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The Liberal Elites: The Real Reason Why They Will Never Leave the USA

Why the Liberal Elites Will Never Leave the USA Despite Claiming Otherwise

5th amendment fbar tax for celebrities that want to expatriate now that Donald Trump has been elected President of the United States of America

With the presidential election in our rear view mirror, we are now able to turn our attention to those in the entertainment industry — and their veiled threats of leaving the United States.

Many of the liberal elite have threatened to leave the United States in the event of a Trump victory.

 I say that they are bluffing.

In truth, these entertainers have enlisted the assistance of the liberal media as an excuse for more face time and for them to remain relevant as “celebrities”.  Late night talk show hosts have also jumped in, as well as mainstream pundits.

Despite Trump’s resounding victory, liberal elites continue their rants of “racist” “homophobe,”“sexist,” “islamophobe, and “xenophobe” as well as the absurd assertion that Clinton should have been anointed the first woman President since she carried the popular vote. Please see the United States Constitution!

Hilary’s epitaph should now read:

“To me, being a gangster was better than being the president of the United States.” Henry Hill: “Goodfellas” 1990.

If history teaches us anything about entertainers, bombastic statements are rarely, if ever, followed up with any meaningful action. While Rosie, Miley, Amy, Whoopi, Chelsea, Samuel, Brian, Al, and others, publicly excoriated the President Elect throughout his campaign, vowing to leave the United States in the event of a Trump victory, it would appear these declarations were nothing more than veiled threats designed to influence the outcome of the election and enhance the respective entertainer’s stock.

The following examples show just how desperate and disingenuous these pseudo intellectuals are and also demonstrate the liberal elite’s penchant to evasively pivot when responding to a simple question that requires an honest answer.

  • Whoopi Goldberg  recently walked back her threat to leave the United States by stating on the View that I’m not leaving the country I was born and raised in,’ The cryptic statement, however, fails to answer the  question: Whoopi, why are you still here?
  • Likewise, Miley Cyrus recanted her promise to leave the country the morning after the election by treating us to a teary eyed emotional video where she conceded the election results and accepted Trump as her President. Like Whoopi, Miley has offered no explanation why she is still here.
  • After being called out on her promise to leave, Amy Schumer offered up a lame excuse in an Instagram statement that the threat of leaving was just a ‘joke.’ Despite dubious explanation, Schumer could not resist the “pivot” by attacking Trump supporters with the following rant: ‘Anyone saying pack your bags is just as disgusting as anyone who voted for this racist homophobic openly disrespectful woman abuser.’

My favorite and perhaps the most creative non-responsive answer came from Samuel L. Jackson.

  • After referring to Trump as a ‘motherf****r’ during a skit on the Jimmy Kimmel show, Jackson threatened to move to South Africa if Trump was elected. However, Jackson later announced via twitter that he is staying, but not without first expressing his indignation for those pressing him for an answer. Jackson said ‘When you learn the difference between My Actual Opinion and A Kimmel Skit….. Maybe we can talk. Till then, I’m Barbed Wire Up Your Asses!! [sic].’  Jackson also seized the moment to Pearl Harbor Trump and his supporters comparing Trump’s victory to the introduction of the Jim Crow laws, which enforced segregation: ‘The Last Time I survived Jim Crow I was Poor.’ He then added: ‘Guess what Motherf*****S.. Not This Time!! Enjoy your newfound win, Bigly!!’
  • Chelsea Handler offered a more civil, but equally disingenuous explanation on her Netflix Show as to why she will not be leaving the United States by stating: ‘ It’s easy to throw in the towel and say that we’re going to leave, or I’m gonna move to Spain.’ She added: ‘Because I want to move to Spain, I really, really want to move to Spain right now. But everyone in my office is like, “you have a responsibility. You have a voice, you need to use it and you have to be here.”’Chelsea, you still haven’t answered the question. Why are you still here?

There are also others who have threatened to leave in the event of a Trump victory.

Like their colleagues, these entertainers have failed to explain why they are still in the United States, instead electing to pivot.

  • Singer Cher, who threatened to move to the Planet Jupiter, has yet to address the question of why she is still living in the United States. Instead, Cher, who has not had a lucid thought since her divorce to the late Sonny Bono, provided her flock via social media with the following words of wisdom: ‘The world will never be the same. I feel sad for the young. [Trump] will never be more than the toilet; I’ve used as a symbol 4 Him. U Can’t Polish [a t***].’

The preceding examples illustrate the hypocrisy behind the liberal mantra: “When they go low, we go high.”  This list is by no means complete, but just a sampling.

The lame excuses as well as the assault on those who dare disagree with these traitors and other dilatory tactics make one thing clear. The liberal elites will never provide us with an honest answer as to why they will not leave. But do not despair. The real answer may be found in the provisions of the Internal Revenue Code and the application of the Exit Tax.

Here is how it works. For purposes of this discussion we will assume expatriation takes place in the year 2016.

A U.S. citizen who renounces her citizenship or a long term resident who terminates her U.S. resident status may be subject to what is sometimes referred to as an “Exit Tax.”  The Exit Tax only applies to “Covered Expatriates.”

For 2016, an individual is considered to be a Covered Expatriate if any of the following apply:

  1. Your average annual net income tax for the preceding 5 tax years ending before the date of expatriation or termination of residency is more than a specified amount adjusted for inflation. (For 2016 the average annual net income tax amount is $161,000);
  2. Your net worth is $2 million or more on the date of expatriation or termination of long term resident status; or
  3. You fail to certify on Form 8854 that you have complied with all U.S. federal tax obligations for the five years preceding the date of your expatriation or termination of your residence.

Based upon the above criteria and Celebrity Net Worth, the celebrities mentioned in this discussion would be considered Covered Expatriates.

If an individual is considered a Covered Expatriate, that individual is subject to income tax on the net unrealized gain from the sale of the individual’s property.

The IRS treats all property owned by a U.S. citizen or long term resident as if the property was sold at its fair market value on the day before expatriation. In other words the individual is taxed on the market to market net gain of all his or her assets.

The total amount of gain is reduced by an exclusion amount which is adjusted for inflation. For 2016 the exclusion is $693,000. The net gain, after allowance for the exclusion,is subject to income tax at the capital gains rate of 20% plus an additional 3.8% surtax. This rate is based upon the assumption that the Covered Expatriate is subject to the top tax bracket of 39.6%.

To illustrate how the Exit Tax is applied, consider the following example:

John, a famous Hollywood actor and producer, is considered a Covered Expatriate.  During a radio interview with ABC news on September 12, 2016 John threatens he will leave the country if that “asshole” Trump is elected. John follows through on his threat. On November 13, 2016 John renounces his U.S. citizenship. The fair market value of all property owned by John immediately preceding his expatriation is $75 million. John’s basis in the property is $25 million. The IRS will treat John’s property as if sold on the day before expatriation. The net unrealized gain on the “deemed” sale is $50 million. After allowance for the $693,000 exclusion, the net gain recognized for tax purposes is $49,307,000.Since John is in the top tax bracket of 39.6%, he would be subject to a capital gains rate of 20% and an additional 3.8% surtax. As such, John would owe $11,735,066.At first blush, a tax of 23.8% may seem a small price to pay in order to be free of Trump’s despotic rule, provided the assets are liquid. In this case, however, John’s assets primarily consist of non-liquid assets, such as real estate, luxury automobiles, a personal jet, two yachts, and a collection of antique cars. A “deemed sale” of these assets results in a cash crisis, causing John to “fire sale” his Ferrari, private jet, 2 yachts and his mountain home in Steamboat Springs, Colorado in order to satisfy the Exit Tax.

The above example provides insight as to why U.S. entertainers will never leave the states.

I would be remiss if I did not mention Al Sharpton. No A-List of celebrities would be complete without him. For those of you who are saddened at the prospect of Al Sharpton expatriating, you can relax. Mr. Sharpton is not going anywhere.  Al Sharpton, considered by some to be a serial tax evader, would be considered a Covered Expatriate based upon his reported net worth of $5 million. Furthermore, Mr. Sharpton’s unpaid federal income and employment taxes are substantial and well chronicled. There is no indication, at least in the foreseeable future that he will pay up.While Obama has been able to provide cover and insulate Sharpton from IRS Collections for the past eight years, the situation has now changed.  “Just Keepen’ It Real.”  Now back to Sharpton as a Covered Expatriate.

Since Certification is an integral part of the expatriation process, “Big Al” or Al “Slim Shady” Sharpton as he is affectionately referred to by radio talk show host, Curtis Sliwa, is currently unable to Certify on Form 8854 that he has complied with all U.S. tax obligations for the preceding five years. Slim Shady has two choices. He can pay his back taxes as well as the Exit Tax and Certify on Form 8854 that he is in compliance, at which point he would be free to leave the U.S. The alternative would be for him to falsely Certify on Form 8854 that he is in compliance and move to a non-extradition country. The latter alternative, however, may be foreclosed if Sharpton’s passport is revoked in accordance with Section 7345 of the Internal Revenue Code.  To date, no response. Cat got your tongue Al?

Finally, I’m a “little bit” disappointed that De Niro has yet to depart for Italy as rumored. Bob’s October 8, 2016 video rant has many in the public concerned. This Goodfella seems to have come unhinged.  Nevertheless, we still do not have an answer. Bob, why are you still here?

The liberal elites would have you think that they are selfless and concerned with championing the causes of those who are less fortunate and converting the masses who voted for Trump. These charlatans would also have you believe that they are concerned with the equitable treatment of all and the redistribution of wealth.  Unfortunately, they are not interested in redistributing their wealth nor are they interested in paying the “vig” in order to leave the States.

While it’s unfortunate that we are stuck with these hypocrites, at least for the foreseeable future, the public can take solace in knowing the real reason why we are unable to rid ourselves of these Hollywood elites. It’s the Exit Tax.

Serious about leaving?  Put up or shut up!

© 2016 Anthony N. Verni, Attorney at Law, Certified Public Accountant

Wednesday, November 16, 2016

 

 

 

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Taxation of Professional Athletes & Entertainers – Are You At Risk?

An athlete running, thinking about the reporting of taxes to the irsThe Risks of Professional Athlete and Entertainer Taxation

Global sports and entertainment have created many new opportunities as well as challenges for those individuals, who are multi-jurisdictional earners.  The IRS has taken a keen interest in cross border sports and entertainment in the context of U.S. tax enforcement. This scrutiny has been expanded to include directors, producers, technicians, managers, promoters as well as others.

Recognizing that professional athletes and entertainers  are globally mobile  and have unlimited earning capacity, the IRS  formed a task force charged  with the  responsibility of improving federal tax compliance among high income athletes and entertainers, through taxpayer awareness and increased enhanced enforcement efforts.

Other countries are likewise interested in professional athletes and entertainers, who earn income while performing services in venues outside of the U.S. Recent global tax enforcement initiatives signal that athletes and entertainers who evade taxes within and without the United States will be vigorously pursued. Specifically, the standards contained in FATCA and the Common Reporting Standards will facilitate the mutual exchange of information, transparency and the detection of those who are determined to evade paying their fair share of income taxes to the United States and its global partners.

In determining whether a professional athlete or entertainer is subject to U.S. income tax, the IRS will always key in on whether the athlete or entertainer is a resident for federal income tax purposes. The IRS will also look at how the income is characterized, whether the athlete or entertainer made use of a shell company or other device to avoid paying U.S. tax and whether the individual unreasonably relied upon a tax treaty or income allocation.A map of the world where U.S. expatirates live outside the United States but are still required to pay foreign income tax to the IRS

A U.S. tax resident is subject to U.S. income tax on his or her worldwide income.

As such, whether an athlete or entertainer is a resident for U.S. income tax purposes is the critical starting point.  Generally, U.S. citizens and permanent resident aliens are considered U.S. tax residents and subject to federal income tax on their worldwide income.

In certain circumstances even a non-resident can be considered a U.S. tax resident if the individual spends the requisite number of days in the United States. A non-resident who is physically present in the United State for 183 days or more during a calendar year is considered a U.S. tax resident. A non-resident can also meet the physical presence test under a formula. If an individual is present in the United States for less than 183 days during a single tax year he or she may nevertheless be considered a U.S. tax resident in that year if the individual spends at least 31 days in the United States in the current year and, by application of a certain carryover formula, where the number of days in the United States in the current year plus the number of days from the prior two years equals 183 days or more.

Finally, a non-resident, who files and signs a joint tax return with a U.S. citizen or legal permanent resident, may also, be subject to federal income tax based upon his or her worldwide income.

Residency for federal tax purposes is significant to the IRS for the following reasons:

      1. Athletes and entertainers, who are considered tax residents of the United States, are subject to U.S. income tax on their worldwide income. As such, the IRS is particularly interested in determining whether the athlete or entertainer received income from foreign sources, and if so, whether that income was properly reflected on the individual’s U.S. tax return.
      2. Foreign athletes and entertainers, who are considered non-residents for U.S. tax purposes, are only subject to U.S. income taxon compensation received for services rendered in the United States, as well as royalties, rents from investments in U.S. real property, dividends, interest, and income derived from U.S. business operations. The IRS will focus on these individuals to determine if the foreign athlete or entertainer is reporting his or her U.S. source income. The IRS will also scrutinize the number of days a foreign athlete or entertainer spends in the United States for purposes of determining whether the individual meets the physical presence test.The unintended consequences of a non-resident athlete or entertainer, who is present for 183 days or otherwise meets the physical presence test under the formula, can be financially devastating.

Many professional athletes and entertainers may not be aware of their U.S. filing and reporting obligations if they are represented by a tax professional that is unfamiliar with cross border tax reporting.  Too often, athletes and entertainers rely upon professional agents and management companies for direction in selecting legal, accounting and tax professionals to assist them with their financial affairs.  Relying upon a professional agent or management company in the selection of a tax professional is inherently suspect and should be avoided at all costs.  The simple reason for this is lack of independence. Moreover, while a recommended tax professional may have a general understanding of U.S. taxation, the individual may not be familiar with the mechanics of taxation in a multi-jurisdictional context.

Similarly, athletes and entertainers who rely upon friends or family in vetting and selecting a tax professional may eventually find themselves at odds with the Internal Revenue Service. An athlete or entertainer may also continue to use his or her existing tax professional out of loyalty, due to a personal relationship or based upon the assumption that the tax professional has the requisite experience, skill and knowledge related to cross border earners. However well intended, these methods for selecting a tax professional can result in adverse tax consequences.

A an athlete or entertainer, who fails to comply with his or her U.S. Tax and filing obligations can be subject to civil and criminal penalties. In cases where the athlete or entertainer has engaged in a systematic pattern of non-compliance, the individual may be subject to criminal prosecution, imprisonment and heavy fines. The IRS is particularly interested in the prosecution of famous athletes and entertainers, since the IRS considers high profile prosecutions a strong deterrent to potential tax cheats.

Running afoul of the U.S. tax laws may also result in loss of work visas and deportation of green card holders and individuals in the United States on visas. In addition, where the IRS has assessed income tax, an athlete or entertainer may not be permitted to leave the United States until federal tax liability is satisfied.

If you are a professional athlete or entertainer, you should speak with a tax attorney. Even athletes or entertainers who are currently in high school or college and anticipate signing a lucrative contract, it would be wise to speak with a tax attorney for purposes of evaluating the tax implications.

A final word of caution unrelated to the topic of taxation. Never permit an agent, accountant, attorney or financial manager to manage your financial affairs or have access to your assets.  The investment, reporting and custody functions should always remain segregated as a safeguard against potential misappropriation of assets or making ill-advised investments. Any appearance of a conflict of interest should be a red flag. If a financial advisor, attorney or accountant suggests an investment, you should always get an independent attorney opinion prior to parting with your hard earned money.  Just ask Hall of Famer, Scotty Pippen or superstar singer Rihanna.

© 2016 Anthony N. Verni, Attorney at Law, Certified Public Accountant

November 12, 2016

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FBAR Collections Ten Billion and Counting

IRS Releases 2016 Offshore Voluntary Compliance Statistics

irs headquarters sign in washington d.c. a place for fbar reporting and becoming Fatca compliant

On October 21, 2016 the IRS released the latest statistics on Taxpayers who have made disclosures under the Offshore Voluntary Disclosure Program (OVDP) or by using the Streamline Procedures.

According to the News Release, a total of 55,800 taxpayers have come into compliance since 2009, resulting in the collection of approximately $9.9 billion in taxes, interest and penalties.

An additional 48,000 Taxpayers have made disclosures using the Streamlined Procedures, paying $450 million in taxes, interest and penalties.

In its News Release, the IRS implies that IRS detection is inevitable for those who fail to come forward.

The foregoing is based upon Taxpayer information received by the IRS through a number of initiatives including:

(i) inter-governmental agreements (IGA’s) executed between the U.S. and its international partners under FATCA providing for the exchange of Taxpayer  financial information;

(ii) Taxpayer information provided by institutions participating in the  Swiss Bank Program;

(iii)  criminal prosecution of Foreign Financial Institutions, institution relationship managers, bank officers, attorneys and other facilitators;

(iv) information gathered in response to the issuance of a John Doe Summons;

(v) Taxpayer information obtained from IRS “Whistleblowers;” and

(vi) Taxpayer information gathered through IRS participation in various international task forces.

For those who elect to proceed under the Streamline Procedures, the bar to establish “non-willfulness” has been raised. The IRS will no longer accept Taxpayer applications under the Streamlined Procedures unless the Taxpayer provides a “narrative statement of facts,” pays the tax due, and submits the required information returns.

This statement must clarify why the particular party failed to disclose offshore assets. Accordingly, a request for relief that fails to contain a detailed explanation, in all likelihood, will result in a denial of relief.  Similarly, a statement that the Taxpayer was unaware of the filing and reporting requirements will not meet the threshold for non-willfulness.

Finally, taxpayers, who self prepared their returns and who answered “no” to questions 7a and 7b on Schedule B pertaining to the existence of an interest in or signatory authority over a foreign financial account, will find it difficult, if not impossible, to establish “non-willfulness.”

© Anthony N. Verni, Attorney At Law, Certified Public Accountant         10/23/2016

A press release from the IRS

https://www.irs.gov/uac/newsroom/offshore-voluntary-compliance-efforts-top-10-billion-more-than-100000-taxpayers-come-back-into-compliance

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Money Laundering Is Tax Evasion

Money Laundering is the same thing as tax evasion according to the IRSMoney Laundering and Tax Evasion

Money laundering and tax evasion are closely related. The IRS has used money laundering statutes to help cut down on tax evasion. Money laundering may be seen as willful tax evasion. Hiding money will off course lead to not paying taxes on the same.

What is Money Laundering?

Money laundering is a common occurrence today. Global concern surrounding this nefarious activity is based upon the theory that failure to report and account for this activity erodes the economic base of national economies. Individuals and organizations involved in criminal activity attempt to obscure the illegal source of the funds in an effort to avoid detection from law enforcement officials.

These funds commonly referred to as “dirty money” are the by-product of illegal activities such as drug and human trafficking, gambling, elaborate fraud schemes, and terrorism. Historically, criminals have utilized foreign financial institutions for purposes of “washing” dirty money through legitimate enterprises in order to avoid the scrutiny of taxing authorities.

Recent Global initiatives in combating money laundering including criminal prosecution, and the imposition of stiff criminal penalties have heightened foreign financial institution awareness and willingness to cooperate with authorities.  Moreover, new reporting requirements, mutual exchange of information agreements and coordination of local, national and global law enforcement agencies will make it more difficult for individuals to avoid detection.

How does money laundering work?

The main objective behind money laundering is to obscure the illegal source of the funds, thereby enabling the criminal to use the money without detection. The process is complex as it involves several financial transactions which may be carried out through various financial outlets in various countries. There are so many ways in which individuals hide money derived from criminal activities to avoid detection. Some of them are:

  • Depositing a large sum of money earned illegally in small amounts in a financial institution under different fake names.
  • Depositing a large sum of money earned illegally in small amounts by using various bearer instruments like money orders.
  • Creating a Trust or Corporation or a non-profit organization or an account under a different name in a different country and moving large sums of money there.

The hidden money is then accessed through debit cards, credit cards, money orders or cash withdrawals. Check this article “Caribbean based investment advisors and an attorney”  to see how Caribbean based investment advisors and an attorney colluded in their efforts to helping US Citizens hide money abroad.

Tax Evasion

Tax evasion is the wilful attempt to evade or defeat the assessment of taxes or the payment of taxes. The act of evasion occurs when a taxpayer either willfully fails to report his or her income as required by law, or having reported the income, engages in conduct that either hinders or defeats any attempt by the IRS in collecting the tax owed. In the latter case, the taxpayer prevents IRS from collecting by moving assets around under different ownership. An example would be: A taxpayer reports his income and has a tax liability. He has the money to pay the liability but instead, he closes all his bank accounts and moves the money to a different account under a different name. This is a clear indication of wilful tax evasion. For more on Tax evasion, check IRS Tax Crimes handbook.

Is money laundering therefore tax evasion?

In the U.S., money laundering is tax evasion but not all tax evasion is money laundering. According to IRS, money laundering is tax evasion in progress if the underlying conduct violates income tax laws and Bank Secrecy Act.  If you are a U.S. citizen/ permanent resident, the law requires you to report your income and pay taxes on the same.

As a U.S. taxpayer, when you are involved in money laundering, it is obvious that you are hiding the money in question. The reason may be because the money is from criminal activities you are involved in and you do not want your cover to be blown. In this case, you want to hide the dirty source of your money through laundering to be able to spend it without worrying about the IRS and the tax consequences. Alternatively, the main reason behind your hiding the money may be because you are actually running away from paying your taxes. Either way, this is tax evasion engineered through money laundering. It does not matter if the income is legal or illegal, you have to pay your taxes or else the IRS will somehow catch up with you some day. It is even worse when your income is from criminal activities since there may be additional consequences for the underlying crime. I think this is why individuals who engage in criminal activities choose to launder their money to avoid detection by the government for the fear of facing criminal prosecution.  While doing so, they are evading their responsibility to pay taxes.

Is there a way out of this money laundering mess?

You may have been involved in money laundering and off course tax evasion in the process and may be you are tired of hiding.  Your question may be “can I really make it right? Is there really a clean way out?” While there is no guarantee of avoiding criminal prosecution, there is still a chance to make it right. This is by getting into the OVDP (Offshore Voluntary Disclosure Program). You have to get a pre-clearance letter from the IRS to be accepted into the OVDP. You do this by providing all information on all foreign financial accounts, filing amended income returns for all the years in question etc.  Once approved, you will be able to enter into “Closing Agreement” with the IRS which means that the IRS will not revisit the matter again.

The Closing Agreement may differ from one case to another since one size does not fit all. This sounds easy, right? It may seem so but the whole process requires a careful evaluation of all the facts. If you need help walking through this, contact The Law Office of Anthony Verni . We can help you evaluate your situation and devise the best strategy to follow.

 

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Tax Controversy: What to Do When You Get An Audit Letter

tax controversy | auditThe phrase “tax controversy” is used in the legal profession to define tax disputes that originate between the IRS or a state tax agency and a Taxpayer, usually, but not always, originating from an audit.

Legal services offered as part of a typical tax controversy matter can include assistance with audits, appeals, and Tax Court litigation as well as negotiated settlements.

While the odds of getting audited are lower than 1%, there is still a chance that the IRS will serve you with an audit letter, particularly where tax issues are flagged on the Taxpayer’s return. So what do you do when you receive an audit letter and are facing a tax controversy?

  1. Ask “Why me?

The IRS may know exactly why you’ve been targeted, but just because you receive a tax audit letter does not automatically mean you are guilty of tax evasion or some other tax related crime.

Many times people are audited because the IRS doesn’t have enough information about them and is merely seeking clarification. In other case, a Taxpayer maybe selected randomly. With most Taxpayers, the IRS has access to all their information, like their total wages and how much mortgage interest they paid. However, returns filed by self-employed people and the wealthy tend to have a lot more self-reported items that the IRS may question.

Review your return to ensure it is accurate and only provide the information the IRS specifically asks for to avoid broadening the scope of the audit to other years.

  1. Get Your Ducks in a Row

Once you have reviewed your return and determined, with the help of a tax controversy specialist, the necessary information the IRS is seeking, begin compiling that information.

The IRS can audit you for taxes up to three years, so it is important to save documentation of your business or personal expenses as they relate to your taxes. For example, if you are being audited because you wrote off 100% of your car usage as a business expense, get your mileage log and other evidence that the car was used only for business purposes all in one place.

  1. Be Efficient in Your Response

The most surefire way to avoid the negative ramifications of a full blow audit is compliance. This doesn’t mean you roll over and give in to the IRS. Instead it means that you seek a qualified tax attorney to assist you in preparing the documents and information the IRS is seeking and conduct due diligence to ensure that you are complying with their requests. Once you have done your due diligence, respond to the IRS promptly and courteously

As the adage goes, ignorance is bliss, but in the case of an IRS audit, ignoring the letter will only make things worse. The IRS will give you a certain deadline to respond, make sure to meet this deadline in order to avoid larger consequences like civil penalties or possibly criminal action.

If you have a tax controversy, either related to your personal or business, please see the help of a qualified tax attorney to guide you through the process of dealing with the IRS.
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Expatriate Tax Advice: What Are the Filing Requirements for U.S. Expats?

What U.S. Expats Need to Know About IRS Filing Requirements
expatriate tax advice

Many expatriates have questions about how to handle their taxes while living abroad. There are many things to consider such as: Do I have to file U.S. income tax return? What about state taxes? And what if any income taxes can I deduct? 

The U.S. tax code can be complicated and confusing for expatriates. It is always best to consult an experienced tax attorney to reduce your tax burden and to also help you understand your rights and responsibilities.

It is important to understand that no matter where you live in the world, as a United States Citizen or a Permanent Legal Resident you are required to file an annual return with the Internal Revenue Service (IRS) if you meet the minimum income requirements. In 2014, the minimum income requirement for a single person less than 65 years of age was $10,150. A married couple both under 65, filing jointly, faced a minimum income requirement of $20,300. The United States does have treaties with several countries that may reduce the total amount you owe.

When it comes to U.S. state tax returns each state sets its own rules. The rules can be complicated and it is best to consult a professional when it comes to filing state returns. States like California, New Mexico, Virginia, and South Carolina have very strict rules when it comes to filing state returns after moving abroad.

Filing Requirements for U.S. Expats

Another area of confusion for expatriates is whether their income might qualify for the Foreign Earned Income Exclusion (FEIE). The IRS qualifies you as eligible for the Foreign Earned Income Exclusion (FEIE) if you fall into one of three categories:

  1. You are citizen of the US who qualifies as a bona fide resident of another country for a period of time containing one entire tax year.
  2. You are a resident alien of the US whose home country has an income tax treaty with the US. Additionally, you must be a bona fide resident of another country for a period of time containing one entire tax year.
  3. You are a citizen or resident alien of the US whose physical absence from the US constitutes a minimum of 330 days out of any 365.

There may also be deductions for any taxes you have paid to your country of residence.

As with any matter involving the U.S. Tax Code there are many pitfalls to trying to figure out what you can legally deduct from your income and how you can minimize your risks of an audit. It is best to consult an experienced tax attorney before filing your taxes. A consultation will help reduce your risk of mistakes on your tax returns and avoid costly audits.

 

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Publication 519: What You Need to Know

What You Need to Know About IRS Publication 519

publication-519-tax-status-irs U.S. Tax guide for AliensPublication 519 is provided by the Internal Revenue Service (IRS) to assist in tax preparation for both resident and non-resident aliens. Among other things Publication 519 helps you to determine whether you are a resident, non-resident alien or if you fall under both classifications; what income may be subject to tax; how income of aliens is taxed; and where, when and how you should file your income tax forms.

Your first step, for tax purposes, should be to determine if you are a resident or non-resident alien. If you qualify as both resident and non-resident in the same year, you have what is referred to as dual status. If you are married, you may also have a choice of treating your non-resident spouse as a resident alien. Your status is determined by either the “Green Card” test or the “Substantial Presence” test. However, even if you do not meet the requirements of either test you may be able to choose to be treated as a United States resident for part of the year.

After you have determined your residency status, your next step is to determine what income is subject to taxes. As a Resident alien, income is generally subject to tax treatment in the same manner as a U.S. citizen. Non-resident aliens are generally subject to U.S. taxes only on income earned from U.S. sources. However, not all income from U.S. sources is subject to income tax.

How Your Income is Taxed

Tax Resolution Firms and tax preparers should also seek counsel with a qualified tax lawyer.Resident and non-resident aliens are taxed in different ways. Resident aliens are generally taxed in much the same way as U.S. citizens.

What this means is that the residents alien’s worldwide income is subject to U.S. tax and must be reported on his/her tax return. The same graduated tax rates that apply to U.S. citizens will apply to a resident alien.

Income for a non-resident alien will be divided into two categories:

  1. Income that is effectively connected to a United States trade or business; and
  2. income that is not effectively connected to a United States trade or business.

The difference between the two categories will be the rate in which the income is taxed. The effectively connected income is subject to the same graduated rates discussed above. The non-effectively connected income is taxed at a flat 30% rate.

As you can see, Publication 519 is a complicated document that also refers to several other IRS publications. When it comes to figuring out which tax status is right for you and which, if any, income is subject to U.S. taxes it is best to consult an experienced tax lawyer.

An experienced tax lawyer can help you to minimize your taxes and reduce the risk of costly audits. They will also help you wade through the complexities of the U.S. tax code.

Doubling Down: How an International Tax Lawyer Can Save You From Double Taxation

How Tax Lawyers Can Help Prevent Double Taxation Confusions

international tax lawyer can help you avoid double taxation with the IRSThe notion of an international tax attorney conjures up images of Grand Cayman and John Grisham’s “The Firm,” but the need for a tax lawyer who specializes is international tax issues is for more than just high rollers and fictional characters.

The problem facing most business owners or individuals in the international tax realm is the burden of double taxation. From small business owners to retirees, international tax implications require that you have a top-notch professional on your team, ready to protect you from the IRS and to prevent you from being taxed twice.

The global markets have made it easy to work, invest and sell goods across borders. For small business owners, the opportunity to reach new markets has never been easier. With that ease of access, however, comes a bevy of new and different tax laws. The Department of the Treasury has issued several rulings which allow businesses to protect their assets and save on taxes.

International tax planning for privately owned businesses is unique. It is different than the foreign tax planning used by publicly traded companies.  Offshore tax planning for a large company like Google does not necessarily apply to the small American business selling internationally. Think of sites like Etsy, Amazon and Kindle, where Americans can sell goods in foreign countries. The country where the business originates may want to claim a sales tax, while the country where the transaction occurred may claim a transaction tax. This results in a major problem for small businesses.

The “problem” for small business is double taxation.  When income is earned in a foreign country, income tax is paid to the foreign country.  Next, taxes are paid to the U.S.

For business owners, the solution is simple. The IRS has approved “dual resident corporation” which eliminates double taxation.  It also allows for a simple tax return, allows for tax savings for foreign operating losses, and waives the requirement to file the complex Form 5471. A seasoned international tax attorney can walk you through the process of setting up a dual resident corporation and apply for a tax ruling with the IRS. Business owners who plan to sell internationally would be wise to seek this option.

While it may be common for business owners to encounter international tax issues, the issues of taxation are becoming increasingly common for the growing number of U.S. citizens living and retiring abroad.

Retiring abroad has many advantages, however, lowering your tax bill typically isn’t one of them. If you earn income in your adopted country, you may be able to exclude up to $97,600 from U.S. in 2015 by claiming the Foreign Earned Income Exclusion. This law enables you to avoid paying taxes to two countries on the same income. Be sure to let your tax lawyer know the details of your new home abroad. Some countries base their tax systems on residency, not citizenship. Without the help of an international tax lawyer you may be subject to double taxation.  The U.S. has tax treaties with many foreign countries to prevent double taxation, but you may still have to file a tax return, in both your country of residence and the United States.

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Finding an FBAR Lawyer to Help Avoid Criminal Charges

How to Find a Good Tax Attorney

FBAR Lawyer to help clients avoid Criminal Charges by the IRSYou’ve discovered you have to file the Foreign Bank Account Report but are having trouble finding an FBAR attorney. As you search across the web, it may seem as though there are attorneys for any number of issues, except this specific one.

If you’re looking for an FBAR lawyer, but having trouble finding the right person for your case, you aren’t alone. In fact, there is actually no such thing as an “FBAR lawyer”. FBAR is simply shorthand for a Foreign Bank Account Report which must be filed with the IRS.

The Report of Foreign Bank and Financial Accounts (FBAR) requires taxpayers with accounts totaling more than $10,000 to file an annual report with the U.S. Treasury. For taxpayers with offshore accounts totaling more than $50,000 during 2011, a brand new requirement came into effect – Form 8938 (Statement of Foreign Financial Assets).

With the full enforcement of the Foreign Account Tax Compliance Act (“FATCA”) on July 1, 2014, all foreign banks began requiring their U.S. account holders to disclose their social security numbers and other information. Banks do this to both protect themselves, and to report U.S. account holders who have foreign accounts to the IRS. But the IRS knows that most people aren’t willfully evading taxes. The creation of the Offshore Voluntary Disclosure Initiative, offers reduced civil penalties for taxpayers who come forward with unreported accounts and can ensure that you don’t face FBAR criminal penalties.

Given the recent publicity surrounding FBARs, and the civil and criminal penalties associated with the failure to file an FBAR, individuals with offshore accounts and tax issues are on the hunt for an FBAR attorney. Stop searching for an “FBAR attorney” and focus your search on a premier tax attorney.

If you don’t come forward and disclose your foreign assets, you could face a civil FBAR penalty of $10,000 per account, per year. You read that right. That means if you have 5 years and 20 accounts in each year, you could face a $1M FBAR penalty, even if all those accounts combined only held $11,000. Tack on the potential criminal penalties, and you’ll wish you had spent a little time and money up-front talking to a tax professional.

You don’t need just any tax attorney, though. With the aggressive nature of the IRS audit process and the possibility that criminal charges can be brought for failure to file FBAR, you should seek out a tax attorney with both tax litigation and criminal tax skills to help you navigate the murky waters of IRS disclosure.

This is not an area of the law you want to try to go it alone. Seek out a qualified tax attorney with experience litigating and handling the IRS. If you choose to go alone, or choose to ignore the filing requirement altogether you could face thousands in civil penalties and jail time.