Tag Archives: irs

What’s up with the Taxpayer First Act

By Coleman Jackson, Attorney & Certified Public Accountant
November 20, 2019

Taxpayer First Act - TFA

During this past summer, the Taxpayer First Act (“TFA”) became U.S. tax law.  The U.S. Congress’ stated purpose of implementing the Taxpayer First Act was to modernize and improve the Internal Revenue Code of 1986.  From a bird’s eye view, the following are three tax law changes that are among the more significant changes made to the Internal Revenue Code of 1986 by the Taxpayer First Act:

 

Form 1040 Taxpayer

  1. The TFA established within the Internal Revenue Service an office known as the ‘Internal Revenue Service Independent Office of Appeals’ to be headed by a Chief of Appeals completely independent and reporting directly to the Commissioner of Internal Revenue. The Office of Appeals is designed to give taxpayers a path to resolution of their disputes with the IRS in the administrative process without the need for costly tax litigation.  Any taxpayer in receipt of a notice of deficiency authorized under Internal Revenue Code section 6212 may request referral to the Internal Revenue Service Independent Office of Appeals.  Individuals and businesses in tax disputes with the IRS can request and obtain their IRS case files in advance of their appearing at an office of appeals conference in defense of their position.  This would permit the taxpayers to school themselves on the applicable law and marshal the facts in support of their tax return position.  Moreover taxpayers will have the right to have their tax cases heard by an independent decision maker and the right to protest adverse IRS decisions against them, including but not limited to, the IRS rejection of their request to go to the Independent Office of Appeals.  The taxpayer will have certain due process rights in the conduct of the Office of Appeals and the dispute resolution procedures.  Finally, the TFA provides that the IRS Independent Office of Appeals process will enjoy increased Congressional Oversight since the IRS Commissioner must submit annual reports to Congress under the TFA.

 

2.	The TFA modifies Internal Revenue Code Section 6015 with respect to Equitable Relief from Joint Liability

  1. The TFA modifies Internal Revenue Code Section 6015 with respect to Equitable Relief from Joint Liability, such as, the joint and severable liability associated with taxpayers signing a tax return with a spouse. The U.S. Tax Court now have the right to review de novo the administrative record established at the time of the IRS determination on the taxpayers innocent spouse relief or other equitable relief claim.  Under the TFA the Tax Court also can consider any additional newly discovered or previously unavailable evidence.  Equitable Relief cases are to be decided based on all the facts and circumstances.  Federal tax law governing equitable relief has always established certain limitations both in fact and time that are not removed or modified by the TFA.  The TFA changes impacting equitable relief claims apply to pending cases filed before this summer and all future equitable relief cases.

 

3.	The TFA modifies Internal Revenue Code Section 6503 with respect to IRS Issuance of Designated Summons

  1. The TFA modifies Internal Revenue Code Section 6503 with respect to IRS Issuance of Designated Summons. First the issuance of such summons must now be preceded by a review and written approval by the Commissioner of the relevant operating division of the Internal Revenue Service and Chief Counsel.  Moreover the burden is on the IRS to establish in the court proceeding that reasonable requests were made for the information forming the basis of the summons.  Taxpayers defending summons in court have due process rights to present counter argument and evidence to the contrary.

These are only three of the changes to tax law pursuant to the Taxpayer First Act (“TFA”); there are other significant changes as well.  Watch our future blog posts which could deal with the IRS implementation of the TFA; Internal Revenue Service Independent Office of Appeals developments under the TFA; and the federal court’s interpretations of the TFA.

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432

The Earned Income Tax Credit Two Year Band

By Coleman Jackson, Attorney, Certified Public Accountant
September 10, 2019

 

The Earned Income Tax Credit

The Earned Income Tax Credit or EITC is designed to assist working class families with children by putting money in their pockets.  The EITC is a tax credit, not, a tax deduction.  The difference is huge!   A tax credit is a dollar for dollar reduction in the taxes owed.  Tax credits generally will result in refunds and money in the taxpayers’ pockets. EITC often results in refunds to the taxpayer; although the IRS cannot issue refund checks for the Earned Income Tax Credit before mid-February.

 

The Earned Income Tax Credit

 

The rules for qualifying and claiming the Earned Income Tax Credit are complicated.  An excerpt from IRS Publication 596 reads as follows:

 

Table 1. Earned Income Credit in a Nutshell:  First, you must meet all the rules in this column.
Chapter 1. Rules for Everyone
1. Your adjusted gross income (AGI) must be less than: • $49,194 ($54,884 for married filing jointly) if you have three or more qualifying children, • $45,802 ($51,492 for married filing jointly) if you have two qualifying children, • $40,320 ($46,010 for married filing jointly) if you have one qualifying child, or • $15,270 ($20,950 for married filing jointly) if you don’t have a qualifying child. 2. You must have a valid social security number by the due date of your 2018 return (including extensions).

3.Your filing status can’t be married filing separately.

4. You must be a U.S. citizen or resident alien all year.

5. You can’t file Form 2555 or Form 2555-EZ (relating to foreign earned income).

6. Your investment income must be $3,500 or less. 7.You must have earned income.

Second, you must meet all the rules in one of these columns, whichever applies.
Chapter 2. Rules If You Have a Qualifying Child Chapter 3. Rules If You Do Not Have a Qualifying Child
8. Your child must meet the relationship, age, residency, and joint return tests.

9. Your qualifying child can’t be used by more than one person to claim the EIC.

10. You can’t be a qualifying child of another person.

11. You must be at least age 25 but under age 65.

12. You can’t be the dependent of another person.

13. You can’t be a qualifying child of another person.

14. You must have lived in the United States more than half of the year.

Third, you must meet the rule in this column.
Chapter 4.Figuring and Claiming the EIC
15. Your earned income must be less than: • $49,194 ($54,884 for married filing jointly) if you have three or more qualifying children, • $45,802 ($51,492 for married filing jointly) if you have two qualifying children, • $40,320 ($46,010 for married filing jointly) if you have one qualifying child, or • $15,270 ($20,950 for married filing jointly) if you don’t have a qualifying child.

 

If a taxpayer claims the Earned Income Tax Credit, the IRS may send a letter to them asking that they send the IRS information to verify the EITC claim.  An appropriate and timely response to the request for substantiation of the EITC is very important because failure to do so could prohibit the taxpayer from claiming the Earned Income Tax Credit (EITC) for subsequent tax periods.  The EITC substantiation may be in the form of the child’s birth certificate, health records, school records and other evidence in substantiation that the taxpayers’ meet all of the qualifications listed above to claim the EITC.  In the event the taxpayers improperly claim the EITC, the taxpayer is banded for two years from claiming the credit.  Internal Revenue Code Section 32(k)(1) permits the IRS to enforce the rules regulating the Earned Income Tax Credit by banding violators from claiming the EITC up to two years.  Recently the IRS Office of Chief Counsel issued an advisement that essentially states that where a taxpayer improperly claim (or fail to substantiate) their EITC claim for one child and continues to claim the EITC in subsequent years for that child, the taxpayers are prohibited from claiming the EITC for that child and all other children even though they may qualify for the EITC in subsequent years.  Claiming the child tax credit when under the two year band for any child has grave consequences.

 

Taxpayers can use the EITC Assistant on the IRS website to see if they qualify for the EITC.  Again claiming the EITC improperly has grave financial consequences.  Working people with low to moderate incomes must follow all the EITC rules so that they don’t run afoul of them and be stopped from claiming the Earned Income Tax Credit even when they otherwise qualify for this working family tax benefit.

 

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432

FBAR

By:  Coleman Jackson, Attorney, Certified Public Accountant
July 16, 2019

FBAR - foreign bank accounts

 

The 1970 Currency and Foreign Transactions Reporting Act, which is otherwise known as the Bank Secrecy Act requires U.S. residents, citizens and businesses with foreign bank accounts and certain other overseas assets to report those interest to the Financial Crimes Network annually on Form 114 by April 15th of the following year. Form 114 is the Report of Foreign Bank and Financial Accounts or (FBAR). The Bank Secrecy Act has a number of reporting requirements that are placed on financial institutions as well as those placed persons with foreign asset interests.  The record keeping and reporting requirements placed on  foreign account holders  are set out in detail in 31 U.S.C. Sec. 5414Form 114, the FBAR must be filed electronically through the Bank Secrecy Act E-Filing Network website.  The Financial Crimes Network is an agency of the United States Treasury but it is not the Internal Revenue Service.  These are two separate agencies under the U.S. Department of Treasury.

 

The Bank Secrecy Act at 31 U.S.C. Sec. 5414 also requires taxpayers with foreign bank accounts to disclose those accounts on their annual federal tax returns.

 

The Bank Secrecy Act at 31 U.S.C. Sec. 5414 also requires taxpayers with foreign bank accounts to disclose those accounts on their annual federal tax returns.  IRS Form 1040 at line 7a of Schedule B specifically asks whether the taxpayer has an interest or signatory authority over a foreign bank account.  A ‘yes ‘answer to this question on Schedule B requires the taxpayer to identify the country of the account and certain other details.  A taxpayer’s failure to check the box ‘yes’ when they have foreign bank interest or signatory authority over a foreign asset seriously increases their legal jeopardy because courts have said that failure to ‘check the box’  constitutes a willful violation of the  Bank Secrecy Act.  Failure to read the return has been held to be insufficient to avoid liability under the Act.  Avoiding knowledge of the Acts requirements has not been a successful plan.   Federal courts all over the country have addressed these various defenses and found them lacking weight.

 

IRS Form 1040 at line 7a of Schedule B specifically asks whether the taxpayer has an interest or signatory authority over a foreign bank account.

 

When a violation of the Bank Secrecy Act is not willful, the FBAR penalty for failure to disclose financial interest in foreign bank accounts, securities or other financial assets is capped at $10,000.  This cap only applies to non-willful violations of the FBAR statute.  Failure to check the box correctly and failure to disclose to a tax return preparer the existence of foreign bank accounts or other assets overseas is extremely likely to be found to be a willful violation of the Act.  The penalty permitted under the Bank Secrecy Act for a willful violation is equal to the greater of $100,000 or 50% of the highest balance in the account at the time of the violation.  There are also criminal penalties for violation of the Bank Secrecy Act if a taxpayer is tried and convicted under the Act.  Under the law, the Internal Revenue Service has 6 years from the date of the violation to assess the FBAR penalty and they can sue the taxpayer or the taxpayer’s estate to the collect the penalties.  Note that assessed FBAR penalties do not go away with the death of the taxpayer.

 

If the IRS assess FBAR penalties and the taxpayer refuses to pay them, the U.S. government can seek to collect the penalties in federal court pursuant to 31 U.S.C. Sec. 5321(b)(1).

 

Again, If the IRS assess FBAR penalties and the taxpayer refuses to pay them, the U.S. government can seek to collect the penalties in federal court pursuant to 31 U.S.C. Sec. 5321(b)(1).   The government must demonstrate in court by a preponderance of the evidence that (a) the taxpayer is a U.S. resident, citizen or business entity subject to the Bank Secrecy Act, (b) the taxpayer had a reporting obligation under the Bank Secrecy Act and failed to satisfy that reporting obligation, and (c) the nature of the taxpayer’s violation in terms of non-willful or willful violation of the statute, and (d) the taxpayer has failed to timely pay the assessed penalty.  The taxpayer must plead and prove any statute of limitations defects in the government’s case.  FBAR cases, as a general matter, are fact based cases.  Taxpayers win some and loose some.

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432

Offshore Accounts? The Train Is Leaving the Station! IRS To End Offshore Voluntary Disclosure Program (OVDP) on September 28, 2018

By:  Coleman Jackson, Attorney and Certified Public Accountant
September 22, 2018

The IRS is closing down the Offshore Voluntary Disclosure Program on September 28, 2018.  This voluntary international tax compliance program was designed to help people, organizations and business entities hiding money, accounts and assets overseas to get current and come into compliance with U.S. tax laws voluntarily under a reduced civil penalty structure and leniency with respect to potential criminal prosecution.  This program that has been in effect since about 2009  and extended in 2012 and again in 2014 is ending in about 7 days.

Non-compliant taxpayers with offshore accounts and assets have seven days to request permission to enter into the Offshore Voluntary Disclosure Program.  Entry into the program begins with submission to the IRS Criminal Division a request for preliminary consideration for disclosure under the OVDP program.  If the prelim request is granted, the disclosure, review, approval and closing process takes about 12 to 18 months.  Taxpayers who may have committed criminal international tax evasion or are holding undisclosed offshore accounts risk being reported by their offshore banking or financial institution since these overseas institutions are required to either directly or indirectly report United States Citizens and/or Green Card Holders with accounts in their financial institutions to the Internal Revenue Service.

Once the OVDP expires on September 28, 2018, the IRS might implement a replacement program or some procedure or method for non- compliant taxpayers to come into international tax compliance, but as of yet, the IRS has not announced any offshore accounts leniency programs or procedures that will replace the expiring OVDP.  Word to the wise— apply for the OVDP before it expires on September 28, 2018.

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432

REASONABLE CAUSE AND GOOD FAITH – IRS Penalties Can Be Abated, Forgiven or Waived

By Coleman Jackson, Attorney & Certified Public Accountant
June 21, 2018

IRS Penalties Can Be Abated, Forgiven or Waived

The Internal Revenue Code is full of various kinds of penalties that the Internal Revenue Service is authorized to assess and collect from errant, indifferent, negligent, ambivalent, and indecisive or otherwise noncompliant taxpayers who fail to collect or pay their tax bill or attempt to evade the federal tax laws.  Six IRS penalties that seem to be common in recent years are as follows:

Code Sec. 6672 Penalties:  penalties assessed when taxpayers fail to timely collect, turn over withholding taxes or avoid timely payment of tax obligations;

Code Sec. 6701 Penalties:  penalties assessed against tax return preparers, such as enrolled agents, certified public accountants or others working in the tax return preparation services industry who aids and abet taxpayers in filing false or fraudulent tax returns;

Code Sec. 6676 Penalties:  penalties assessed against taxpayers and others who file tax refund claims or take tax credits without basis in reality, truth or facts.  Unsubstantiated deductions and credits on a tax return commonly give rise to Code Sec. 6676 penalties.   Filing a tax return with the IRS with a false refund request constitutes a false statement under the penalty of perjury.

IRS Penalties

Code Sec. 6697-6699 Penalties:  penalties for failure to file various types of tax returns that should be filed.  Such as failure to file a Form 1040, Form 1120, Form 1120S or Form 1165 can all be the basis for the IRS to assess a failure to file penalty.  Pass through entities, such as, partnerships and s-corporations must still file entity tax returns even though federal taxes are paid at the individual ownership level rather than the entity level.

Code Sec. 6712 Penalties:  penalties assessed against taxpayers who fail to disclose treaty based tax positions.  Immigrants, expatriates and foreigners are especially susceptible to incurring faulty tax treaty position penalties unless they hire well qualified tax consultants in preparation of their annual tax returns.

Code Sec 6662 Penalties:  penalties assessed against taxpayers who fail to report income from foreign sources, such as, foreign bank accounts, foreign businesses, and foreign asset holdings can incur very severe penalties.  U.S. citizens, resident aliens and certain nonresident aliens must report worldwide income from all sources including foreign bank accounts, foreign businesses, foreign trusts and other foreign assets.  Moreover, taxpayers with foreign holdings whose aggregate value exceeds $10,000 at any point during the calendar year must file Form 114, Report of Foreign Bank and Financial Accounts (FBAR) electronically with the Financial Crimes Network (FinCen’s BSA E-Filing System).  Failure to report the existence of offshore holdings is subject to civil and criminal penalties.  It is anticipated that this set of penalties and potential criminal prosecution will be on the rise in the near future because the IRS has announced that it will end the 2014 Voluntary Disclosure Program on September 28, 2018.

REASONABLE CAUSE AND GOOD FAITH

Another special set of tax rules have long been in force to forgive tax penalties due to reasonable cause and good faith.  The reasonable cause relief is set out in Code Sec. 6664.  The IRS will not impose accuracy related penalties upon a showing by the taxpayer that there was reasonable cause for the tax position and that they acted in good faith with respect to the tax position or act in question.  The reasonable cause defense under Code Sec. 6664 turns on all the facts and circumstances.  That simply means that the IRS and Courts try to determine ‘why’ the taxpayer failed to comply with the federal tax laws.  A taxpayer’s substantial knowledge of federal tax law is a significant factor that the IRS and Courts consider in determining whether a taxpayer acted in good faith and reasonable.  Immigrants or those recently immigrating to the U.S. often lack the sophistication and knowledge of U.S. tax laws.  U.S. tax laws complexity often confounds well educated Americans as well.  Taxpayers reliance on tax return preparers’ suggestions, recommendations and guidance also have been found by many Courts to meet the taxpayers burden to show that they acted reasonable and with good faith.  Taxpayers exercising ordinary business care and diligence sometimes likewise are found by the IRS and Courts as acting in good faith and reasonably.  These various examples simply show that the IRS can abate, forgive or waive federal tax penalties in a very broad spectrum of situations.  Taxpayers confronted with IRS tax penalty situations must act reasonable and be prudent in exploring with their tax attorney the potential that the penalties can be abated, forgiven or waived.  Even fraud penalties can be waived under certain circumstances and criminal charges may likewise be averted.

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432

IRS REFUNDS LIKE DISCOUNT COUPONS CAN BE LOST

By:  Coleman Jackson, Attorney, CPA
May 11, 2018

IRS REFUNDS LIKE DISCOUNT COUPONS CAN BE LOST

Read discount coupons’ fine print.  IRS refunds like discount coupons can be lost for a variety of reasons.  That is why you need to read the fine print; so that, it is more likely than not, that you receive what you expected.  Read carefully the fine print of the Internal Revenue Code too.

Focus on the Internal Revenue Code.  26 United States Code exclusively set for the guidelines and requirements for federal tax refunds claims.  26 U.S.C. is commonly referred to as the Internal Revenue Code.  The Internal Revenue Code governs tax refund claims.  Taxpayer’s must focus on the fine print or legitimate refunds can be lost.  IRS refunds like discount coupons can be lost.  Under 26 U.S.C.S Section 7422(a), a taxpayer who seeks a refund must make a timely claim for refund.  This means that the taxpayer must file a timely tax return and do everything it can to attempt to collect the erroneously or illegally assessed or collected tax.  This includes seeking an appeals conference within the IRS.  The taxpayer must exhaust these administrative attempts before filing suit against the United States government in the appropriate federal District Court.

A tax refund claim encompasses a taxpayer’s attempt to obtain a credit, offset or return of any overpayments of taxes assessed or collected by the United States government under the Internal Revenue Code

Pay more attention to fine points.  A tax refund claim encompasses a taxpayer’s attempt to obtain a credit, offset or return of any over payments of taxes assessed or collected by the United States government under the Internal Revenue Code.  Refund claims must be filed within the statute of limitations which depends upon whether an original tax return was timely filed.  If a tax return was timely filed, a taxpayer must file a refund claim with the IRS within 3 years of the return due date or within two years of paying the tax.  The due date governs when the statute begins to run.  For example, if the return was due on April 15, 2018 and the taxpayer actually filed early; the actual due date of the return and not the early filing date would govern the start of the statute of limitations.  Likewise, for example, if the payment due date is June 30, 2018 and the taxpayer actually pays on May 15, 2018, the due date of the payment governs the start of the statute of limitations and not when the taxpayer actually paid the tax.   Filing early or paying early reverts back to their respective due dates.  The fallback statute of limitations is two years under the IRC if no return was required; see IRC Sec. 6511(a).  If a tax return was required and no return was filed within three years of its due date; the taxpayer is not entitled to a refund.  Normal filing extensions, insolvency and bankruptcy of the taxpayer and formal agreements with the Internal Revenue Service; such as, installment agreements has absolutely no affect on the ‘due date of the return’ for refund purposes. Pay attention to waivers, however, because taxpayers can waive (give up) their legal rights to recover IRS refunds.

Focus on IRS delays.  The IRS must be given the opportunity to return the erroneously assessed or collected tax, penalty or interest

Focus on IRS delays.  The IRS must be given the opportunity to return the erroneously assessed or collected tax, penalty or interest.  If the IRS refuses to return the erroneously assessed or collected tax within six months of the taxpayer’s refund claim, the IRS is required to inform the taxpayer of its right to an appeals conference pursuant to Treasury Regulation 301.7430-1(e)(3)(iii).  If the government fails to give the taxpayer notice of the right to an appeal conference, the taxpayer can file suit six months after filing its tax refund claim because the presumption is that the taxpayer has exhausted its administrative remedies.  If the IRS gives the taxpayer the required ‘right to appeals conference notice’ but refuses to return the erroneously or illegally assessed or collected tax, penalty or interest after the appeals conference, the taxpayer can sue in federal court.  Note ; however, that no federal lawsuit can be filed against the tax collector, or IRS auditor, or IRS revenue officer because claims for return of erroneously assessed or collected taxes, penalties and interest are claims against the United States government—not claims against the government’s agents, auditors or collectors.  See Kaucky v. Southwest Airlines Co., 109 F. 3d 349 (7th Cir. 1997).  The U.S. government is the only party that the taxpayer can sue in tax refund recovery cases.  The taxpayer must file suit against the United States government for erroneously assessed taxes, penalties or interest within two years after exhaustion of administrative remedies pursuant to 26 U.S.C.S. Sections 7422(a) through 7422(f).    The tax refund lawsuit must be brought in federal court; taxpayer’s cannot sue the federal government in state court for tax refunds.  Tax refund cases can be brought in the Court of Federal Claims and federal District Court with jurisdiction over all parties.  Repeat!  Taxpayers must bring their refund suit within two years of exhausting their administrative remedies.  The federal suit can include claims for recovery of overpaid taxes, penalties and interest.  And when the IRS agents have acted in a manner that is arbitrary and capricious the taxpayer can also seek to recover its administrative cost which includes litigation costs and reasonable attorney fees.  Government agents act arbitrary and capricious whenever their actions have no basis in law or fact.

To summarize; IRS refunds like discount coupons can be lost if the taxpayer ignores the fine print.  Focus on the following summary:

  1. The Internal Revenue Code governs tax refunds relating to taxpayer’s attempts to recover allegedly erroneous assessment or collection of federal taxes, penalties and interest;
  1. Taxpayer’s must file a claim for refund with the Internal Revenue Service within the statutory time frame for filing such claim. The statute of limitation is typically 3 years from the due date of the tax return or 2 years from the payment due date when the tax is paid;
  1. The IRS is required to act lawfully and in a reasonable amount of time pursuant to the Internal Revenue Code and the IRS Practice Manual to resolve administratively tax refund claims;
  1. Taxpayer’s who exhaust their administrative remedy can sue the United States government in federal court to recover overpayments of taxes, penalties and interest from the U.S. government. If the IRS had no basis in law or fact to support its position in denying the taxpayer’s refund claims, the taxpayer can seek to recover administrative cost, including litigation costs and attorney fees pursuant to the 5th Amendment to the United States Constitution.  The pertinent part of the 5th Amendment reads that no one shall be deprived by the federal government of life, liberty or property without due process of law.   The U.S. Constitution sits atop all statutes and other laws both federal laws and state laws; including the Internal Revenue Code.  The term “Rule of Law” simply means that the country is ruled by laws and not the dictates of men.  The federal government cannot constitutionally take anyone’s ‘life, liberty and property’ without due process of law.

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432

IRS to End the 2014 Offshore Voluntary Disclosure Program on September 28, 2018

By:  Coleman Jackson, Attorney, CPA
March 27, 2018

IRS to End the 2014 Offshore Voluntary Disclosure Program - OVDP on September 28, 2018

Have you heard the news!  On Monday, March 13, 2018 the IRS announced that it will end the Offshore Voluntary Disclosure Program on September 28, 2018.

It is likely already too late for all those people who are taking their chances and have not already made steps to enter the OVDP.  Practitioners from all over the country have experienced extreme delays in getting taxpayers pre-cleared into the 2014 OVDP for months.  Pre-clearance requests are taking more than 6 months these days.  IRS representatives have stated that the preclearance processing unit of the IRS has long backlogs in even logging in new OVDP preclearance requests.  The unit has about a 9 to 12 month back log in pre-clearance requests… so we have been told.

Taxpayers who have not taken advantage of the 2014 OVDP must act quickly.

Taxpayers who have not taken advantage of the 2014 OVDP must act quickly.  Repeat it is possible that it is now too late to act.  The U.S. Treasury has been receiving directly or indirectly information from foreign financial institutions concerning U.S. persons with foreign bank accounts for about two years now.   They probably already know those U.S. persons who hold foreign bank accounts.  The chances of being detected with respect to foreign bank holdings are probably extremely high.  In fact it might be impossible to hide from detection; and, possible federal prosecution of violators could rise.

Violators of FBAR rules by failing to timely report offshore bank accounts are subject to civil fines and criminal prosecution.  Foreign Bank Accounts are reported annually on April 15th by filing Form 114 with the Financial Crimes Network.  Delinquent FBARs put taxpayers in legal jeopardy.  There may also be federal income tax issues involved also if the taxpayer has under-reported its income or unfiled federal tax returns.   Tax fraud and delinquent FBARs are serious crimes which can result in violators spending years in federal prison upon conviction.

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432