Senator Pat Toomey is expressing increasing concern about the tax fraud problem in Pennsylvania and even went to IRS Commissioner Douglas Shulman for answers.
In a recent letter to Shulman, Toomey wrote, “[Pennsylvania law enforcement officials] have noticed a disturbing trend whereby fraudulent tax returns are being filed using legitimate Social Security numbers in order to generate improper tax refunds”. He went on to express how urgent it was to stop this as quickly as possible.
Although the use of data-mining technology is most closely associated with technology companies, it has begun to take hold among other types of organizations in recent years, none more notable than the IRS.
The Internal Revenue Service has recently adopted the E-trak Offshore Voluntary Disclosure system, which is data-mining software that enables them to better find taxpayers with concealed bank accounts overseas. So for any U.S. taxpayers who are debating whether or not to disclose their offshore accounts, they should be aware that the likelihood of being detected has increased.
Jay Nanavati, the publisher of “Why Holders of Foreign Bank Accounts Need to Worry About IRS’s Voluntary Disclosure Data-Mining Program” warns that taxpayers should act accordingly as those with offshore accounts who are discovered by the IRS will no longer be eligible to participate in the Offshore Voluntary Disclosure Program.
U.S. taxpayers who do not fulfill their tax obligations can face civil and criminal penalties for nondisclosure.
If you have any questions or need assistance with an undisclosed foreign bank account, call US Tax Shield at 800-417-8372 and talk to a seasoned tax attorney today.
Bruce Gregory Harrison III, a North Carolina businessman, has been sentenced to 12 years in prison for failure to pay payroll taxes and individual income tax returns. Between 2004 and 2006, and again in 2009, Harrison skipped out on paying over $40 million in federal taxes that he withheld from the pay of his employees. And now he’s facing the consequences.
Through a variety of temporary staffing businesses, such as U.S.A. Staffing and Compensation Management Inc., Harrison contracted out workers to other companies with the understanding that he would have these businesses withhold taxes for those employees and send them to the IRS. Instead, evidence shows that Harrison went far out of his way to conceal his nonpayment of payroll taxes, going to lengths such as presenting false bank statements to auditors and giving false statements to IRS revenue officers.
Instead of paying the IRS in the form of payroll taxes, Harrison instead lavished this money upon himself, with a yacht and even to get into the movie industry by financing various productions.
Needless to say, the government has taken a hard lined stance against Harrison. Said Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, “The integrity of our Social Security and Medicare system depends on payroll deductions from honest, hard-working taxpayers being properly paid over. The sentence handed down today demonstrates that those who steal the taxes paid by their employees risk lengthy prison sentences, and in the end, will still owe the taxes together with civil penalties.”
And now Harrison pays a significant price for his transgressions, and serves as a cautionary tale against committing payroll tax fraud.
Recently the IRS announced new procedures to provide tax relief and induce tax compliance among non-resident taxpayers, even if they have foreign bank accounts that were previously undeclared.
The streamlined compliance procedures were designed specifically for taxpayers living abroad who have resided outside of the U.S. since January 1, 2009 and have not filed U.S. tax returns since then. In addition, in order to qualify, the IRS must deem the taxpayer a low compliance risk.
Coming on the heels of similar programs in previous years, the 2012 version of this program is intended to give these taxpayers a second chance to file U.S. federal income tax returns or Reports of Foreign Bank and Financial Accounts (FBARs) without the risk of civil penalties. For those who meet the requirements and present a low compliance risk, the review will be expedited and the IRS will not impose penalties or pursue follow-up actions.
For consideration, eligible non-resident taxpayers must submit the required questionnaire, tax returns for the years 2009-2011 and FBARs for the last six years.
Do you need professional help with reporting foreign bank accounts to the IRS? Talk to the tax experts at US Tax Shield. Call 800-417-8372 or visit www.ustaxshield.com today.
The Internal Revenue Service has announced that they will provide tax relief to individuals and businesses in Louisiana and Mississippi who were affected by Hurricane Isaac.
Eligible individuals, located in select sections of the two states most impacted by Isaac, will receive tax relief in the form of a tax filing and payment extension. Tax filing and payment deadlines that occurred on or after August 26, 2012 will be pushed back to January 11, 2013—thus, affected individuals will have until then to file and pay any taxes owed. In addition, the IRS will abate interest or late penalties that would otherwise apply.
The tax relief includes companies and businesses that have previously obtained an extension until September 17, 2012 or October 15, 2012, as well as estimated tax payments for the third quarter of 2012 which are commonly due on September 17.
Other locations may also be offered relief based on additional damage assessments by FEMA in the coming weeks.
Rhode Island taxpayers who owe money to the state are in luck. Those who are behind on their state taxes will have the opportunity to pay the full amount of overdue taxes back to the IRS, plus only 75% of any interest accrued, without being subject to any late penalties.
The Rhode Island Division of Taxation is offering a 75-day only Tax Amnesty Program to its residents, which began on September 2, 2012.
The program applies to personal and corporate income taxes, sales and use taxes and employer taxes (such as unemployment and temporary disability insurance) due for taxable periods ending before January 1, 2012, but also includes 2011 Rhode Island personal income tax returns, which were due on April 17, 2012.
Taxpayers who are facing criminal investigations or have any civil or criminal proceedings pending in any court in the United States for fraud associated with state taxes are not eligible for the tax amnesty program.
All others have until November 15, 2012 to take advantage of this rare opportunity.
Will other states adopt similar tax amnesty programs in the future? We’ll keep you updated if any follow Rhode Island’s lead.
Michael Cohn of AccountingToday reports that the Internal Revenue Service has made changes to its Revenue Procedure 94-22 and will no longer provide individuals, companies or organizations with letter-forwarding services intended to locate missing taxpayers who may be entitled to a payout on their retirement plan or other types of financial benefits.
The IRS’ previous program would forward a letter to a missing individual on behalf of a private individual, business or government agency if the request was made for a humane purpose and there was no other possible way to relay the information. However now, under current budget constraints, the IRS has decided to stop providing free detective services, claiming that other “locator resources,” like the Internet, can serve as suitable replacements.
The IRS will continue to forward letters but will limit its services to emergency situations where a message is urgent — like notification of a serious illness, imminent death or the actual death of a close relative.
FATCA, or the Foreign Account Tax Compliance Act, was introduced by the IRS as a way for the U.S. to improve tax compliance involving foreign financial assets and offshore accounts.
But just about everyone despises the act. U.S. expatriates are not fond of it because it has led foreign banks to block them from opening accounts. And that’s because those financial institutions are burdened to follow its set of guidelines, should they accept Americans’ money. And foreign governments in general oppose it because it allows the IRS to overpower their own countries’ tax agencies.
So while not many support FATCA, it has however, won over the most unlikely of candidates — the British. British legislators have announced that they want to create their own replica of FATCA to regulate cross-border tax evasion. Which of course means that U.K. citizens and U.K. companies may soon have to follow a similar set of rules, most likely to the annoyance of its citizens, financial institutions outside of the U.K. and other countries.
It’s too soon to tell if they’ll enact their own version of FATCA, but Forbes reports that the Brits are gung-ho about the act and are even looking to rally other European nations to join the FATCA movement.