Topics:
· Is there any difference in an LLC or S-Corp when forming a business and looking at potential tax liability?
· How can this affect things if the business breaks up?
· How long do the tax records need to be kept?
The length of time you should keep a document depends on the action, expense, or event which the document records. Generally, you must keep your records that support an item of income, deduction or credit shown on your tax return until the period of limitations for that tax return runs out.
The period of limitations (which we call the Statute Of Limitations or “SOL”) is the period of time in which you can amend your tax return to claim a credit or refund, or the IRS can assess additional tax. The information below reflects the SOL that apply to income tax returns. Unless otherwise stated, the years refer to the period after the return was filed. Returns filed before the due date are treated as filed on the due date.
SOL’s that apply to income tax returns:
1. Keep records for 3 years if situations (4), (5), and (6) below do not apply to you.
2. Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return.
3. Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction.
4. Keep records for 6 years if you do not report income that you should report, and it is more than 25% of the gross income shown on your return.
5. Keep records indefinitely if you do not file a return.
6. Keep records indefinitely if you file a fraudulent return.
For employment tax returns, you should keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.
The following questions should be applied to each record as you decide whether to keep a document or throw it away.
Are the records connected to property?
Generally, keep records relating to property until the period of limitations expires for the year in which you dispose of the property. You must keep these records to figure any depreciation, amortization, or depletion deduction and to figure the gain or loss when you sell or otherwise dispose of the property.
If you received property in a nontaxable exchange, your basis in that property is the same as the basis of the property you gave up, increased by any money you paid. You must keep the records on the old property, as well as on the new property, until the period of limitations expires for the year in which you dispose of the new property.
What should you do with your records for nontax purposes?
When your records are no longer needed for tax purposes, do not discard them until you check to see if you have to keep them longer for other purposes. For example, your insurance company or creditors may require you to keep them longer than the IRS does.
Is there any difference in an LLC or S-Corp when forming an entity and looking at potential tax liability?
When clients inquire on what type of entity should be formed for the operation of a business venture, we refer to that type of discuss ion as “Choice Of Entity”.
Both LLC’s and S-Corp’s have some similarities.
They both offer the following advantages over not incorporating:
• Limited liability: Directors, officers, shareholders/members, and employees enjoy limited liability protection.
• Pass-through taxation: Owners report their share of profit and loss on their individual tax returns.
• Double taxation elimination: Income is not taxed twice (unlike corporate income which is taxed at the corporation level and again then at the individual level as dividend income when distributions are made).
• Investment opportunities: The company can attract investors through the sale of shares of stock or membership interests.
• Perpetual existence: The business continues to exist even if the owner leaves or dies.
The big difference though is how these entities are taxed which people are not aware knowing that for both types of entities, the income or loss flows through to the individual income tax returns of the owners. An S-Corp will follow the corporation tax code. An LLC can follow either the partnership tax code or the corporation tax code or even be taxed as an entity disregarded as separate from its owner.
To answer which tax code is most beneficial, we consider several factors including the type of business being conducted. Real estate ventures are usually better off being subject to the partnership tax code while other types of businesses are usually better off being subject to the corporation tax code.
How the owners are to be compensated or paid back their investment also impact what entity to use. It is common that owners who fund a business over owners who provide sweat equity will demand a priority when any distributions are made. It is also advisable that for owners who render services to the business pick up ordinary income as compensation for the service provided. The choice of entity becomes key to minimize the adverse tax consequences that could otherwise arise if proper planning is not made.
We also consider the ultimate exit strategy of the business in determining what entity to use. Depending on how the business is first going to be capitalized or financed, the exit strategy for the business will have different tax consequences if the entity follows the corporation tax code or the partnership code.
Since the initial choice of entity in most cases cannot subsequently be changed without incurring additional tax liability, you should seek tax counsel BEFORE forming the entity and not waiting until afterwards when it is too late.
The Internal Revenue Service faces many challenges when it comes to enforcing compliance with U.S. tax laws for individuals with offshore assets and income sources. To strengthen these efforts, the IRS has implemented offshore voluntary disclosure programs (known as OVDP’s) as a way to encourage U.S. taxpayers to come forward to meet their tax obligations related to earning income abroad or having undisclosed offshore assets. The OVDP’s support comprehensive efforts to address tax evasion issues through targeted enforcement, prosecution and implementation of the Foreign Account Tax Compliance Act (“FATCA”). Results of voluntary disclosure programs and FATCA implementation have been encouraging to the extent that the IRS has vowed to expand FATCA and strengthen enforcement strategies. The programs have proven effective in helping taxpayers become current with their tax liabilities, raising IRS collections and discouraging offshore tax evasion for taxpayers with assets and income abroad.
Understanding FATCA
FATCA was introduced in March 2010 as part of a strategy to crack down on U.S. taxpayers who use foreign financial institutions (FFI’s) to conceal their assets to avoid paying U.S. taxes. This piece of legislation effectively gives the Department of Justice (“DOJ”) and the IRS blanket authority to investigate suspect accounts held by individuals and businesses in offshore institutions. FATCA forces FFI’s to comply with stringent reporting requirements for any accounts that may be held by U.S. taxpayers in countries that have signed inter-governmental agreements(IGA’s) or, to disclose specific account holder information to the DOJ and the IRS. Serious sanctions and penalties may be imposed for non-compliance.
The intent of FATCA was to go after high net worth individuals who were taking advantage of offshore tax havens to shield assets from U.S. tax obligations. However, FATCA provisions include disclosing information on all accounts held in the name of U.S. citizens. This had unintended consequences, including closure of accounts when businesses and individuals failed to meet stringent documentation requirements and denial of new account applications that affected even those who had limited income and assets. Countries that have signed IGA’s include Spain, France, Germany, United Kingdom, Singapore, Switzerland and Japan.
The IRS has indicated that FATCA Offshore compliance and FATCA provisions will top 2016 priorities. These efforts will include facilitating exchange of FATCA information worldwide to root out unreported and under-reported income and untaxed assets. Aside from reporting requirements, FATCA also obligates FFI’s to withhold taxes and to report account activities that may indicate fraud and tax evasion.
Compliance with FATCA Provisions
U.S. citizens who have assets held in FFI’s should use Form 8938 to report those assets as part of their annual tax returns. The reporting thresholds vary depending on certain factors.
• If you live in the U.S. and you are single, you may have to comply with FATCA requirements when your offshore financial assets are valued at $50,000 at year-end or $75,000 anytime during the year.
• If you are U.S.-based, married but filing separately, the same thresholds as outlined above applies.
• If you are married and living in the U.S., the value of your specified foreign assets must be reported starting at a year-end valuation of $100, 000 or if the value met or exceeded the $150,000 level during the tax year.
• If you live abroad, married and filing jointly, the threshold is $400,000 at year-end or $600,000 at any time during the year.
• If you live abroad and you are single, the foreign asset filing threshold is $200,000 at year-end or $300,000 during the year.
Filing Form 8938 does not take the place of other reporting requirements such as the FBAR, the Report of Foreign Bank and Financial Accounts, and FinCen Form 114. Failure to file Form 8938 and the FBAR may lead to hefty penalties, starting with $10,000 for failure to file. When the IRS sends a notification and you fail to file your Form 8938, another $50,000 is added to your accrued penalties. You could also be liable for an additional 40% penalty based on underpayment of taxes due to non-disclosure of offshore assets. Also, being compliant with these filing requirements now does not cure past non-compliance.
Impact of FATCA Reporting Requirements
Under FATCA provisions, banks, investment houses, brokers, specified insurance companies and some non-financial entities are required to report account information to the IRS and DOJ if the account holders are U.S. citizens. This means that when you set up new accounts with offshore entities, you will be asked to provide information about your citizenship. FATCA reporting requirements apply even when only one spouse is a U.S. citizen or only one spouse lives abroad.
To clarify, the OVDP’s implemented in 2009, 2011 and 2012 were intended to encourage taxpayers with offshore assets to comply with their tax obligations and become current on tax liabilities accruing to ownership of assets in FFI’s and any income earned abroad. The 2009 OVDP resulted in 18,000 disclosures and a $3.4 billion collection that covered back taxes, penalties and interest payments. In 2011, the OVDP generated 15,000 disclosures and revenue collections of $1.6 billion for 75 percent of the accounts that were finalized in that year. In 2012, a third program generated 12,000 disclosures, bringing total collections for all OVDP opportunities to $8 billion as of October 2015 according to Douglas W. O’Donnell, commissioner for the Large Business and International Division, which is part of the IRS.
A separate report prepared by the Treasury Inspector General for Tax Administration pointed out that the IRS stood to generate about $21.6 million more in penalties alone with more efficient enforcement action on taxpayers who were disqualified or who withdrew from the OVDPs. Taxpayers who participate in voluntary disclosure programs qualify for reduced penalties. When FATCA reports reveal the existence of unacknowledged accounts before the taxpayer applies for OVDP participation, the IRS may deny access to reduced penalties and other benefits of voluntary disclosure.
The Future of FATCA
Since FATCA was implemented in 2010, it has proven effective as an offshore asset tracking strategy and in raising tax compliance for taxpayers with offshore accounts. IRS collection figures demonstrate the value of voluntary reporting as a key component of compliance efforts. As such, the IRS is expected to put more muscle into FATCA and offshore compliance strategies in 2016 and beyond. These efforts may include automatic information exchange for FATCA-related issues, greater cooperation with FFIs, foreign governments and the IRS to pinpoint potential target accounts and improved tax withholding compliance by offshore financial institutions.
References:
https://www.irs.gov/pub/irs-utl/d11809–2016-01-00.pdf
https://www.irs.gov/businesses/corporations/summary-of-fatca-reporting-for-u-s-taxpayers
https://www.irs.gov/uac/newsroom/irs-offshore-voluntary-disclosure-efforts-produce-6-5-billion-45-000-taxpayers-participate
http://www.accountingtoday.com/news/tax-practice/irs-overlooks-noncompliance-in-offshore-voluntary-disclosure-program-78456-1.html
Topics Covered:
1. Special Guest: Cade VanHeel, Pay it Forward Processing Regional Sales Office Manager
2. Employers Cut Down on Wellness Benefits
3. How Taxes And Business Entities Work
4. Questions from our listeners:
a. If I’m invested in my companies 401(k), what are the benefits of me opening up an outside IRA?
b. Can I invest a Healthcare Spending Account? How does that work?
*************************************************************
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 Licensed Financial Planner, Windus A. Fernandez Brinkkord, Senior Vice President Of Investments at Trilogy Financial Services.
Jeff is off on assignment today but I am not alone as I will be introducing my special guest in the studio with me and Jeff’s associate Amy Spivey will be calling in later in the show. 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. 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! 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.
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.
For today’s show we have coming up:
Segment 2 material: Employers Cut Down on Wellness Benefits
Also coming up is:
Segment 3 material: How Taxes And Business Entities Work
And of course towards the end of our show, we will be answering some of your questions.
Windus states: Please welcome today’s special guest…
Pay it Forward’s Regional Sales Office Manager,
Cade VanHeel
1. Tell us a little bit about what you do as the Regional Sales Manager for Pay it Forward Processing.
2. What was it about Pay it Forward that attracted you to the position in the first place?
3. The company philosophy centerpiece of “Every Swipe Benefits Charity” is an innovative program that fundraises to give back to the community. Can you explain how that works and what organizations benefit from the charity?
4. How long has the program “Every Swipe Benefits Charity” been around?
5. How much has the “give back” program donated to charity?
6. Is their one organization or foundation that leads in
7. Do you have a niche clientele? Or a sector that gravitates toward you more than others for services?
8. When proposing your product to a merchant, what costs are associated with program?
9. How quickly would your company be able to equip a merchant with the devices and/or technology to conduct business?
10. A benefit of Pay it Forward Processing is no increase in processing costs, but what triggers a decrease in costs to merchants?
11. How do you keep your sales team engaged? Do you have monthly quotas, or how does that work?
Well it’s time for a break but stay tuned because we are going to tell you why employers are cutting down on wellness benefits.
You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.
BREAK
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, Windus A. Fernandez Brinkkord.
And be aware of the special offer that Windus has for you: Windus 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, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.
Employers Cut Down on Wellness Benefits
http://on.wsj.com/1YzJFAy
1. New survey of benefits from the Society for Human Resource Management finds employers are cutting back on certain wellness benefits
(Discuss correlation between healthcare costs going up while benefits are decreasing)
2. Designed to cut employers’ health costs, study saw fewer benefits for:
a. on-site flu shots
i. Decrease from 61% to 54%
b. 24-hour nurse hot lines
c. Health coaching
i. Decrease from nearly 50% to 37%
d. Discounts on premiums for weight loss
3. Alternately, One Rand Corp study of a Fortune 100 company found when measuring ROI, wellness programs lost 50 cents for every dollar spent
a. (Discuss: Should companies be held to providing health and wellness programs, if they’re not benefiting a majority?)
4. Not only focused on health and wellness, survey finds pay is changing too
a. More companies are handing out bonuses to top performers instead of large annual raises
b. Wider range of workers are eligible for things like spot-bonus awards and retention bonuses
c. Spot bonuses offered by 43% of employers compared to 38% in 2012
d. (DISCUSS: Which would you prefer and why, bonuses or company-wide raises?)
5. Survey also shares that organizations offering telecommuting has tripled to 60%, up from 20% in 1996.
a. (DISCUSS: Does the benefit of telecommuting warrant cuts in company sponsor wellness programs, since employees aren’t going into work in the first place?)
6. Healthcare and retirement savings benefits have remained fairly steady, although types of coverage have changed
a. Health savings accounts are being provided by some 50% of employers surveyed, up from 43% last year.
b. (DISCUSS: 20 years ago, companies didn’t offer health-savings accounts. Is this a suitable substitution for cutting health and wellness spending?)
c. (DISCUSS: Are health and wellness provisions being weaned out like pensions? Health care savings accounts being substituted like company sponsored retirement savings that only help those who help themselves?)
7. The variety of benefits has been widening to appeal to the multigenerational workforce.
a. Survey says companies now cover so 330 benefits compared to 60 two decades ago
b. Emerging benefits include:
i. Genetic testing for cancer = offered by 12% of employers
ii. Subsides for using an employee owned tech device = offered by 12% of firms
iii. Automatic enrollment in a 401(k) or other retirement plan = offered by 21% of companies
(DISCUSS: Is this changing for the better or just evolution with time in general? Does it benefit an employee more to have little bits of benefits in a lot of places or more generalized benefits, leaving one liable for the rest?)
Windus 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, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.
Stay tuned because after the break we are going to tell you How Taxes And Business Entities Work.
You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.
BREAK
Windus 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, Windus A. Fernandez Brinkkord.
Calling into the studio from my Walnut Creek Office is Jeff’s associate attorney, Amy Spivey.
Chit chat with Amy
Windus states: So Amy please tell our listeners of your offer.
Amy states: 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 our office to make an appointment to meet with Jeffrey Kahn, right here in San Diego or at one of our other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.
How Taxes And Business Entities Work
Windus asks: Is there any difference in an LLC or S-Corp when forming an entity and looking at potential tax liability?
Amy replies: When clients inquire on what type of entity should be formed for the operation of a business venture, we refer to that type of discuss ion as “Choice Of Entity”.
Windus asks: What are the similarities between LLC’s and S-Corp’s?
Amy replies: They both offer the following advantages over not incorporating:
• Limited liability: Directors, officers, shareholders/members, and employees enjoy limited liability protection.
• Pass-through taxation: Owners report their share of profit and loss on their individual tax returns.
• Double taxation elimination: Income is not taxed twice (unlike corporate income which is taxed at the corporation level and again then at the individual level as dividend income when distributions are made).
• Investment opportunities: The company can attract investors through the sale of shares of stock or membership interests.
• Perpetual existence: The business continues to exist even if the owner leaves or dies.
Windus asks: So what are the big differences?
Amy replies: The big difference though is how these entities are taxed which people are not aware knowing that for both types of entities, the income or loss flows through to the individual income tax returns of the owners. An S-Corp will follow the corporation tax code. An LLC can follow either the partnership tax code or the corporation tax code or even be taxed as an entity disregarded as separate from its owner.
Amy continues: To answer which tax code is most beneficial, we consider several factors including the type of business being conducted. Real estate ventures are usually better off being subject to the partnership tax code while other types of businesses are usually better off being subject to the corporation tax code
Windus asks: How can this affect things if the entity breaks up?
Amy replies: Whether the entity breaks up or sells off an interest is something to consider at the beginning when first choosing an entity. The exit strategy for the business will have different tax consequences if the entity follows the corporation tax code or the partnership code. A big factor to consider is how the business is first going to be capitalized or financed.
Windus states: So a lot of people always ask me how long do tax records need to be kept. Amy what do you have to say about that.
Amy replies: The length of time you should keep a document depends on the action, expense, or event which the document records. Generally, you must keep your records that support an item of income, deduction or credit shown on your tax return until the period of limitations for that tax return runs out.
Windus asks: What is that period of limitations?
Amy replies: The period of limitations is the period of time in which you can amend your tax return to claim a credit or refund, or the IRS can assess additional tax. The information below reflects the periods of limitations that apply to income tax returns. Unless otherwise stated, the years refer to the period after the return was filed. Returns filed before the due date are treated as filed on the due date.
Windus asks: So what are the Period of Limitations that apply to income tax returns?
Amy replies:
1. Keep records for 3 years if situations (4), (5), and (6) below do not apply to you.
2. Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return.
3. Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction.
4. Keep records for 6 years if you do not report income that you should report, and it is more than 25% of the gross income shown on your return.
5. Keep records indefinitely if you do not file a return.
6. Keep records indefinitely if you file a fraudulent return.
Windus asks: So what are the Period of Limitations that apply to employment tax returns?
Amy replies: Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.
Windus asks: Are the any special consideration for records connected to property?
Amy replies: Yes, generally, keep records relating to property until the period of limitations expires for the year in which you dispose of the property. You must keep these records to figure any depreciation, amortization, or depletion deduction and to figure the gain or loss when you sell or otherwise dispose of the property.
Amy continues: If you received property in a nontaxable exchange, your basis in that property is the same as the basis of the property you gave up, increased by any money you paid. You must keep the records on the old property, as well as on the new property, until the period of limitations expires for the year in which you dispose of the new property.
Windus asks: What should you do with your records for nontax purposes?
Amy replies: When your records are no longer needed for tax purposes, do not discard them until you check to see if you have to keep them longer for other purposes. For example, your insurance company or creditors may require you to keep them longer than the IRS does.
Windus states: So Amy please tell our listeners of your offer.
Amy states: 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 our office to make an appointment to meet with Jeffrey Kahn right here in San Diego or at one of our other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.
Windus states: 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, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.
BREAK
Windus 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, Windus A. Fernandez Brinkkord.
And Jeff 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 Jeff’s office to make an appointment to meet with him right here in San Diego or at one of his other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.
Windus states: Windus 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, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.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.
Windus 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.
Windus states: OK Cade as our special guest, what questions have you pulled for us to answer?
Joshua of Newport Beach asks: If I’m invested in my companies 401(k), what are the benefits of me opening up an outside IRA?
Windus answers.
Debbie of San Diego asks: Can I invest a Healthcare Spending Account? How does that work?
Windus answers.
Windus 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.
Windus states: Have a great day everyone!
Topics Covered:
1. Special Guest Steven Hyde, Loan Officer at Movement Mortgage
2. The Most Pessimistic Bull Market in History
3. Streamlined Filing Compliance Procedures if you have undisclosed foreign accounts.
4. Questions from our listeners:
a. I have a 401(k), my spouse has a 401(k) and we make deductible contributions. Can I contribute to an IRA?
b. Can I still contribute to an IRA after I retire? How does that work with RMDs?
**************************************************************
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, 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: The Most Pessimistic Bull Market in History
Gary states:
Also coming up is:
Segment 3 material: Streamlined Filing Compliance Procedures if you have undisclosed foreign accounts.
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: So let’s introduce you to today’s guest:
Please welcome Steven Hyde, Senior Mortgage Loan Officer at Movement (858) 775-1005
Questions:
1. You have quite the passion for photography, not only working freelance for a while as a photographer, but also in web design and marketing. What prompted your career change and peaked your interest in becoming a Loan Officer?
2. What top factors determine if someone gets a loan?
3. Can you walk us through the process you take to select a mortgage loan for a client?
4. What’s more important when looking at a mortgage: rates, fees or points?
5. What do you expect to see happen to mortgage loan rates over the next couple of years?
6. Under what circumstances would you recommend to a client a refinance?
7. What are some of the things should people be aware that will increase their chances for being approved for a loan?
Well it’s time for a break but stay tuned because we are going to tell you about the Most Pessimistic Bull Market in History.
You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Gary Sussman on Inside Advantage on ESPN.
BREAK
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.guideyourstory.com.
The Most Pessimistic Bull Market in History
http://on.wsj.com/1ZKiTo3
1. Instead of chasing growth and profits, investors this year have bought into safety
a. Go-go stocks aren’t growing, investments geared toward utilities and consumer staples
b. (DISCUSS: examples of safety stocks or funds in relation to go-to stocks like Google, Amazon, Facebook, Netflix, etc.)
2. The bubble that pushed markets up in 2007 is elsewhere
a. Excess in credit created shaky profits; this time the government bond market
b. (DISCUSS: market sectors that took the hardest hit in the Great Recession)
3. Change of pace
a. Investors transitioning to stock from underperforming bonds are not risk takers; aiming for more conservative, bond-like equities
b. (DISCUSSION: Does it look like investors are still uneasy from the last recession? More cautious the next go-around while remembering what happened last time?)
4. Opting for the least exciting companies has worked brilliantly
a. (DISCUSS: super conservative market sectors that perform similarly to bond expectations yet have a greater dividend and annual return)
b. Utilities sector: Up 16%
c. Consumer Staples: Up 5.7%
d. Telecom Sector: Up 14%
e. All three sectors offer healthier dividends than the market
5. The two most obvious signs that the economy is improving
a. Small company figures
b. Chip maker yield
c. (DISCUSS: Russell 2000 Index for small capitalization stocks and the PHLX Semiconductor Index of the US sector; what should investors be looking at?)
d. Leading indicators for the economy tend to follow the direction of small-cap equity and chip makers
e. (DISCUSSION: With the market what it is, what ratio should investors be focusing on between domestic and international equities? Is there a way to safe guard yourself from another US melt-down by keeping a “toe” in global trade?)
6. Picking a side
a. Buying Bond proxies = believing insanely low global yields are right, economy is weaker than projected and bad times are ahead of us
b. Buying cheaper economically sensitive stock = believing we are going to continue the recovery of the past seven years/maintain growth in a pessimistic bull market
c. (DISCUSSION: Where do you see the market heading? How do you feel the election will affect the market come November or Inauguration Day? What if you’ve got a ways until retirement, how should you be planning you IRA investments?)
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.guideyourstory.com.
Stay tuned because after the break we are going to tell you about the Streamlined Filing Compliance Procedures if you have undisclosed foreign accounts.
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.
Streamlined Filing Compliance Procedures
Jeff states: A reader of last week’s show commented on why we did not discuss the Streamlined Procedures as the solution to U.S. taxpayers who have undisclosed foreign accounts. Well we have talked about this in the past so maybe a refresher and update is due.
Gary asks: But before we get into this, Amy, what are the Filing Requirements If You Have Undisclosed Bank Accounts?
Amy replies: By law, many U.S. taxpayers with foreign 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). Taxpayers with an interest in, or signature or other authority over, foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2015 must file FBARs. It is due by June 30 and must be filed electronically through the BSA E-Filing System website.
Amy continues: Additionally, U.S. citizens, resident aliens and certain non-resident aliens must report specified foreign financial assets on Form 8938 if the aggregate value of those assets exceeds certain thresholds. Reporting thresholds vary based on whether a taxpayer files a joint income tax return or lives abroad. The lowest reporting threshold for Form 8938 is $50,000 but varies by taxpayer.
Gary asks: Is it true that the U.S. Requires Reporting Of Worldwide Income On U.S. Income Tax Returns?
Amy replies: The law requires U.S. citizens and resident aliens to report worldwide income, including income from foreign trusts and foreign bank and securities accounts. In most cases, affected taxpayers need to complete and attach Schedule B to their tax return. Part III of Schedule B asks about the existence of foreign accounts, such as bank and securities accounts, and usually requires U.S. citizens to report the country in which each account is located.
Jeff states: The first Voluntary Disclosure Program for Undisclosed Foreign Bank Accounts came out in 2009. While the law imposes a penalty rate as high as 50% of the value of your foreign accounts, this program had a maximum rate of 20%. In later years this top penalty rate was increased to 25% and then 27.5%. The IRS still received a lot of complaints that the penalty rates under this program were to high.
Amy states: So on June 18, 2014, the IRS announced major changes in the 2012 offshore account compliance programs, providing new options to help taxpayers residing in the United States and overseas. The changes are anticipated to provide thousands of people a new avenue to come back into compliance with their tax obligations.
Jeff states: The streamlined filing compliance procedures are available to taxpayers certifying that their failure to report foreign financial assets and pay all tax due in respect of those assets did not result from willful conduct on their part. The streamlined procedures are designed to provide to taxpayers in such situations (1) a streamlined procedure for filing amended or delinquent returns and (2) terms for resolving their tax and penalty obligations.
Gary asks: How are the streamlined procedures different than the regular OVDP?
Amy replies: Taxpayers will be required to certify that the failure to report all income, pay all tax, and submit all required information returns, including FBARs (FinCEN Form 114, previously Form TD F 90-22.1), was due to non-willful conduct. Under the regular OVDP it is not necessary to show your conduct was non-willful.
Gary asks: Under what circumstances would a taxpayer not be allowed to enter into this program?
Amy replies: If the IRS has initiated a civil examination of a taxpayer’s returns for any taxable year, regardless of whether the examination relates to undisclosed foreign financial assets, the taxpayer will not be eligible to use the streamlined procedures. Similarly, a taxpayer under criminal investigation by IRS Criminal Investigation is also ineligible to use the streamlined procedures.
Amy continues: However, taxpayers eligible to use the streamlined procedures who have previously filed delinquent or amended returns in an attempt to address U.S. tax and information reporting obligations with respect to foreign financial assets (so-called “quiet disclosures” made outside of the OVDP or its predecessor programs) may still use the streamlined procedures.
Jeff states: Now the Streamlined Procedures are classified between U.S. Taxpayers Residing Outside the United States and U.S. Taxpayers Residing in the United States.
Gary: As I understand a key factor in qualifying for a full waiver of the penalty is that the taxpayer cannot be a U.S. resident.
Amy replies: That’s right. Individual U.S. citizens or lawful permanent residents, or estates of U.S. citizens or lawful permanent residents, meet the applicable non-residency requirement if, in any one or more of the most recent three years for which the U.S. tax return due date (or properly applied for extended due date) has passed, the individual did not have a U.S. abode and the individual was physically outside the United States for at least 330 full days. Under IRC section 911 and its regulations, which apply for purposes of these procedures, neither temporary presence of the individual in the United States nor maintenance of a dwelling in the United States by an individual necessarily mean that the individual’s abode is in the United States.
Amy continues: Individuals who are not U.S. citizens or lawful permanent residents, or estates of individuals who were not U.S. citizens or lawful permanent residents, meet the applicable non-residency requirement if, in any one or more of the last three years for which the U.S. tax return due date (or properly applied for extended due date) has passed, the individual did not meet the substantial presence test of IRC section 7701(b)(3).
Gary asks: What if a taxpayer closed an liquidated their undisclosed foreign bank accounts, are they in the clear?
Amy replies: No. Recent closure and liquidation of foreign accounts will not remove your exposure for non-disclosure as the IRS will be securing bank information for the last eight years. Additionally, as a result of the account closure and distribution of funds being reported in normal banking channels, this will elevate your chances of being selected for investigation by the IRS. For those taxpayers who have submitted delinquent FBAR’s and amended tax returns without applying for amnesty (referred to as a “quiet disclosure”), the IRS has blocked the processing of these returns and flagged these taxpayers for further investigation. You should also expect that the IRS will use such conduct to show willfulness by the taxpayer to justify the maximum punishment.
Amy continues: Additionally, starting with the 2011 Tax Return Filing Season: U.S. taxpayers who have an interest in foreign assets with an aggregate value exceeding $50,000 must include new Form 8938 (Statement of Specified Foreign Financial Assets) with their Federal income tax return. This reporting will serve as an additional tool for the IRS to determine prior noncompliance of taxpayers who have undisclosed foreign accounts or unreported foreign income. The new Form 8938 filing requirement does not replace or otherwise affect a taxpayer’s obligation to file an FBAR (Report of Foreign Bank and Financial Accounts). Failing to file Form 8938 when required could result in a $10,000 penalty, with an additional penalty up to $50,000 for continued failure to file after IRS notification. A 40% penalty on any understatement of tax attributable to non-disclosed assets can also be imposed.
Gary asks: What if someone is current in the 2012 Offshore Voluntary Disclosure Initiative (“OVDI”) and facing a penalty of 27.5%, can they get relief under the streamlined procedures and be subject to a 5% penalty?
Amy replies: For taxpayers who essentially applied to the 2012 Offshore Voluntary Disclosure Initiative (“OVDI”) on or before June 30, 2014, they can have their case converted to be under the new procedures which could substantially reduce their penalties to 5% and in some cases even eliminate them. Our office has been successful in getting such cases converted.
Gary asks: So what should one do if they have undisclosed foreign accounts?
Amy states: So we encourage taxpayers who are concerned about their undisclosed offshore accounts to come in voluntarily before learning that the U.S. is investigating the bank or banks where they hold accounts. By then, it will be too late to avoid the new higher penalties under the OVDP of 50% percent – nearly double the regular maximum rate of 27.5% and 10 times more than the 5% rate offered in the expanded streamlined procedures.
Jeff states: And keep in mind that once the IRS contacts you, you cannot get into this program. You will now 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.guideyourstory.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.
OK Steven since you are our guest, what questions have you pulled for us to answer?
James from Newport Beach asks: I have a 401(k), my spouse has a 401(k) and we make deductible contributions. Can I contribute to an IRA?
Gary answers.
James from Newport Beach also asks: Can I still contribute to an IRA after I retire? How does that work with RMDs?
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 Happy Father’s Day!
Topics Covered:
1. Interview with Vivienne Kaseno, Licensed Realtor at Realty ONE Group and Director of Homes for Hope and Healing
2. Alcohol Makers Await Scottish Ruling
3. Panama Papers Show How Rich United States Clients Hid Millions Abroad
4. Questions from our listeners:
a. We’re hearing all of this rumble of “doom and gloom” when referring to where the market is heading. What kind of investments should one be contributing in order to wait out the storm?
b. If someone had a foreign bank account that they never disclosed to the IRS and later closed out the account, can they still be liable to the IRS and subject to criminal prosecution?
***********************************************************
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.
Windus states:
And this is Licensed Financial Planner, Windus A. Fernandez Brinkkord, 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!
Windus 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: Alcohol Makers Await Scottish Ruling
Windus states:
Also coming up is:
Segment 3 material: Panama Papers Show How Rich United States Clients Hid Millions Abroad
And of course towards the end of our show, we will be answering some of your questions.
Jeff starts chit chat with Windus.
Windus states: Let’s introduce you to today’s guest:
Vivienne Kaseno, Licensed Realtor at Realty ONE Group and Director of Homes for Hope and Healing 619-922-0843 – Questions:
a. You’re originally from South Africa, what made you decide to make the move out to California?
b. When you first came to the US in 1991, you worked as an educator, what changed your interest to Real Estate?
c. Would you consider what you’re doing now, your dream job?
d. You’ve received quite a few awards including “Rookie of the Year” when you first started in Real Estate with Prudential. What are the driving factors of your success?
e. Do you have any predictions for the real estate market this year?
f. Is there a best time of year to buy?
g. What advice can you give someone who is looking to purchase a home this year?
h. Tell us a little bit about your work as the Director of Homes for Hope and Healing, what is your mission?
i. Do you volunteer with any other organizations? (In conjunction w/ next question)
j. What about these organizations drew you to them?
Well it’s time for a break but stay tuned because we are going to tell you about Alcohol Makers Awaiting A Scottish Ruling
You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.
BREAK
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, Windus A. Fernandez Brinkkord.
And be aware of the special offer that Windus has for you: Windus 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, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.
Alcohol Makers Await Scottish Ruling
http://on.wsj.com/1U31gOv
1. A court will mandate this summer if the government can mandate a potentially precedent-setting, minimum prices on alcohol
2. The measure is supposed to stem heavy drinking
3. The semiautonomous Scottish government in 2012 passed legislation that sets a minimum price for all alcoholic beverages of 50 pence (about 72 cents) a unit, which is equal to 10 milliliters of pure alcohol
4. Parts of Canada have some form of minimum unit pricing, but if Scotland succeeds in court it will become the first country to implement a floor price per unit of alcohol
5. Countries on the band wagon: Wales, Ireland, Estonia
6. The Scotch Whisky Association in July 2012 filed a complaint saying a pricing floor would “artificially distort trade in the alcoholic drinks market, contrary to EU law”
7. Alcohol is a particularly hot-button issue in Scotland, where sales were 20% higher than in England and Wales last year
8. Additional claims that it breaches the U.K.’s EU treaty obligations
9. Establishing a pricing floor “is a very crude implement,” said Pernod Ricard’s U.K. managing director, Denis O’Flynn. “We think personal responsibility and education is how you address the whole issue of responsible drinking”
10. However a floor of 40 pence a unit could mean 50,000 fewer crimes a year and 900 fewer alcohol-related deaths a year by the end of the decade
11. Variants of pricing based on alcohol strength have been effective where they have been implemented, health researchers say
12. A 10% increase in the minimum price of alcoholic beverages in Saskatchewan was associated with an 8.43% reduction in total alcohol consumption, according to a 2012 analysis
13. Drinking kills six Scots a day, and Scottish drinkers are twice as likely to die of alcohol-related health problems as those in the rest of the U.K.
Windus 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, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.
Stay tuned because after the break we are going to tell you more people who have been discovered to be in the Panama Papers.
You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord 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, Windus A. Fernandez Brinkkord.
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.
Panama Papers Show How Rich United States Clients Hid Millions Abroad
www.nytimes.com/2016/06/06/us/panama-papers.html?smid=nytcore-ipad-share&smprod=nytcore-ipad&_r=0
Jeff states: Dubbed the “Panama Papers” a collection of more than 11 million documents reveal how dozens of the most powerful and wealthy people around the world are laundering money, as well as evading taxes and sanctions, by using offshore accounts.
Windus states: Just this past April, documents obtained by the U.S. government from the Panama law firm of Mossack Fonseca connect to 140 politicians in over 50 countries including former leaders of Ukraine, Saudi Arabia, Argentina, Iceland, Georgia, Qatar and Iraq.
Amy states: Already it has been determined that associates of Russian President, Vladimir Putin, have funneled as much as $2 billion through offshore accounts, banks and shadow companies.
Amy continues: Given the comprehensive nature of the Panama Papers, this is the biggest breakthrough for the U.S. government and other foreign governments to combat offshore tax evasion since the 2004 UBS crackdown that resulted in the undermining of the Swiss Bank Secrecy Laws and more than 60,000 U.S. Taxpayers coming forward to voluntarily disclose their foreign bank accounts to avoid criminal prosecution and get a reduction in penalties.
Jeff states: The BBC even had reports of connections to families and associates of Syrian President Bashar Assad, former Libyan dictator Moammar Gadhafi, and former Egyptian President Hosni Mubarak.
Amy states: And just about every day now a new world leader is announcing their involvement in this scheme before their names are leaked from these documents. Recently Prime Minister David Cameron of Britain admitted that he had profited from an offshore trust established by his late father.
Windus states: And this is not just limited to government leaders, professional soccer player Lionel Messi, movie star, Jackie Chan and his son Jaycee, celebrity judge Simon Cowell, and Dreamworks Co-Founder David Geffen, are just some of the few note-worthies that have been linked to the Panama Papers.
Amy states: The Panama Papers go back through 40 years of secretive dealings from the Mossack Fonseca law firm as one of the leading creators of shell companies. Documents from the firm include data on 214,488 “offshore entities” tied to individuals in roughly 200 countries and territories.
Jeff states: As the information on these documents is being released, much of the news media is picking this up and we are learning of more people who had dealings with the Mossack Fonseca law firm. The New York Times is one of those media outlets that picked up on this and published an article on this.
Amy states: William R. Ponsoldt
Amy continues: Mr. Ponsoldt retired to Florida after earning millions of dollars building a string of successful companies. He had renovated apartment buildings in the New York City area. Bred Arabian horses. Even ran a yacht club in the Bahamas, a rock quarry in Michigan, an auto-parts company in Canada, and a multibillion-dollar hedge fund. The Panama Papers show that in 2004 he approached a lawyer at Mossack Fonseca who documented that Mr. Ponsoldt’s “Primary objective is to maintain the utmost confidentiality and ideally to open bank accounts without disclosing his name as a private person.” In summary, the firm explained: “He needs asset protection schemes, which we are trying to sell him.” So the firm started a relationship that would last at least through 2015 as Mossack Fonseca managed eight shell companies and a foundation on the family’s behalf, moving at least $134 million through seven banks in six countries — little of which could be traced directly to Mr. Ponsoldt or his children.
Jeff states: Now keep in mind that many of these transactions can be legal as there are legitimate reasons to create offshore accounts, particularly when setting up a business overseas or buying real estate in a foreign country. But the documents — confidential emails, copies of passports, ledgers of bank transactions and even the various code names used to refer to clients — show that the firm did much more than simply create offshore shell companies and accounts. For many of its American clients, Mossack Fonseca offered a how-to guide of sorts on skirting or evading United States tax and financial disclosure laws.
Amy states: The documents show that the strategy included locating an individual from a “tax-convenient” jurisdiction to be the straw man owner of an offshore account, concealing the true American owner, or encouraging one client it knew was a United States resident to use his foreign passports to open accounts offshore, again to avoid scrutiny from regulators.
Windus asks: What are the Filing Requirements If You Have Undisclosed Bank Accounts?
Amy replies: By law, many U.S. taxpayers with foreign 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). Taxpayers with an interest in, or signature or other authority over, foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2015 must file FBARs. It is due by June 30 and must be filed electronically through the BSA E-Filing System website.
Amy continues: Additionally, U.S. citizens, resident aliens and certain non-resident aliens must report specified foreign financial assets on Form 8938 if the aggregate value of those assets exceeds certain thresholds. Reporting thresholds vary based on whether a taxpayer files a joint income tax return or lives abroad. The lowest reporting threshold for Form 8938 is $50,000 but varies by taxpayer.
Windus asks: Is it true that the U.S. Requires Reporting Of Worldwide Income On U.S. Income Tax Returns?
Amy replies: The law requires U.S. citizens and resident aliens to report worldwide income, including income from foreign trusts and foreign bank and securities accounts. In most cases, affected taxpayers need to complete and attach Schedule B to their tax return. Part III of Schedule B asks about the existence of foreign accounts, such as bank and securities accounts, and usually requires U.S. citizens to report the country in which each account is located.
Windus asks: So How Does This Breakthrough Impact U.S. Taxpayers?
Jeff replies: Consider this – about 60,000 U.S. taxpayers have come forward to disclose their previously undisclosed offshore accounts but just last year alone, 300,000 U.S. taxpayers filed Form 8938 disclosing foreign accounts. That would mean that about 240,000 did not previously report their foreign accounts and that under this recent filing of Form 8938 to IRS, they have put the IRS on direct notice of their non-compliance.
Jeff continues: Our office saw an increase in interest and activity by U.S. taxpayers hiring our firm after the 2004 UBS scandal and subsequent implementation by IRS of its first dedicated Offshore Voluntary Disclosure Program.
Amy states: So we encourage taxpayers who are concerned about their undisclosed offshore accounts to come in voluntarily before learning that the U.S. is investigating the bank or banks where they hold accounts. By then, it will be too late to avoid the new higher penalties under the OVDP of 50% percent – nearly double the regular maximum rate of 27.5% and 10 times more than the 5% rate offered in the expanded streamlined procedures.
Jeff states: And keep in mind that once the IRS contacts you, you cannot get into this program. You will now 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, Windus A. Fernandez Brinkkord 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, Windus A. Fernandez Brinkkord.
And Windus 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.
Windus states: Windus 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, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.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.
OK Windus, what questions have you pulled for us to answer?
Dianne from San Diego asks: We’re hearing all of this rumble of “doom and gloom” when referring to where the market is heading. What kind of investments should one be contributing in order to wait out the storm?
Windus answers.
Carlos from Del Mar asks: If someone had a foreign bank account that they never disclosed to the IRS and later closed out the account, can they still be liable to the IRS and subject to criminal prosecution?
Jeff answers: Many people believe that because they closed out their foreign accounts, they have insulated themselves from any scrutiny by the IRS and do not need to worry about liability or criminal prosecution. That is a big myth. Foreign banks are now required to report present and past U.S. account holders to the U.S. government. We have clients who closed out their accounts as long as three years before who were later contacted by the foreign bank and informed that they were being disclosed to the IRS. I encourage taxpayers who are concerned about their undisclosed offshore accounts to come in voluntarily before learning that the U.S. is investigating the bank or banks where they hold accounts. By then, it will be too late to avoid the new higher penalties under the OVDP of 50% percent – nearly double the regular maximum rate of 27.5% and 10 times more than the 5% rate offered in the expanded streamlined procedures.
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.
Windus states: Have a great day everyone!
Topics Covered:
****************************************************************************
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.
Windus states:
And this is Licensed Financial Planner, Windus A. Fernandez Brinkkord, 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!
Windus 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: Oil Change: Affluent Saudi Arabia Goes to Work.
Windus states:
Also coming up is:
Segment 3 material: IRS Warns of Latest Scam Variation Involving Bogus “Federal Student Tax”.
And of course towards the end of our show, we will be answering some of your questions.
Jeff starts chit chat with Windus.
Windus states: Let’s introduce you to today’s guest:
Ed Quinlan, Market President of Corporate Alliance. Email: eq@corporatealliance.net
Questions:
a. Describe your primary everyday responsibilities as a Market President.
b. What type of background do you look for in a prospect you’re looking to recruit?
c. Would you consider “communication disconnect” the number one deficiency that corporations face?
d. What would your plan of attack be, going in to consult for a business that is lacking highly productive individuals?
e. What are some good examples of creating continuous learning environments for associates?
f. What do you find is the most difficult aspect of customer retention?
Jeff states: Well it’s time for a break but stay tuned because we are going to tell you about how the oil change is making affluent Saudi Arabia go to work.
You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.
BREAK
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, Windus A. Fernandez Brinkkord.
And be aware of the special offer that Windus has for you: Windus 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, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.
Oil Change: Affluent Saudi Arabia Goes to Work
http://www.wsj.com/articles/oil-change-affluent-saudi-arabia-goes-to-work-1464716895;
http://www.bloomberg.com/news/articles/2016-06-01/saudis-said-to-seek-restoration-of-opec-unity-after-doha-failure-iowrk295
1. Saudi Arabia’s leadership has taken up the challenge of weaning the kingdom from its dependence on oil
a. Deputy crown prince’s urgent plan to wean kingdom from petroleum will mean deep changes in a conservative society long accustomed to handouts
2. Dismantling the world’s biggest petro-state
a. a key part of the government’s economic strategy is to replace foreign workers with Saudis displaced from down-sizing oil conglomerates
3. Prince Mohammed bin Salman
a. Deputy crown prince, second in line to the throne
b. Runs all economic and domestic policy
c. Runs the country’s military
d. Launched a historic effort to remake the conservative, change-averse kingdom
4. History of a developed kingdom
a. Crude was first discovered there in 1938
b. Developed into one of the quintessential economic constructs of the oil age
c. Billions of barrels of crude oil, pumped and sold to the world, have forged its politics and economy
5. Saudi citizens benefit from oil
a. Citizens have enjoy deeply discounted gasoline, water and electricity
b. Subsidized housing
c. Health care and education(including stints studying abroad) are paid for by the government
d. No taxes
e. Businesses have depended on cheap energy and ready access to cheap foreign labor
6. Demographics are overwhelming the petrostate
a. Social compact is breaking down
b. Declining oil prices
c. By 2030, the number of Saudis over the age of 15 will likely increase by about six million
i. At least 4.5 million new eligible workers into the labor force
ii. Even more if women begin working in larger numbers
iii. Doubling the size of the adult population
d. Stretching the kingdom’s cradle-to-grave system of handouts and subsidies to the breaking point
i. Requires the creation of almost three times as many jobs as the country generated
e. Sales, repair and low-level management jobs have long been filled by foreign workers
i. Inexpensive
ii. Willing to work long hours
7. The Response
a. Government envisions a broad diversification of the economy beyond crude exports
b. Privatize chunks of many government companies
c. Expanding more aggressively into higher-value refined products such as gasoline and petrochemicals
d. Developing a tourist industry
e. Building a manufacturing base
8. Develop tourism
a. An industry the government has struggled with
b. Holy city of Mecca draws tens of millions of visitors annually during the hajj pilgrimage
i. Saudi construction companies have made fortunes building new luxury hotels and shopping malls
ii. Muslim holy cities remain off limits to non-Muslims
c. The kingdom still doesn’t issue tourist visas, but the government says it plans to start a tourist visa program soon
d. Some tourism boosters would like to turn the country into a year-round destination
i. Capitalizing on archeological treasures
ii. Scuba diving
iii. A variety of government-supported efforts to restore historic homes
1. New projects teach restoration
2. Carpentry skills
9. Biggest challenge for the kingdom’s overhaul of the petrostate
a. The flood of oil dollars tends to drive up the price for Saudi labor
b. Exports too costly to compete in foreign markets
c. “about wealth creation” for business owners, not “economic value creation”
i. Neither encourage innovation
10. Ministry of Labor and Social Development
a. The ministry has launched a nationwide media campaign to complete “Saudization” by September
b. Decided to replace all foreigners who work in shops for sales and maintenance of mobile phones with Saudi nationals
c. New ban on foreign workers will create more than 20,000 job opportunities for locals
d. 19,084 men and women have been trained and are ready to take jobs in the sales, customer service and basic maintenance of mobile phones
e. Force most retail outlets to close by 9 p.m. instead of 11 p.m. or midnight, to make retail jobs more attractive to Saudis because it will allow them to finish work early enough to return home to spend time with their families
11. Segments of Saudi society are expressing unease
a. Skeptical that the government will be able to train enough people in time to make the plan work within the deadline
b. The sector has been controlled by foreigners for many years
c. Limits on store hours are impractical
i. Forced to close five times a day for prayer
ii. Temperatures are often blazing hot during the day
iii. Most people prefer to shop and run errands in the evening
d. Government goal = bring more Saudi women into the workforce
e. Kingdom’s arch-conservative clerical class aggravated over the government’s efforts to expand women’s participation in the public workplace
f. Young Saudis have over the years acquired a reputation of looking down on manual work
12. Innovation Center at King Fahd University for Petroleum and Minerals
a. The center has forged tie-ups with multinational companies
i. General Electric Co.
1. Invest at least $1.4 billion
2. Double its workforce in the kingdom to 4,000 by 2020
3. onglomerate plans to team up with two partners, including Aramco, to build a $400 million manufacturing facility for the energy and marine sector
ii. China’s Sinopec
b. Has developed dozens of new patents
c. 90 new products, including a water purification process
d. The university’s business incubator is developing case studies in Arabic
i. tap into the youngest members of some of the kingdom’s prominent merchant families
Windus 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, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.
Stay tuned because we do not want you to be a victim to the newest IRS scam variation involving a bogus “Federal Student Tax”.
You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord 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, Windus A. Fernandez Brinkkord.
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.
IRS Warns of Latest Scam Variation Involving Bogus “Federal Student Tax”
Windus states: Scam artists exploiting innocent law-abiding taxpayers has been a big problem for the IRS and despite issuing multiple consumer alerts, the bogus emails, the bogus IRS letters and the bogus telephone calls continue and unfortunately taxpayers are still falling for this.
Jeff states: Every week our office receives about a half-dozen inquiries from taxpayers asking whether the communication they just received is really from the IRS. Scam artists have been coming up with new creative ways to lure victims. I do not want you to become the next victim of any such scam so listen carefully to what we have to say.
Amy states: In the latest scheme taxpayers are receiving bogus phone calls from IRS impersonators demanding payment for a non-existent tax, the “Federal Student Tax.” The scammers look to target students and try to convince them to wire money immediately to the scammer. If the victim does not fall quickly enough for this fake “federal student tax”, the scammer threatens to report the student to the police.
Amy continues: Scam artists frequently masquerade as being from the IRS, a tax company and sometimes even a state revenue department. Many scammers use threats to intimidate and bully people into paying a tax bill. They may even threaten to arrest, deport or revoke the driver’s license of their victim if they don’t get the money.
Jeff states: Some examples of the varied tactics seen this year are:
• Demanding immediate tax payment for taxes owed on an iTunes gift card.
• Soliciting W-2 information from payroll and human resources professionals.
• “Verifying” tax return information over the phone.
• Pretending to be from the tax preparation industry.
Windus states: The communication methods used by the scammers are email, letters and telephone calls. The scammers are still going strong doing this to people who are unsuspecting and don’t know how systems work and could very easily frighten them to turn over money. So with my two top tax attorneys we are going to break down each type of fraudulent communication for you and give you the warning signs and tips that you should be aware of.
Windus asks: Amy please tell us what people should be aware about emails.
Amy states: When identity theft takes place over the Internet, it is called phishing. Phishing (as in “fishing for information” and “hooking” victims) is a scam where Internet fraudsters send e-mail messages to trick unsuspecting victims into revealing personal and financial information that can be used to steal the victims’ identity. Current scams include phony e-mails which claim to come from the IRS and which lure the victims into the scam by telling them that they are due a tax refund.
Jeff states: Remember, too, the IRS does not use unsolicited email, text messages or any social media to discuss your personal tax issue so if this is the form of communication used – avoid it like you would avoid the plague.
Windus asks: Amy please tell us what people should be aware about letters.
Amy states: If you receive a notice regarding your taxes which does not bear the official seal of the Internal Revenue Service and an official verifiable address of an IRS office or Service Center, that is a sign that it really isn’t the IRS sending you a notice.
Jeff states: Another scam that the public has told our office involves a sophisticated fraudulent tax collection notice scam targeting taxpayers for which the IRS has filed a Federal Tax Lien.
Jeff continues: Here is how it works: The scammers will search public records for the filing of a Federal Tax Lien by IRS and with the information gathered from that filing will generate a form letter and mail it to the targeted taxpayer. The letter is designed to mimic an IRS notice but it is really coming from a third party having nothing to do with the IRS. If the recipient of the notice contacts the number listed, the person answering your call will purport to be working for the IRS. The intended victim is told he or she owes money to the IRS and it must be paid promptly through a pre-loaded debit card or wire transfer. If the victim refuses to cooperate, he or she is then threatened with arrest, deportation or suspension of a business or driver’s license. In many cases, the person who answered your call becomes hostile and insulting.
Windus asks: Amy please tell us what people should be aware about the telephone.
Amy states: These callers may demand money or may say you have a refund due and try to trick you into sharing private information. These con artists can sound convincing when they call. Scammers use fake names and IRS badge numbers. They generally use common names and surnames to identify themselves. They may know a lot about you and may be able to recite the last four digits of a victim’s Social Security Number and your place of business. They usually alter the caller ID to make it look like the IRS is calling – many times they will use a Washington, D.C. area code. The area codes for the Washington D.C. area are 202, 301 and 703. They will also background noise of other calls being conducted to mimic a call site. If you don’t answer, they often leave an “urgent” callback request and if they have your email address, will send bogus IRS emails to some victims to support their bogus calls. After threatening victims with jail time or driver’s license revocation, scammers hang up and others soon call back pretending to be from the local police or DMV, and the caller ID supports their claim.
Windus asks: How do you recognize that this call is fake?
Amy states: Here are five things the scammers often do but the IRS will not do. Any one of these five things is a tell-tale sign of a scam. The IRS will never:
1. Call you about taxes you owe without first mailing you an official notice.
2. Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
3. Require you to use a specific payment method for your taxes, such as a prepaid debit card.
4. Ask for credit or debit card numbers over the phone.
5. Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.
Jeff states So what should you do?
Amy states: If you get a phone call from someone claiming to be from the IRS and asking for money, here’s what you should do:
If you know you don’t owe taxes or have no reason to believe that you do, report the incident to the Treasury Inspector General for Tax Administration at 1.800.366.4484.
Jeff states: And if you do owe taxes and you have not already resolved this with the IRS, then that is where we come in.
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, Windus A. Fernandez Brinkkord 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, Windus A. Fernandez Brinkkord.
And Windus 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.
Windus states: Windus 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, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.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.
OK Ed since you are today’s guest, we will let you pull this week’s questions for us to answer?
Sharon from Del Mar asks: My spouse passed away last year, and I will be filing a joint return. How should I file, how should I sign, and are there any special notations required to indicate my spouse is deceased?
Answer:
• Across the top of the return – above the area where you enter your address, write “Deceased,” your spouse’s name, and the date of death.
• When you are a surviving spouse filing a joint return and a personal representative has not been appointed, you should sign the return and write “filing as surviving spouse” in the signature area below your signature.
• A tax return for a decedent can also be filed electronically. Follow the specific directions provided by your preparation software for proper signature and notation requirements.
Note: You cannot file a final joint return with your deceased spouse if you as the surviving spouse remarried before the end of the year of death. The filing status of the decedent in this instance is married filing separately.
Cindy from San Diego asks: How do I sign my tax return when I e-file?
Answer:
You can sign your tax return electronically by using a Self-Select PIN, an Electronic Filing PIN, or a Practitioner PIN.
Self-Select PIN – Using the Self-Select PIN method, allows you to electronically sign your individual income tax return by selecting a five-digit personal identification number (PIN). The PIN can be any five numbers (except all zeros) that you choose to enter as your electronic signature PIN.
If you are filing a joint return, each spouse uses his or her own PIN. As part of the authentication process, each taxpayer also enters his or her date of birth and either his or her:
• Original prior year adjusted gross income (AGI)
• Prior year PIN, or
• Temporary PIN obtained using the Get Your Electronic Filing PIN Web tool
If you need to know the eligibility requirements or you cannot locate your prior year AGI or prior year PIN, see Self-Select PIN Method for Forms 1040 and 4868 Modernized e-File (MeF).
Electronic Filing PIN – The Electronic Filing PIN (EFP) is a temporary number issued by the IRS Web application. If you need an EFP, access the Get Your Electronic Filing PIN application or call 866-704-7388. You will have to follow the provided instructions in order to receive your PIN. As a reminder, this number changes every year.
Practitioner PIN – The Practitioner PIN is a method that does not require a prior AGI amount or prior year PIN. When using this method, you must always appropriately sign a completed signature authorization form such as the Form 8879, IRS e-file Signature Authorization. Under this method, you may either enter your own PIN into the return or authorize your Electronic Return Originator to select and enter your PIN. If you use the Practitioner PIN method and enter your own PIN in the electronic return record after reviewing the completed return, you must still appropriately sign the signature authorization form.
Jeff states: Well we are reaching the end of our show. Ed thank you for joining us.
Remember you can send us your questions by visiting the kahntaxlaw website at www.kahntaxlaw.com.
Windus states: Have a great day everyone!
With the announcement released just recently that the IRS is hiring hundreds of new agents dedicated to doing tax audits, this means that it will be crucial for US taxpayers to stand up and take notice. In addition, with these new hires, the reports indicate that the agents are going to be more focused, on self-employed small-business owners, and those who are behind on filing their taxes too. For that reason, taking the time now to work with a tax advisor, or tax attorney service provider, could help the person to avoid issues when these workers start to do their jobs. With that said, for those that may find themselves facing this particular situation, this article will provide some suggestions they can put into practice immediately, so continue reading to learn more.
In past years, the IRS had become relaxed in regard to enforcing taxpayers who were delinquent on paying back the taxes they owed. Moreover, due to not having enough employees to cover the arrears log of audits, it was extremely difficult for them to enforce more audits, and focus their attention on the lost revenue from these backlogs of audits. Nevertheless, the Commissioner stated that with these new 700 hired employees, it was going to allow them to try, and recoup all those past years of revenue, which is owed to the government entity.
In addition, these brand-new hires are being made possible due to funds inside of the IRS becoming available for use, by the latest retirements taking hold. Keeping that in mind, many people think the extra $290 million, which Congress gave the IRS helped too with these recent auditor employees. In contrast, that is not the case, as those funds given were actually earmarked to be used for customer services, improvements to our cyber security, and the agencies long fight against identity theft.
With that said, the Congress said that they found these extra funds during their own internal review of their accounts, and discovered that there was enough within their current fiscal year, to provide for these new 600-700 enforcement positions. Moreover, they are not going to roll out the first set of job openings, at least for a few more weeks. However, when they do, they are placing them into the departments that oversee the self-employed taxpayers, and small-business owners. In addition, the IRS plans to place hundreds of more employees into other higher-level enforcement positions, later this year too.
Therefore, for those business owners who have just barely been getting by on covering their tax bills, they might be one of the first among the list to face audits, when these jobs get filled. Moreover, small-business owners might not be aware that some of the tax breaks they have been taking on their returns filed, might already be putting them at risk for a red flag to the IRS to look into those credits deeper. Keep in mind, that in the past, the IRS simply did not have the man power to enforce some of the discrepancies that business owners were taking on their filings.
In addition, for those that are self-employed, and who perhaps tried to save some cash, by filing out their own tax returns, they too should take notice on these new IRS agents. Keep in mind that the whole idea behind hiring these agents, is to allow the IRS to get more work completed faster for the general public. Therefore, if the business owner has fallen behind on taking care of their quarterly payments, and the enforcement agent comes across this information within their database as missing, these new hires are actually there to bring more enforcement to collecting those payments.
For that reason, taking the time to sit down with a tax attorney service provider could prove to be beneficial in certain circumstances. In addition, these professionals are very familiar with the most-recent tax laws, and ways to protect their clients from perhaps facing jail time for the amount owed to the government. However, if the small-business owner waits until they are contacted by these newly hired IRS enforcement agents, it might hinder how much the tax attorney could help their clients then. Therefore, spending a bit of time with the advisor now, to help the business owner take a closer look at their financial records, may even help them to reduce their overall tax bill long term.
Having said that, while many of the newly hired IRS agents will be placed into the self-employment, and small business departments, that is not to say that individual taxpayers are exempt from these audits either. In fact, the enforcement agents are going to be handling those taxpayers, who are already delinquent in their tax obligations with great force. Therefore, if up until now, the person has simply not been contacted by the IRS due to the lack of employees within those areas, they too should take notice of this article topic today. Be that as it may, taking the time to visit a tax professional advisor to look over the past five years’ worth of a person’s tax returns they have already filed with the IRS could also prove to be essential, if for no other reason than peace of mind.
When the IRS puts these newly hired enforcement agents to work within the next upcoming weeks, it could spell trouble for both small-business owners, and individual taxpayers alike. Moreover, this is especially going to be true, if these same self-employed businesses have fallen behind with their tax obligations, and have not been paying them on time for a few years or more. However, there are qualified tax attorneys that could readily guide their clients into getting caught up with their tax bills, before being audited by the IRS. Therefore, for those business owners, or individuals who find themselves in this particular situation, taking the time now to speak with a professional tax attorney could help bring the individual current with their tax obligations effortlessly.
Follow
Follow