, penalties, and interest up front, notes Chamberlain Hrdlicka’s Sheppard.
Instead, taxpayers must pay the total liability — which can be huge as a result of the penalties — and sue for a refund in U.S. District Court. Also surprising to taxpayers (and perhaps their advisers) is that FBAR penalties are not dischargeable in bankruptcy.
These little-known traps were highlighted in two recent cases, “Williams v. Commissioner” and “United States v. Simonelli“.
Last, most taxpayer data is protected under stringent IRS rules that make unauthorized sharing a felony. FBAR forms are not protected under those rules; instead, they are governed by a different privacy act and may readily be shared with other law enforcement agencies, according to Miller & Chevalier’s Clarke. [Editor: This makes these reporting forms virtual public records!]
In June, the agency announced that the filing requirements apply to investors in an offshore hedge and mutual funds. That caused a backlash, and the IRS agreed to delay the deadline for filing this year’s form to Sept. 23 from the normal due date of June 30.
Now, tax lawyers and accountants say they are being deluged by taxpayers with overseas holdings, worried they will face civil penalties — or even criminal charges.
Christine Ballard, a managing director at tax preparer RSM McGladrey, said the firm will prepare some 1,000 civil FBAR filings this year, perhaps double the number last year, with thousands more in the offing depending on how the IRS interprets some rules on offshore investments.
Criminal attorney George Clarke of Miller & Chevalier in Washington reports a tenfold increase in such inquiries compared with last year.
*The penalties for offshore income violations are now among the toughest in the tax system.* Those who have inadvertently failed to report offshore income, even just a few hundred dollars, could be subject to a $10,000-a-year penalty going back several years.
For those the IRS considers willful tax evaders, it is much worse. The IRS can impose a penalty of $100,000, or one-half the value of the account, whichever is greater, per year.
“I just helped a 67-year-old man who cannot sleep, he’s so nervous,” says New York certified public accountant Stuart Kessler. “He’s saying, ‘What if they find me before I turn myself in?’”
No one knows how many new forms will be filed before the Sept. 23 deadline, but it is expected to be much higher than the 386,000 forms filed last year. Those who already paid taxes on foreign income but didn’t file the form may escape civil penalties, the agency says.
Meanwhile, those who didn’t pay taxes but come forward voluntarily won’t be recommended for criminal prosecution.
Tax advisers say IRS agents are using a prepared list of 30 questions
<//online.wsj.com/articleSB124804796387763807.html#QUESTIONS> to grill taxpayers who come forward to confess to nonpayment of tax under its Voluntary Disclosure program.
Among other things, they are asked who told them about the foreign bank account or investment, who helped open it, and whether there is a credit card tied to the accounts. One goal is to figure out who is promoting these offshore accounts. The IRS says there is no standard list of questions.
The Sept. 23 deadline applies to two groups of taxpayers. One consists of U.S. citizens and residents who haven’t been paying tax on foreign income. The IRS wants these taxpayers to confess under the voluntary disclosure program. All applications are inspected first by the criminal division of the IRS.
The other group includes those who have been paying tax on foreign income but not filing the form because they were unaware or believed it wasn’t required.
Among others, it now includes U.S.citizens and residents with signature authority over a foreign account, such as executors or employees of a business; those with interests in foreign partnerships or controlled foreign corporations; beneficiaries and even potential beneficiaries of trusts, and investors in foreign-based Individual Retirement Accounts and Pension plans.
Although taxpayers are exempt from filing if the total value of accounts never tops $10,000 at any point during a year, there is no exemption for even small amounts of income if the account goes above that point.
The IRS also allows an exemption for non-income-producing properties, such as artwork. The agency has suspended, just for this year, a provision forcing foreigners doing business in or with the U.S. to file as well.
Says Eileen Sherr, a manager of the American Institute of Certified Public Accountants in Washington: “If your daughter spends her junior year abroad and has an account there, or your Brazilian wife never closed an account in São Paulo, you might have an FBAR filing requirement.”
Filings are likely to jump this year because of multiple filings on the same accounts, especially by trust firms and money managers, she says, adding, “If there are 30 potential beneficiaries of one trust, even children, all may have to file or risk the $10,000 nonfiling penalty.”
Taxpayers trying to bring a foreign account into compliance are finding the process difficult because it can mean getting up to six years’ worth of bank statements from overseas institutions. The statements are necessary to determine how much tax and interest is due.
It’s also expensive. Mr. Kessler, the New York CPA, cites one recent voluntary disclosure case that cost about $20,000 in advisers’ fees to resolve, on top of taxes, interest, and penalties. A complex case could run more than $50,000, says Miller & Chevalier’s Mr. Clarke.
The price for not complying is even stiffer. In a statement, the IRS detailed the total amount of tax and penalties due on a $1 million offshore account that generated $50,000 in unreported annual income for the past six years.
If the taxpayer were to come forward under the Voluntary Disclosure program ending in September, the figure would be $386,000 plus interest. But if the IRS discovers this taxpayer on its own, he or she could face as much as $2.3 million in tax and penalty plus interest.
Such a taxpayer is also subject to criminal prosecution, the IRS added. [Editor: The criminal penalties are so severe that convicted “offenders” are destined, like Irwin Schiff, to die of old age in prison The crime? Not filing a report on time—even if they filed tax returns and paid taxes.]
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