Lowrance Law, LLC

WASHINGTON ─ The Internal Revenue Service today announced a one-time extension of the deadline for special voluntary disclosures by taxpayers with unreported income from hidden offshore accounts. These taxpayers now have until Oct. 15, 2009.   See http://tinyurl.com/mv9oub and NY Times http://tinyurl.com/nleozr 

Under special provisions issued in March, taxpayers with these hidden accounts originally had until Sept. 23, 2009 to come forward. Those taxpayers who do not voluntarily disclose their hidden accounts by the new deadline face much harsher civil penalties, where applicable, and possible criminal prosecution.

IRS officials decided to extend this deadline after receiving repeated requests from tax practitioners and attorneys around the country following an influx of taxpayer requests. By extending the deadline for a short period of time, the IRS is providing relief for those taxpayers who had intended to come forward prior to the deadline, but faced logistical and administrative challenges in meeting it. The extension will allow tax preparers and attorneys the necessary time to interview and advise their backlog of taxpayers with these hidden accounts, and prepare the necessary paperwork to qualify for the special penalty provisions.

The IRS also announced that there will be no further extensions.

No legal opinion here.

Bill Lowrance

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The U.S. Treasury Department announced on June 19 (see Treasury Press Releases) that Switzerland will agree to more exchange of financial information for tax enforcement purposes.   Treasury Secretary Timothy Geithner said the new accord “will increase our ability to enforce our tax laws and will help bring an end to an era of offshore accounts and investments being used for tax evasion.” 

Officials said the protocol would revise the existing US-Switzerland income tax treaty to allow for the exchange of information for income tax purposes “to the full extent permitted by Article 26 of the Organization for Economic Co-operation and Development (OECD) Model Income Tax Convention.”

Article 26 of the OECD Model Income Tax Convention is the “exchange of information” clause that most countries use as their “exchange of information” paragraph in International Tax Treaties.  The change in the US–Swiss Tax Treaty means that the Switzerland definition of “tax fraud” will not control the information that may be given to the US authorities under the US – Swiss Tax Treaty.  In the past, Switzerland would not give information to the US under a tax treaty request unless the information led to “tax fraud” as defined by the Swiss law.  “Tax fraud” under Swiss law is very narrow and does not meet the US standard of “tax evasion” that most US tax treaty requests encompass. 

Article 26 of the OECD Model Income Tax Convention states:

“The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Convention or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to the Convention.”

Now, the question will become, after the US – Swiss change, what if “foreseeably relevant” in the Switzerland’s opinion.  This may be a whole new area for litigation in Switzerland and the US for the collection of financial information from Switzerland.

Hey, no tax opinon here.

Bill Lowrance

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Offshore Accounts–Disclosure to IRS

May 7, 2009

 Here are a couple of the FAQs the IRS published yesterday on its web site regarding offshore accounts:  1. Why did the IRS issue internal guidance regarding offshore activities now? The IRS has had a voluntary disclosure practice in its Criminal Manual for many years. Once IRS Criminal Investigation has determined preliminary acceptance into the […]

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IRS FAQs–Offshore Accounts & Voluntary Disclosure

May 7, 2009

Yesterday, May 6, 2009, the IRS posted on its website FAQs on more details of the settlement offer for unreported offshore income.  The FAQs discuss the recently announced program for voluntary disclosure to the IRS of offshore bank accounts.  The official Voluntary Disclosure can be found Click Here.  Those meeting the terms of the disclosure […]

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Offshore Accounts — Open Up

March 13, 2009

Switzerland, Austria and Luxembourg agreed to share secret banking information in cases of tax evasion on Friday.  Basically, these havens are agreeing to the OECD standards on financial information sharing.   Of course, this is not an open season on the bank and financial information.  These countries will consider various requests from other countries for banking […]

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IRS and Offshore Accounts–The Heat Is On

January 11, 2009

According to the NYT, the Swiss Bank UBS, the world’s largest wealth manager, is going to return about $18 billion dollars to more than 19,000 account holders most of whom are US citizens.   The US citizens holding the accounts, according to the IRS and Justice Department, have evaded at least $300 million a year in […]

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Famous Tax People 08

January 5, 2009

Accounting Web posted a great article about famous tax cheats for 2008—sort of a looking back for tax cheaters. The list:  Wesley Snipes, Joe Francis (Girls Gone Wild), Nicholas Cage, Helio Castroneves and Paul Hogan (Crocodile) among others. Read the whole story Click Here Interesting story. Bill Lowrance

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IRS Increasing Workforce-More Enforcement

December 15, 2008

The IRS announced that it is hiring senior level Economists and Internal Revenue Agents (International Examiner, Financial Products & Transactions Examiner, and Team Member/Domestic Agents for entry on duty in March and April 2009. This is another indicator that the IRS will be stepping up enforcement efforts in 2009 and subsequent years. Special emphasis will […]

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US Tax Investigations–Foreign Bank Accounts and Tax Havens

December 4, 2008

Thanks to Tax Prof Blog for A NYT Story on the expanded US Justice Department and IRS investigation of foreign banks, Credit-Suisse and HSBC and their private banking services.  The new investigation relates to the present investigation into UBS Bank in Switzerland See See Prior Post.  The IRS and US Department of Justice (DOJ) are really looking for […]

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Swiss Bank UBS Clients Hiring Tax Attorneys

November 25, 2008

Some US citizens who have secret, offshore Swiss bank accounts are hiring attorneys and going to the IRS to disclose the unreported accounts.  All this activity stems from the prior indictment of a UBS bank executive for providing some US citizens with aggressive, advanced tax avoidance (evasion?) schemes.  See prior post Click Here.  Various news accounts […]

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