FBAR Filing: Statute of Limitations
On 6/24/09, in FAQ #31, the IRS confirmed they will be able to assess taxes under a 6 year statute of limitations if the IRS can prove a substantial omission of gross income:
How can the IRS propose adjustments to tax for a six-year period without either an agreement from the taxpayer or a statutory exception to the normal three-year statute of limitations for making those adjustments?
Going back six years is part of the resolution offered by the IRS for resolving offshore voluntary disclosures. The taxpayer must agree to assessment of the liabilities for those years in order to get the benefit of the reduced penalty framework. If the taxpayer does not agree to the tax, interest and penalty proposed by the voluntary disclosure examiner, the case will be referred to the field for a complete examination. In that examination, normal statute of limitations rules will apply. If no exception to the normal three-year statute applies, the IRS will only be able to assess tax, penalty and interest for three years. However, if the period of limitations was open because, for example, the IRS can prove a substantial omission of gross income, six years of liability may be assessed. Similarly, if there was a failure to file certain information returns, such as Form 3520 or Form 5471, the statute of limitations will not have begun to run. If the IRS can prove fraud, there is no statute of limitations for assessing tax.
IRS to Expand Audits as Cash Runs Low
By Joe Mont, TheStreet.com – The Internal Revenue Service, trying to recoup some of the estimated $14 billion that companies underpay in employer taxes a year, plans to wage a three-year campaign to audit 6,000 businesses.
Click link above for complete article.
Currency Transaction Report (CTR) & Suspicious Activity Report (SAR)
U.S. financial institutions file Currency Transaction Reports (CTR) and Suspicious Activity Reports (SAR) with the IRS Detroit Computing Center (uploaded into the IRS/DCC Currency Banking and Retrieval System database at the IRS/DCC).
The combined CTR/SAS currency transaction reports provides a paper trail (or roadmap) for investigations of financial crimes and illegal activities including: tax evasion, embezzlement and money laundering. Between 1994 - 1997, the IRS criminal Investigation Division initiated 1030 investigations as a result of CTR/SAR (Currency Transaction Reports).
Report/Requirements
Currency Transaction Report (CTR) - Filed by financial institutions that engage in a currency transaction in excess of $10,000.
Currency Transaction Report Casino (CTRC) - Filed by a casino to report currency transactions in excess of $10,000.
Report of Foreign Bank and Financial Accounts (FBAR) - Filed by individuals to report a financial interest in or signatory authority over one or more accounts in foreign countries, if the aggregate value of these accounts exceeds $10,000 at any time during the calendar year.
IRS Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business - Filed by persons engaged in a trade or business who, in the course of that trade or business, receives more than $10,000 in cash in one transaction or two or more related transactions within a twelve month period.
Suspicious Activity Report (SAR) - Filed on transactions or attempted transactions involving at least $5,000 that the financial institution knows, suspects, or has reason to suspect the money was derived from illegal activities. Also filed when transactions are part of a plan to violate federal laws and financial reporting requirements (structuring).
Credit Suisse (Casualty Loss)
Investors at four high-end luxury resorts have filed a class action lawsuit against Credit Suisse and Cushman & Wakefield, contending they conspired to inflate the value of property so that they could take them over.
In the Complaint, the Plaintiff’s lawyers contend that Credit Suisse and Cushman & Wakefield conspired by setting up a Cayman Islands branch to circumvent a federal law on real estate appraisals. The Plaintiff alleges they inflated the value of resorts and made millions of dollars in fees on loans against the property. Credit Suisse knew the resorts would most likely default under the weight of inflated values which would allow the bank to take ownership of each on the behalf of the Creditor.
For taxpayers who have been defrauded, they may be eligible for a tax loss deduction for their fraud damages if the fraud is considered theft under their state’s law (see Gerstell v. Commissioner 46 TC 161 (1966)). The tax loss deduction may be carried back for prior years for tax refund, or carried forward for future years for tax free income up to the amount of the tax loss.
See article, Credit Suisse is Accused of Defrauding Investors in 4 Resorts
The New York Times, January 5, 2010.
UBS Client Who Hid $6.1 Million From IRS Avoids Jail
By David Voreacos, Bloomberg.com
A New Jersey businessman who admitted using a UBS AG account to hide $6.1 million from U.S. tax authorities was sentenced to five years probation by a judge who credited his cooperation with prosecutors.
Juergen Homann, 67, also was fined $60,000 and ordered to perform 300 hours of community service by U.S. District Judge Stanley Chesler in Newark, New Jersey, yesterday. Homann, who faced as long as five years in prison after he pleaded guilty Sept. 25, has helped prosecutors pursuing offshore tax evasion, said Assistant U.S. Attorney Marc Ferzan.
“His cooperation was very significant to the government,” Ferzan said in an interview.
Click link above for complete article.
IRS to start regulating paid tax preparers
By Stephen Ohlemacher, Associated Press
WASHINGTON – The Internal Revenue Service plans to start regulating paid tax preparers, requiring them to register with the government, pass competency tests and adhere to ethical standards…
Shulman said he hopes to have all paid tax preparers registered by the 2011 filing season. Preparers will be given about three years to meet competency requirements.
Click link above for complete article.
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