WASHINGTON –– The Internal Revenue Service today issued its annual

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Now that the IRS has announced at more than 33,000 individuals have come forward under the various and recent Amnesty programs, it is essential to look at how the internal mechanics of your filing will be handled by the IRS and/or the Criminal Investigation Division, CID.

As I mentioned in my earlier article on the most recent Voluntary Disclosure filing, enacted January 9, 2012, there are still penalties and probably referral of your case to CID. However, should the IRS decided that you do not qualify for this amnesty filing or you are not cooperating under the subjective belief of an IRS agent, then the amnesty filing will be rejected and probably passed to CID.

This article focuses on FBAR requirements should you wish to now begin filing delinquent filings without applying for the Amnesty or if you have applied under one of the recent amnesty programs and have been rejected.

Step 1.

If you learn you were required to file FBARs for earlier years, you should file the delinquent FBARs and attach a statement

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Over the years, I have probably prepared thousands of tax returns, from the straightforward to the very complex.  Tax returns that are a few pages in length to those exceeding 300 pages.  No matter the size of the tax return, there are usually stock sales that take place on these tax returns from simple investments to a heavy buying and selling that comprise over 500 trades in any one year.  The common factor that seems to occur is that the brokers list the description of the stock sold, the trade and sale dates, the sales price and commissions; but they fail to list when that particular stock was bought and the purchase price.  Therefore, I can not calculate the gain/loss or whether the sale was long term or short term.

Under the Obama legislation, cost reporting shall now be the burden of the Broker to calculate and report to you as well as the IRS.  This new law will cover all stocks purchased from January 1, 2011 forwards.  It will also cover mutual funds and dividend reinvestment plan stock (or similar arrangements) acquired on or after January 1, 2012; and for debt instruments, options and other covered securities acquired

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New reporting form for beneficiaries of a foreign trust & the December 15th, 2011 deadline is looming for Americans living and working overseas

PART I.

The final extension of time to file your 2010 Individual Income Tax Return is fast approaching, December 15, 2011. This extension is given only for U.S. Taxpayers who live and work overseas.  It also includes dual citizens of the United States, such as a foreign national living and working in their home land but had a parent who was a U.S. Citizen, and U.S. citizens who are long-term residents of a foreign country have a filing requirement to file U.S. tax returns.  However, the deadline for filing the Reports of Foreign Bank and Financial Accounts (FBARs) has passed as of June 30, 201.  Now, there is an even more worrisome report, Form 8938 (see part II for a discussion).  According to the latest IRS statistics there is a very large part of the world population that has yet to come forward and become current with IRS filings.  The IRS is aware that many of these individuals are only recently aware of these requirements for being in compliance with the U.S. laws.

IRS

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The United States’ East Coast suffered the ravages and beating of Hurricane Irene and on August 29th, the Mayor of New York notified the public that New York City's subways would begin reopening that morning.  On the same day, the IRS announced that the Offshore Voluntary Disclosure Initiative, OVDI, would have its deadline of August 31, 2001 extended by nine days to September 9, 2011. The IRS believed that the Hurricane had an impact on non-filers who still wished to come forward before losing out to the deadline which was affected by the Hurricane. 

With this deadline extended, individuals, corporations, partnerships and trusts may still request to participate in the Initiative by September 9th.  Individuals will need to provide certain identifying information must be submitted to the Criminal Investigation Division of the U.S. Treasury that includes the following:

1.    Your full name
2.    Date of Birth
3.    Social Security Numbers
4.    Other detailed information requested in the initial disclosure letter that was employed for the August 31st deadline.

If you can not supply all of this information indicated in the above item 4, then you may request a 90-day extension for submitting the complete Disclosure package, which is quite lengthy and

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Section I

If you are working and living overseas or you are a member of the U.S. military on duty outside the United States, you may already know that the deadline for filing your 2010 tax return is usually an automatic extension of two months to June 15, 2011, rather than April 15, 2011.

If you did not meet the June 15, 2011 deadline for filing your 2010 tax return, then you should have availed yourself to one of two extensions that were available to you. The first extension you may have filed on or before June 15, 2011 will extend the filing date to October 17, 2011.  It is important to note that this is an extension of time to file your tax return, not an extension of time to pay the tax you may owe on the return. Also, interest, currently at the rate of 4 percent per year-compounded daily, applies to any payment made after April 18, 2011. There is also the late payment penalty, .5 percent per month, which applies to payments made after June 15, 2011.

If you still cannot get your tax return filed by the October 17, 2011 due date,

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President Obama has had a dislike for offshore financial centers since he was a Senator.  He co-sponsored a bill called the Stop Tax Haven Abuse Act and it appears that his administration will pursue the bill in the near future.

President Obama pledged to crack down on “tax havens” during his  election campaign.  He has vowed to investigate and put pressure on banking secrecy in over thirty-four jurisdictions that practice a high level of protection that may lead to tax evasion and fraud.

The then Senator Obama was a cosponsor of the Stop Tax Haven Abuse Act, which was introduced on February 17 2007.  A House bill was developed simultaneously, but no action was taken on either bill.  Obama aides have indicated that the bill may be resurrected.

Since the recent scandals with banks like UBS and the investigation into tax evasion coupled with the recession and the financial fall out, Senate Permanent Subcommittee on Investigations has placed a priority on international investigations of individuals with connections to offshore financial centers.  Similar pressure is happening in other countries.

The Stop Tax Havens Abuse Act would restrict the use of offshore financial centers by imposing that transactions between US

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With the recent economic downturn, many U.S. citizens and Green Card Holders may want to look at renouncing their U.S. citizenship or giving up Permanent Residency Status. Although this is a true outlook, there are other more numerous reasons why an individual may want to renounce. Not all renunciations are based on tax! Many individuals, when born, and who have one or both parents of U.S. citizenship become a U.S. citizen automatically. In times of war, America has a huge presence of servicemen and servicewomen present in foreign countries. This has lead to procreation between the U.S. service individual and the foreign individual, producing children with U.S. citizenship. In my recent travels to the South Pacific and European regions, I have met many individuals who had an American serviceman as their father during WWII and Korea. They, without their consent, became dual citizens of their home country and the United States. To be held accountable for taxation to a country that does not even know of their existence, or the burden of continued accounting for double taxation filings and foreign bank account reporting on retirement income, is onerous to them.

Heroes Earning Assistance and Relief Tax Act of 2008

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