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Jeffrey B. Kahn, Esq. and Gary Sussman Discusses Impact Of BREXIT, Investing and Taxes and Reporting Foreign Accounts To The IRS On ESPN Radio – July 1, 2016 Show

Topics Covered:

  1. Mark Miletello, Managing General Agent for American National Insurance in Southern California
  2. BREXIT: What the British ‘Divorce’ With the EU Holds in Store
  3. Now That The June 30th Deadline Has Passed to Report Certain Foreign Accounts to the U.S. Treasury – What Should You Do?
  4. Questions:
    • The markets started to rally on Wednesday, recovering ground after the initial Brexit vote. Was that it? Or should I still be more conservative and plan for another recession?
    • With the current volatility in the stock market, is it better to be investing in bonds, mutual funds or just keep funds in a money market account? What are the benefits of each?

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Jeff states: Good afternoon! Yes sometimes we just have to take the money and run!

Welcome to Inside Advantage – Your Financial And Tax Radio Show.

This is Board Certified Tax Attorney, Jeffrey B. Kahn, the principal attorney of the Law Offices Of Jeffrey B. Kahn, P.C. and head of the KahnTaxLaw team.

Gary states:

And this is Licensed Financial Planner, Gary Sussman, Senior Vice President Of Investments at Trilogy Financial Services.

You are listening to our weekly radio show where we talk everything about finances and taxes from the ESPN 1700 AM Studio in San Diego, California.

Jeff states:

When it comes to knowing tax laws and paying taxes, let’s face it — everyone in the U.S. is either in tax trouble, on their way to tax trouble, or trying to avoid tax trouble!

Gary states:

And whether you are on the rebound or flying high, we have the information you need to make sound financial decisions and map out your strategy for success.

Jeff states:

Our show is broadcasted each Friday at 2:00PM Pacific Time and replays are available on demand by logging into the KahnTaxLaw website at www.kahntaxlaw.com.

Jeff states:

For today’s show we have coming up:

Segment 2 material: BREXIT: What the British ‘Divorce’ With the EU Holds in Store

Gary states:

Also coming up is:

Segment 3 material: Now That The June 30th Deadline Has Passed to Report Certain Foreign Accounts to the U.S. Treasury – What Should You Do?

And of course towards the end of our show, we will be answering some of your questions.

Jeff starts chit chat with Gary.

Jeff states: I’d like to take this moment to introduce today’s special guest:

Mark Miletello, Managing General Agent for American National Insurance in Southern California

  1. Tell us a little about yourself, Mark.
  2. Insurance seems to have become overly commoditized over last decade, especially when you think of auto, homeowners umbrella insurance. How do you help people see that there is more to the equation than cost?
  3. Now you were an agent in Louisiana during Katrina. I imagine you had to process a lot of claims. What was that like?

Jeff states: Well it’s time for a break but stay tuned because we are going to talk with you about BREXIT and What the British ‘Divorce’ With the EU Holds in Store for Us.

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Gary Sussman on Inside Advantage on ESPN.

BREAK

Jeff states: Welcome back.  This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Gary Sussman.

And be aware of the special offer that Gary has for you: Gary states PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Gary Sussman.  The number to call is 949.536.2030. That is 949.536.2030. Or visit www.yourfinancialstory.com.

BREXIT: What the British ‘Divorce’ With the EU Holds in Store for the U.S.

http://blogs.wsj.com/economics/2016/06/24/economists-react-to-brexit-a-wave-of-economic-and-political-uncertainty/

http://blogs.wsj.com/economics/2016/05/12/wsj-survey-recession-odds-remain-elevated-despite-calmer-fianancial-markets/

http://blogs.wsj.com/economics/2016/06/09/four-risks-that-could-push-the-u-s-economy-into-recession/

  1. A week ago, the United Kingdom voted to leave the European Union
    1. Sets the stage for a protracted European political break-up as well as extended global economic uncertainty
    2. Presents a new complication for Federal Reserve officials determining the next interest rate hike and a broader monetary policy
    3. DISCUSS: Which sectors would take the hardest hit with economic uncertainty in the EU and an interest rate hike here at home?
  2. Here’s what a few economists are saying:
    1. “Brexit will shave a few tenths off the US GDP growth”
      1. DISCUSS: Agree or Disagree? Why?
    2. “We are not at the point where we would forecast a global recession based on Brexit”
      1. DISCUSS: Agree or Disagree? Why?
    3. “It is unlikely the US consumer—which is driving this recovery—will be thrown off by Brexit in the short-term”
      1. DISCUSS: Should we be expecting a lesser impact?
    4. “In the long run, the stronger dollar and reduced demand from UK and EU emanating from slower economic growth will negatively affect the US economy”
      1. DISCUSS: What types of negative impact?
    5. “It is not difficult to see parallels between the sentiment of UK voters and the sentiment of voters in the US presidential election”
    6. “The Brexit vote may suggest Trump has a better chance of winning the White House”
      1. DISCUSS: Agree or Disagree? Why?
    7. So what are the chances of us falling into a recession in the next year?
      1. 20% chance of falling into a recession in 2017
      2. Global slowdown is still identified as the biggest risk
      3. Is China still a factor with all the attention on Brexit?
        1. DISCUSS: Slowdown in international trade weighing down the US and the issues behind a strong dollar
      4. The Four Risks That Could Push the US Economy Into Recession
        1. China
        2. Business Investment
        3. US Politics
        4. Stall Speed
          1. DISCUSS: The weight of each factor and what it means/how it relates to our economy.

Gary states PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Gary Sussman.  The number to call is 949.536.2030. That is 949.536.2030. Or visit www.yourfinancialstory.com.

Jeff states: Stay tuned because after the break we are going to tell you Now That The June 30th Deadline Has Passed to Report Certain Foreign Accounts to the U.S. Treasury – What Should You Do?

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Gary Sussman on Inside Advantage on ESPN.

BREAK

Jeff states: Welcome back.  This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Gary Sussman.

Calling into the studio from my Walnut Creek Office is my associate attorney, Amy Spivey.

Chit chat with Amy

And be aware of the special Offer that I have for you: PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment.  Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Now That The June 30th Deadline Has Passed to Report Certain Foreign Accounts to the U.S. Treasury – What Should You Do?

Amy states: By law, many U.S. taxpayers who have one or more bank or financial accounts located outside the United States, or signature authority over such accounts  exceeding certain thresholds must file Form 114, Report of Foreign Bank and Financial Accounts, known as the “FBAR”. It is filed electronically with the Treasury Department’s Financial Crimes Enforcement Network (FinCen).  This report for 2015 was due June 30, 2016.  If you filed an extension for your 2015 Form 1040, that extension does not apply to the FBAR.

Gary asks: What is the filing requirement for the FBAR?

Amy replies: In general, the filing requirement applies to anyone who had an interest in, or signature or other authority over foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2015. The form is only available through the BSA E-Filing System website where it is also electronically filed.  There is no paper submission of this form.

Jeff states: In 2015, FinCen received a record high 1,163,229 FBARs, up more than 8% from the prior year. FBAR filings have grown on average by 17% per year during the last five years, according to FinCen data.  The IRS reported that about 60,000 taxpayers have come forward to voluntarily disclose their foreign accounts through an IRS Voluntary Disclosure Program that satisfied past reporting deficiencies.  That being the case, either a lot of U.S. persons for the first time opened a foreign account or there are a lot of U.S. persons who elevated their chances to get caught by the IRS.

Amy states: In addition, the IRS has also implemented the Foreign Account Tax Compliance Act (FATCA), which mandates third-party reporting of foreign accounts to foster offshore tax compliance. FATCA created a new filing requirement for U.S taxpayers: IRS Form 8938, Statement of Specified Foreign Financial Assets, which is filed with your Form 1040. The filing thresholds are much higher for this form than for the FBAR.

Gary states: So it sounds like the noose is getting tighter for taxpayers who have yet to properly disclose their foreign accounts.

OVDP Myths

Jeff states: That’s right Gary. And U.S. taxpayers with previously undisclosed interests in foreign financial accounts and assets continue to analyze and seek advice regarding the most appropriate methods of coming into compliance with their U.S. filing and reporting obligations.

Amy states: Many are pursuing participation in the current IRS Offshore Voluntary Disclosure Program known as OVDP (the current version began in 2014 and is modeled after similar programs in 2009, 2011 and 2012.  In 2014 the IRS also added a version called the “Streamlined Procedures” which for eligible taxpayers provides an even lower penalty rate of 5% for domestic taxpayers and no penalty for foreign taxpayers.

Gary states: So with my two tax attorneys in the house, let me read off the myths on disclosure and get your comments.

[Gary reads each myth followed by Amy explanation and Jeff comments.]

Myth #1: An individual will be better off “explaining” the undisclosed foreign bank accounts through amended tax returns, rather than opting into OVDP.

Even outside of OVDP, any disclosure to the IRS requires that the taxpayer file amended tax returns and be prepared to provide the foreign bank information and statements to support the new income being reported. Such returns are signed by the taxpayer that they are true and complete. Being outside of OVDP the government can develop a case supporting severe penalties and even criminal prosecution using the combination of original filed tax returns which omitted the foreign income and amended tax returns reporting the foreign income as admissions of intent to evade U.S. income tax.

Myth #2: Once an individual enters into OVDP, you cannot dispute the amount of penalties imposed by the program.

Just because the penalty rate structure is set in OVDP does not mean the amount of penalty can never be disputed. Agents assigned to OVDP cases do make mistakes and do misinterpret foreign bank income and transaction activity including those accounts, assets and transactions that should not be part of any penalty calculation. These disputes or differences can still be contested and challenged through different means and channels while still remaining in OVDP.

Myth #3: An individual who enters into OVDP opens up all years for examination since becoming a U.S. person for tax purposes with undisclosed foreign bank accounts and unreported foreign income.

While the normal Statute Of Limitations to examine a tax return is three years, it can be extended to six years where there is a substantial omission of income and where the government can show fraud, the government has no limitation on how far back it can go. Furthermore, the government has a six-year Statute Of Limitations to pursue criminal prosecution. A person who is in OVDP avoids criminal exposure and any income tax return amendments are limited to the last eight years or if shorter, from the time the individual becomes a U.S. person for tax purposes.

Myth #4: An individual who enters in OVDP is forfeiting assets, including entire lifetime savings and more to the government so that any income, inheritances, or gifts these people may receive in the future will belong to the IRS.

Outside of OVDP, the MINIMUM penalty is 50% of the value of your foreign assets. But for taxpayers participating in OVDP, the MAXIMUM penalty is 27.5%.  And for taxpayers participating in the Streamlined Procedures the penalty is 5% for domestic persons and waived for foreign persons. That means for taxpayers who are in OVDP, they will still get to keep at least 72.5% of their foreign assets.   

Jeff states: If you have never reported your foreign investments on your U.S. Tax Returns or even if you have already quietly disclosed, you should seriously consider participating in the IRS’s 2014 Offshore Voluntary Disclosure Initiative (“OVDP”) or its Streamlined Procedures.  Once the IRS contacts you, you cannot get into this program and would be subject to the maximum penalties (civil and criminal) under the tax law. Which is why …

PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment.  Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Thanks Amy for calling into the show.  Amy says Thanks for having me.

Stay tuned as we will be taking some of your questions. You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Gary Sussman on Inside Advantage on ESPN.

BREAK

Jeff states: Welcome back.  This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Gary Sussman.

And Gary and I always pleased to make our offers to our listeners where… PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment.  Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Gary states PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Gary Sussman.  The number to call is 949.536.2030. That is 949.536.2030. Or visit www.yourfinancialstory.com.

You should also know that the securities and advisory services are offered through National Planning Corporation (NPC) Member FINRA, SIPC, and a Registered Investment Advisor.  Trilogy Financial Services and NPC are separate and unrelated Entities.

Jeff states: If you would like to post a question for us to answer, you can go to my website at www.kahntaxlaw.com and click on “Radio Show”.  You can then enter your question and maybe it will be selected for our show.

And in the studio with us is Mark Miletello of American National Insurance.  OK So Mark with you being our special guest, what questions have you pulled for us to answer?

Charles of Del Mar asks: The markets started to rally on Wednesday, recovering ground after the initial Brexit vote. Was that it? Or should I still be more conservative and plan for another recession?

Gary answers.

Kevin from Laguna Beach asks: With the current volatility in the stock market, is it better to be investing in bonds, mutual funds or just keep funds in a money market account? What are the benefits of each?

Gary answers.

Jeff states: Well we are reaching the end of our show.

Remember you can send us your questions by visiting the kahntaxlaw website at www.kahntaxlaw.com.

Gary states: Have a great day everyone and a great 4th of July Holiday!

Request A Case Evaluation Or Tax Resolution Development Plan

Get a Tax Resolution Development Plan from us first before you attempt to deal with the IRS. You would meet with Board Certified Tax Attorney Jeffrey B. Kahn at the office location most convenient to you. Jeff will review your situation and go over your options and best strategy to resolve your tax problems. This is more than a mere consultation. You will get the strategy or plan to move forward to resolve your tax problems! Jeff’s office can set up a date and time that is convenient for you and take your credit card information to charge the $600.00 session fee which secures your appointment. By the end of your Tax Resolution Development Plan Session, if you desire to hire us to implement the strategy or plan, Jeff would quote you our fees and apply in full the $600.00 charge for the Tax Resolution Development Plan Session.