The IRS on Feb. 8 opened a second reduced-penalty voluntary compliance initiative for taxpayers’ undisclosed offshore assets. The program is designed to bring money held in foreign accounts back into the U.S. tax system and to help taxpayers with income from offshore accounts to comply with federal tax law. Under
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TOPICS / TAX
International tax
IRS Issues Foreign Financial Account Reporting Guidance
The IRS issued a second notice giving guidance on various reporting requirements under the Foreign Account Tax Compliance Act (FATCA, part of PL 111-147) (Notice 2011-34). The notice responds to concerns raised by commenters following the issuance last August of Notice 2010-60, which contained preliminary guidance on implementation of the
Unfair Lending Practice Settlement Does Not Result in Income to Borrower
In Chief Counsel advice, the IRS stated that adjustments to loan principal amounts under a settlement to reform unfair lending practices do not result in income to the borrower, even though the adjustments result in a reduction in the amount the borrower will pay under the loan (CCA 201112008). The
Free File Program Expanded to Include Returns Filed From Overseas
The IRS on Friday announced that taxpayers who live in foreign countries can now use the Free File program to prepare and e-file their federal tax returns (IR-2011-30). The program is available to both U.S. citizens and resident aliens, and currently five of the Free File software providers can accept
Congress Votes to Limit Use of Foreign Tax Credits
The House of Representatives on Tuesday interrupted its August recess and passed H.R. 1586 by a vote of 247–161, sending the bill to President Barack Obama. The president signed the bill into law the same evening. The measure was passed by the Senate on Aug. 5. The bill is designed
CPAs Provide Expertise for Transfer Pricing Analyses
Transfer pricing, the process by which multinational companies set arm’s-length prices for cross-border transactions within a corporate group, is complex and consistently ranks as the No. 1 international tax issue facing multinational companies, according to Ernst & Young’s 2009 Global transfer pricing survey. To avoid penalties and potential interest, most
IRS Provides Guidance on Deemed Dispositions by Canadian Emigrants
The IRS has issued guidance for individuals who emigrate from Canada and wish to make an election under the U.S.-Canada income tax treaty regarding Canadian departure tax (Revenue Procedure 2010-19). Under Article XIII(7) of the U.S.-Canada treaty, if an individual is treated for purposes of taxation by one of the
IRS Extends Relief for Some FBAR Filers; Prop. Regs Clarify Certain FBAR Definitions
The IRS on Friday suspended any requirement for persons other than U.S. citizens and domestic entities to file a Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), otherwise due on June 30, 2010. The Service also extended until June 30, 2011, the deadline for filing an
Cross-Border Tax Issues
CFOs can exercise reasonable diligence to ensure that they have procedures in place to deal with some of the more common shortcomings in cross-border tax compliance. The following are some routine tax compliance situations that U. S. companies ($500 million or less in sales) with outbound activities are most likely
Swiss Court Halts Release of Some UBS Account Holder Data
A Swiss court has held that the Swiss bank UBS does not have to hand over to the IRS confidential data on 26 accounts under a settlement agreement between the United States and Switzerland negotiated in August 2009. Under the agreement, UBS is supposed to turn over for investigation information
Family Partnership Rules Applied in TIFD III-E Remand
In a case reversed and remanded by the Second Circuit, the U.S. District Court in Connecticut again held that a General Electric subsidiary could treat Dutch banks’ interests as partnership equity rather than debt. In so doing, the district court in the long-running TIFD III-E case again sided with the
LILO Stands Up to Court Scrutiny
In a rare setback for the IRS in its litigation against lease-in, lease-out (LILO) tax shelters, the Court of Federal Claims held that an arrangement by Consolidated Edison Co. of New York (Con Ed) with an electric utility in the Netherlands should be respected for federal tax purposes because it
IRS Extends FBAR Filing Date for 2008 Filings
The IRS announced Friday in Notice 2009-62 that it is extending for certain taxpayers the due date for filing calendar year 2008 Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR). Because the Treasury Department is still working out various FBAR filing issues, it has decided to
IRS Releases Streamlined Offshore Voluntary Disclosure Form
The IRS has posted to its Web site a three-page “optional format” short form for taxpayers to use when applying for the Voluntary Disclosure Program. The form asks taxpayers to estimate the annual highest aggregate value for their offshore accounts or assets for the years 2003–2008. It also requires them
Report of Foreign Bank and Financial Accounts: Significant Revisions and Severe Penalties
In September 2008, the IRS website posted revisions to the Report of Foreign Bank and Financial Accounts (Form TD F 90-22.1) that surprised many practitioners. This article discusses new traps for the uninitiated created by these revisions and the new reporting requirements for certain taxpayers who previously may not have
FBAR Disclosure Questions Answered
The IRS has answered 51 “frequently asked questions” (FAQs) about its voluntary disclosure and settlement option for previously unreported offshore financial accounts and entities and income from them. The six-month window for making disclosures under the program ends Sept. 23. Although IRS Commissioner Doug Shulman said the program can allow taxpayers
Foreign Bank Account and Other Foreign Information Return Developments
The IRS on June 24 released 20 new updated frequently asked questions (FAQs) on its offshore income voluntary disclosure program (VDP) and foreign bank and financial accounting reports (FBAR). The IRS also provided to the AICPA FBAR Task Force the street address for FBAR submissions by private delivery services: IRS
FBAR Voluntary Disclosure Questions Answered
The IRS has answered 51 “frequently asked questions” (FAQs) about its voluntary disclosure and settlement option for previously unreported offshore financial accounts and entities and income from them. The six-month window for making disclosures under the program ends Sept. 23. Although IRS Commissioner Doug Shulman said the program can allow taxpayers
IRS Offshore Voluntary Compliance Program Questions
The information below includes questions that IRS Criminal Investigation special agents have asked some taxpayers participating in the IRS Offshore Voluntary Compliance program. Practitioners might want to document the facts as fully as possible in a detailed summary when submitting under the program. Those considering the Offshore Voluntary Compliance program
IRS Changes FBAR Reporting Requirements for June 30, 2009
June 30 is the deadline for filing the current year Report of Foreign Bank and Financial Accounts, Treasury Form TD F 90-22.1 (FBAR). “United States persons” having a financial interest in or signature authority or other authority over any financial account in a foreign country have an FBAR filing requirement
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