Los Angeles California Tax Attorney Blog

Foreign Bank Account Tax Amnesty Attorney:

Internal Revenue Service IRS introduced new 2012 offshore voluntary disclosure program to encourage IRS taxpayers holding foreign or offshore bank accounts. Previous programs introduced in 2009 and 2011 have been extremely successful for the IRS. Based on the result of the Offshore Voluntary Disclosure Program (OVDP), IRS understands that it is cost effective and time wise to obtain tax compliance through "carrot and stick" framework than "stick" alone.

Althoug past criminal tax investigations focused on the offshore banking problems in Switzerland, future IRS criminal tax investigations will focus on the Asia Pacific regions including China, South Korea, Taiwan, Australia, Japan, Indonesia and Malaysia.

The key component in any voluntary disclosure participation with the IRS has always been early disclosure to IRS before they find out about you.

FEATURES OF THE 2012 OFFSHORE VOLUNTARY DISCLOSURE PROGRAM FOR OFFSHORE BANK ACCOUNTS

1) 2012 Offshore Bank Voluntary Disclosure will be open for an indefinite period:

Although IRS did not set a deadline for their Voluntary Disclosure program, a key component of any voluntary disclosure program requires that you disclose to the IRS before they find you. In addition, the terms of the voluntary disclosure program could change at any time and the likelihood of increased IRS tax penalties in the future.

2) 27.5% vs. 25% Tax Penalty:

IRS Tax Penalty under the 2012 Offshore Bank program requires taxpayers to pay a tax penalty of 27.5 versus 25% under the 2011 OVDP based on the highest total balance in offshore bank or foreign bank bank accounts.

3) 5% vs. 12.5% Tax Penalty:

Some taxpayers will be eligible for 5 or 12.5 percent penalties based on the level of the asset value and their culpability in establishing the offshore bank or foreign bank scheme. An example of a taxpayer who may qualify for the lower category of tax penalties would be a recent immigrant who came to the United States and kept a bank account in his or her home country and recently discovered the Foreign Bank Account Reporting Requirement.

4) 2012 Offshore Bank Account Participants Must File IRS Tax Returns:

IRS Taxpayers who want to participate in the Foreign Bank Account Program must file and pay all required tax returns for the past few years.

5) Dual Citizens - New Voluntary Disclosure Program for Certain Dual Citizens:

Although not certain, IRS is currently reviewing another disclosure program or new set of procedures for dual citizens of US who may owe no taxes to the IRS to come into FBAR compliance.

Quick Fact About IRS Voluntary Disclosure Program For Offshore Bank Accounts:
1) $3,400,000,00 - IRS Taxes collected so far under the 2009 offshore bank account program.

2) $1,000,000,000 - IRS Taxes collected so far under the 2011 offshore bank account program to date. This amount is expected to double as the IRS completes its investigation.

3) 33,000 - Number of IRS Taxpayers who voluntarily disclosed offshore bank accounts under the 2009 and 2011 programs.

If you have an offshore bank account, and would like to learn about your legal options, including a voluntary disclosure, contact us. All communications will be confidential and covered under the attorney client privilege.

California Tax Attorney:

Internal Revenue Service IRS catches another tax evader.

Another UBS client pleaded guilty today in a criminal IRS tax case concerning FBAR and Offshore Bank Accounts. According to the Wall Street Journal, US Taxpayer Barouh operated a watch business since 1976 and hid some of his unreported income in various UBS offshore accounts.

A Florida man pleaded guilty to filing a false tax return by failing to report income on money held in UBS AG (UBS) Swiss bank accounts.

In addition to any jail sentence, Barouh has agreed to pay some $5 million, half the estimated amount he owned or controlled offshore, as well as any additional taxes, interest and penalties.

In all likelihood, this taxpayer probably could not have participated in the preferred voluntary disclosure program which ended last year. Before any criminal tax case comes to an indictment or reaches guilty plea stage, there would have been an ongoing tax investigation into this taxpayer before the tax amnesty program became available.

Based on the IRS FBAR-Voluntary Disclosure program, any taxpayer(s) under any tax investigation would not have qualified for the tax amnesty program which existed last year.

If you did not disclose your foreign bank account(s) to the IRS yet, there are several options that are availabe to avoid criminal exposure so you can avoid sleepless nights.

California Tax Attorney:

Last year Democrats Proposed 30% Tax on Foreign Banks that refuse to disclose US Taxpayers as part of continuing efforts by the IRS to quash offshore asset protection and tax evasion strategies conjured up by various financial planners. US Taxpayers with offshore or foreign bank account are required to disclose this information by filing IRS Foreign Bank Account Report.

The Baucus-Rangel bill proposed to impose a thirty percent (30%) withholding tax on income from U.S. financial assets held by a foreign financial institution unless the offshore bank agrees to disclose the identity of any U.S. taxpayers with an account at the foreign bank with additional condition to annually report on the foreign account balance including payments and withdrawals from the foreign bank account.

However, the FBAR game has suddenly changed with this new development from Germany. According to Tax Section of Businessweek , Germany has decided to buy stolen bank data from a former employee of an unidentified Swiss bank. The data contains names of German citizens who hold undisclosed foreign bank accounts.

Swiss government issued a statement expressing its concern over Germany’s decision to buy stolen information but IRS may make similar decision in light of the billions of dollars which the IRS may realize from its recent FBAR Voluntary Disclosure program.

Any offshore or foreign banks with complex operation will eventually realize that in the digital age, it would be nearly impossible to maintain banking secrecy as it existed in previous generations. The source for the stolen Swiss Bank data is from a computer specialist at the Swiss bank.

Foreign Bank Account Tax Amnesty Attorney:

Failure to file FBAR can have devastating consequences to a taxpayer. We attached a summary of potential penalties and criminal tax exposure related to an unfiled FBAR- FBAR Tax Penalty Summary.

We've been receiving calls from stressed taxpayers regarding their unfiled FBAR- IRS Form TDF 90-22.1. We can't offer psychiatric help but you can reach me this weekend on my cell (310) 968 9820 if you have few questions which may help ease your mind.

FBAR Tax Attorney:

Internal Revenue Service IRS issued a statement this week stating that they will be pursuing foreign bank accounts held by US taxpayers in other countries including South Korea, Hong Kong, Singapore and several European countries.

US Senate also introduced a new tax and banking legislation which will further frustrate US taxpayers seeking tax shelters through foreign bank accounts.

FBAR- IRS Voluntary Disclosure Attorneys

Even if the taxpayer has missed the October 15, 2009, deadline, IRS voluntary disclosure program may still be available to those with delinquent FBAR, unreported income or undisclosed foreign bank accounts. However, taxpayers need to proceed with caution if they are considering filing their voluntary disclosure post October 15, 2009. We recommend that you seek a competent FBAR- IRS Voluntary Disclosure Attorneys to navigate through these proceedings. A thorough risk analysis with your tax attorney must be performed before implementing any FBAR Voluntary Disclosure after 10/15/09.

Voluntary disclosure allows IRS taxpayers to resolve their tax debt or compliance issues with the IRS and reduce the probability of IRS criminal prosecution. Foreign Bank Account Report or FBAR which many US taxpayers have failed to file falls in the ambit of the Voluntary Disclosure program. Whether the foreign bank account is located at UBS or any other banks, the failure to file FBAR may result in criminal prosecution by the IRS.

Internal Revenue Service IRS Voluntary Disclosure is a program implemented by IRS Criminal Investigation Division which involves taking timely, accurate, and complete voluntary disclosures by IRS taxpayer in deciding whether to recommend to the Department of Justice that a taxpayer be criminally prosecuted.

Los Angeles Tax Attorney:

Congratulations Los Angeles Lakers #15

Los Angeles Lakers 2009 World Champions Game Highlights

Los Angeles Tax Attorney:

Internal Revenue Service IRS TAX has set a deadline for reporting offshore bank accounts and other offshore income activities through its voluntary disclosure program. Voluntary disclosure may eliminate risk of IRS criminal prosecution and reduce or eliminate assessment of tax penalties.

Even taxpayers who do not have offshore activities but have unreported income, fraud, unpaid taxes or unfiled tax returns will benefit from the IRS Voluntary Disclosure program.

Internal Revenue Manual Section 9.5.11.9
Voluntary Disclosure Practice:

IRS Voluntary Disclosure is the truthful, timely and complete communication from a taxpayer to the IRS, regarding the accuracy of the taxpayer’s federal income tax returns. The IRS considers voluntary disclosure along with other factors in the investigation of fraudulent tax reporting practices when determining whether criminal prosecution would be recommended. Voluntary disclosure is simply the procedural practice of the IRS, and does not provide the taxpayer with any rights.

As each case if different, taxpayers should not rely on a similar taxpayer’s situation where criminal prosecution was not recommended. It is important to note that this practice doesn’t apply to taxpayers with illegal source income.

For a IRSvoluntary disclosure to occur, the communication must be truthful, timely, complete, and meet the following requirements:

The taxpayer must express willingness to cooperate with the IRS in determining his/her correct tax liability, and the taxpayer does actually cooperate.

The taxpayer must make good faith arrangements with the IRS to pay in full, the tax, interest, and any penalties owed to the IRS, and to be determined by the IRS.

A disclosure is considered timely if it is received before:

The IRS has initiated a civil examination or criminal investigation of the taxpayer, or has notified the taxpayer that it intends to initiate such an examination or investigation.

The IRS received from a third party (e.g., informant, other governmental agency, or the media) information regarding the taxpayer’s noncompliance.

The IRS has already begun a civil examination or criminal investigation that is directly in connection with the specific liability of the taxpayer.

The IRS has acquired information directly related to the specific liability of the taxpayer from a criminal enforcement action (e.g., search warrant, grand jury subpoena).

Below please find a few examples of what constitute a voluntary disclosure:

An attorney writes a letter to the IRS enclosing amended returns from a client which are complete and accurate (reporting legal source income omitted from the original returns). The letter states that the taxpayer will pay the tax, interest, and any penalties determined by the IRS to be applicable in full. The correspondence meets the timeliness standard set forth above.

The IRS sends a notice stating that it has no record of a tax return filed for a certain year and inquires whether the taxpayer has filed a return for that year. The taxpayer has not filed that year’s tax return and makes a disclosure after receiving such a letter. The individual files complete and accurate returns and makes arrangements with the IRS to pay, in full, the tax, interest, and any penalties determined by the IRS to be applicable . Because the IRS hasn’t started investigation or notified the taxpayer of its intent to investigate, this is considered a voluntary disclosure.

Examples of what are not voluntary disclosures include:

A correspondence from an attorney requesting to resolve his/her client’s tax liability, and that his/her client wants to remain anonymous. This does not meet the requirements of voluntary disclosure and in addition, the identity of the taxpayer is not disclosed.

If a taxpayer discloses its IRS tax liability, while already under grand jury investigation. The end result would be the same whether or not the taxpayer knew about the grand jury investigation.

A taxpayer who is in a partnership, is not currently under investigation and makes a disclosure. However, the partner in the partnership is under investigation. The disclosure in this case is not considered a voluntary disclosure because the investigation of the specific liability is already under investigation, whether or not the taxpayer knew about the investigation.

A taxpayer’s employee notifies the IRS regarding a double set of books. Thereafter, the taxpayer discloses to the IRS. Since the IRS has already been informed by the third party of the specific taxpayer’s noncompliance, this is not a voluntary disclosure, whether or not the taxpayer knew of the about the third party’s contact with the IRS.

Internal Revenue Manual Section 9.5.11.9.1
Voluntary Disclosure Protocols

All voluntary disclosures must meet the requirements contained in subsection 9.5.11.9 above. There is not particular format that the voluntary disclosure must abide by when making the voluntary disclosure communication. In addition, the communication by the taxpayer or their representative can be either verbally or in writing. Determining whether or not a communication is a IRS Voluntary Disclosure can only be done by examining the facts and circumstances of each situation and investigation.

Los Angeles Tax Attorney:

Internal Revenue Service IRS criminal tax evasion charges against Helio Castroneves came to a conclusion today. Federal Jury acquitted former Los Angeles Dancing with the Stars and Indy Race Car Driver on six counts of IRS Tax Evasion. Criminal tax evasion cases are processed throug the Federal District and not through the US TAX COURT system.

IRS criminal tax evasion charges against Helio Castronoves which alleged that IRS tax evasion mechanism involving Panamanian bearer share corporation called Seven Promotions to avoid and evade IRS taxes. Asset protection attorneys view these corporations as a planning device to evade taxes and protect certain class of assets from creditors.

According to SI.com,

these Panamanian bearer share corporations can be created without producing a public record of the incorporating party's name, their shares omit any identifying information about shareholders, and a person with a controlling interest can direct corporate assets to purchase various property and goods, such as real estate and cars, with minimal risk of personal detection.

Business Tax Attorney

Internal Revenue Service IRS TAX and United States Tax Court US TAX COURT released information regarding tax fraud related scams using the name of the IRS and US Tax Court.

Business and Payroll Tax Scam

This e-mail appears to come from an IRS.gov e-mail address, addresses recipients by name and references the company the recipient works for. These personalized details may convince the recipient that the e-mail is legitimate. The e-mail says that the IRS has a report on the company and asks the recipient to review a copy by clicking on a link to download the report. However, when the link is clicked, malware is downloaded to the recipient’s computer.

There are various types of malware, which can hijack a victim’s computer hard drive to give someone remote access to the computer, search for passwords and other information and send them to the scammer, or cause other types of identity theft or damage.

The IRS does not compile reports on companies or send e-mails to company staff asking them to review a report. Generally, the IRS does not send unsolicited e-mails to taxpayers.

“Taxpayers should take steps to keep their personal information out of the hands of identity thieves,” said IRS Commissioner Doug Shulman. “That includes not falling for any of the phony e-mails or faxes now in circulation pretending to come from the IRS.”

Although most of these scams consist of e-mails requesting detailed personal information, the IRS generally does not send e-mails to taxpayers, does not discuss tax account matters with taxpayers in e-mails, and does not request security-related personal information, such as PIN numbers, from taxpayers.

California Tax Attorney

Internal Revenue Service IRS TAX and United States Tax Court US TAX COURT released information regarding tax fraud related scams using the name of the IRS and US Tax Court.

IRS Tax Form 1040 Scam

This scam consists of a cover letter and form that are faxed, rather than e-mailed. The cover letter is addressed “Dear Valued Tax Payer (sic)” and appears to be signed by an IRS employee. The letter says that the IRS is updating its files and that recipients who supply the requested information will receive a nominal tax refund. It also states that those who fail to immediately return the completed form risk additional tax and withholding. The attached form is labeled a substitute Form 1040 and is titled “Certificate of Current Status of Beneficial Owner For United States Tax Recertification & Withholding.” It requests a large amount of detailed personal and financial information, such as mother’s maiden name (often used in security screening), bank account numbers, estimated assets and more. It asks the recipient to sign and fax back the completed form, as well as a copy of the recipient’s driver’s license and passport.

The letter, signature and form are all fraudulent. Moreover, the IRS does not send unsolicited faxes to taxpayers and does not request such detailed personal and financial information.

This is a variant of earlier scams. For more information, see news releases IR-2004-104 and IR-2004-75.

“Taxpayers should take steps to keep their personal information out of the hands of identity thieves,” said IRS Commissioner Doug Shulman. “That includes not falling for any of the phony e-mails or faxes now in circulation pretending to come from the IRS.”

Although most of these scams consist of e-mails requesting detailed personal information, the IRS generally does not send e-mails to taxpayers, does not discuss tax account matters with taxpayers in e-mails, and does not request security-related personal information, such as PIN numbers, from taxpayers.

Sacramento woman guilty of grand theft, state tax fraud
On April 3, A Sacramento woman pleaded no contest to one count of grand theft with an enhancement for a theft involving more than $150,000 and three counts of filing false state income tax returns.

Jill L. Platt, 36, pleaded no contest to the charges in a plea agreement. According to court documents, Platt embezzled more than $150,000 from her former employer, a local engineering firm. Platt had access to the company’s credit card and used it from September 2004 to October 2006 for personal items such as food, beverages, and entertainment. Platt also failed to claim the credit card purchases as income on her 2004, 2005, and 2006 state income tax returns. All income is taxable including income from illegal sources.

Platt faces a maximum of five years in state prison if sentenced to the full term under the plea agreement.

This was a joint investigation between the Sacramento County District Attorney’s Office and FTB.

Riverside man arrested April 15 on state income tax charges

On “tax day,” April 15, an Upland man was arrested on felony charges of filing false state income tax returns.

Jose Alberto Garcia, Jr., 28, is the owner and operator of Mi Oficina Income Tax, a.k.a. My Office Income Tax, a tax preparation business. According to FTB investigators, Garcia allegedly filed false tax returns for 2001 – 2004, failing to claim the nearly $968,000 in unreported income he earned during these years. The failure to claim the income was first discovered by FTB’s Fraud Prevention and Detection Unit. This program targets people who earned California income, but did not claim the income on their tax return. An earlier search warrant executed on Garcia’s bank account revealed the additional income. After today’s arrest, FTB investigators executed eight more search warrants on Garcia’s eight tax preparation businesses. Mi Oficina Income Tax offices are located in La Puente, Los Angeles, Ontario, Riverside, San Bernardino, Santa Ana, and Temple City.

Each felony tax count carries a three-year maximum term in state prison. All income is taxable, including income from illegal sources. Garcia owes the state more than $85,000 in unpaid tax on the unreported money. Penalties, interest, and the cost of the investigation will be added to the FTB’s restitution request.

Garcia was booked into the West Valley Detention Center in Rancho Cucamonga. Bail was set at $100,000, and his next court date has not been set.

California and Hawaii Taxpayers Struck by IRS Payroll Tax & Income Tax Problems Created by IRS Tax Evasion and Tax Avoidance Schemes.

Los Angeles - San Jose Tax Attorney: According to the Internal Revenue Service, lawyers from the IRS with the support of tax attorneys from DOJ announced that IRS has obtained civil injunctions against more than 100 tax promoters of illegal IRS tax avoidance schemes and fraudulent IRS tax return preparers in an ongoing crackdown that began in 2001.

Many of the illegal tax promoters targeted taxpayers in Los Angeles, Alhambra Burbank Carson Cerritos Downey El Monte Lawndale Lomita Long Beach Oakland Palmdale Pasadena Pomona San Jose Santa Monica Studio City Van Nuys West Los Angeles and Woodland Hills with income tax and payroll tax avoidance schemes. These taxpayers along with the tax promoters may receive IRS tax audit notice as part of the ongoing IRS tax investigation.

Many of the IRS Tax related injunctions, obtained in cooperation with the tax attorneys at Department of Justice, also order the IRS tax promoters to turn over taxpayer lists and to cease preparing IRS federal income tax returns for others.

Signaling a renewed fight against tax fraud and tax evasion, the IRS stepped up the use of injunctions to stop the tax evasion and tax fraud schemes designed to avoid income tax and payroll tax debt.

The IRS becomes aware of abusive tax promoters through a variety of means, including ongoing IRS tax audit, state of California tax audits,or referrals from external sources such as tax professionals.

The IRS is currently investigating more than 1,000 additional tax avoidance promoters for possible referral to the Justice Department and conducting individual and business tax audit on thousands of IRS tax scheme participants.

If you are currently being audited or think that you might be under IRS tax investigation, you may contact our offices located in Oakland, San Jose, San Mateo, Long Beach, Pasadena, Torrance, Los Angeles and San Francisco to speak with an experienced IRS tax attorney.

Los Angeles Tax Attorney - We serve California taxpayers with IRS or California State tax problem, tax audit, tax levy, tax lien, offer in compromise residing in the following areas: Alhambra Beverly Hills Burbank Carson Cerritos Culver City Downey El Monte Gardena Glendale Lawndale Lomita Long Beach North Northridge Palmdale Pasadena Pomona Rancho Palos Verdes Redondo Beach Rolling Hills San Gabriel San Pedro Santa Clarita Santa Fe Springs Santa Monica Sherman Oaks Studio City Torrance Valencia Van Nuys West Covina West Hollywood West Los Angeles and Woodland Hills.

All taxpayers should be aware of tax preparers such as Hazel Harris who according to government complaint targets elderly customers who receive Social Security benefits and generates fraudulent income tax refunds on their behalf.

The Government and IRS Tax complaint states that Harris tells her clients she is an accountant who specializes in refunds for Social Security recipients. In order to increase business, she is alleged to have advised potential customers to contact current clients who have received refunds as a result of her fraudulent return preparation.

Harris reportedly generates improper tax refunds by reporting only half of her customers’ Social Security benefits as taxable income, and by fabricating amounts of taxes withheld. Additionally, she has prepared the clients’ returns for multiple years at one time, regardless of whether a return has already been filed for those years.

The government alleges that Harris has prepared more than eight-thousand federal income tax returns for others since 2001. According to Internal Revenue Service (IRS) estimates, she has claimed over $3.5 million in fraudulent refunds.

Continue reading "Tax Fraud-California Taxpayers Defend Against False IRS Tax Return" »

IRS Criminal Tax Prosecution- IRS Summons Defense

Los Angeles Tax Attorney - The Internal Revenue Service may issue a summons inquiring “any offense connected into the administration or enforcement of the IRS tax code. Thus, unless there has been a referral to the Justice Department for criminal tax prosecution, that fact that there is a IRS criminal tax aspect to the Internal Revenue Service’s investigation into the taxpayer’s tax returns is not sufficient to quash a IRS tax summons.

IRS Criminal Tax and IRS Tax Fraud - Criminal Tax Defense

California Tax Attorney - A taxpayer may utilize his privilege against self-incrimination in an IRS tax audit as to records in his possession. The IRS tax attorney-client privilege also applies in the IRS tax audit context.

The constitutional immunity against self-incrimination may be involved in an IRS tax audit or tax examination. It also applies during any IRS tax collection activity. The Internal Revenue Service’s announcement policy is that the IRS Criminal Investigation Division’s Special Agent is to advise the taxpayer at the initial meeting that he cannot be compelled to incriminate himself by answering questions or producing documents, even though the case has not yet reached the IRS tax criminal prosecution stage. This does not mean, however, that the taxpayer is protected merely because the IRS agent does not comply with that directive.

Los Angeles IRS Tax Audit - Tax Attorney Production of Internal Revenue Service Documents

California Tax Attorney - During the coarse of an IRS tax audit, the IRS taxpayer may request documents from the Internal Revenue Service. Under a specific statute, the IRS taxpayer is entitled to inspect his IRS tax return, including amendments, supplements, and attachments.

In addition, Los Angeles, Long Beach, Torrance, Orange, Riverside, San Jose, California taxpayers may force the Internal Revenue Service to produce its manuals of instructions for revenue and special agents, since these are relevant to the possible improper use of the summons to aid an IRS criminal prosecution or IRS tax fraud; the IRS manuals may not be suppressed as privilege. The manuals are not exempt from disclosure under the Freedom of Information Act.

The Internal Revenue Service has been required under the Freedom of Information Act to give the taxpayer access the documents reflecting final opinions that showed how it arrived at certain fair market valuations, against the Internal Revenue Service’s argument that it was impossible to know what information might indirectly identify other taxpayers. But the taxpayer was not entitled to disclosure of a document prepared by the Internal Revenue Service which contained information almost completely derived from audits of another individual where the court found the material to be return information, not subject to the provisions of Freedom of Information Act.