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Of travel restrictions and back taxes

Travel bans have been in the headlines and certain nationals are seeing their access to the country imperiled. While that ban is on hold pending legal appeals, U.S. citizens may soon find their passports revoked or limited.

The proposal that tied travel to tax collection was a part of the 2015 Fixing America's Surface Transportation (FAST) Act. In our April post last year, we wrote about the details. But it was unclear when the new law would go into effect. Now, the IRS has announced plans to start sending certification letters to the State Department as early as March.

Prison sentence for international tax avoidance scheme

The former professor had invested in a number of startups over the years. Most went bust, but one took off and netted him $80 million when he sold his shares of company stock.

In the year he sold the stock, his first mistake was to under report his income and the gain on the sale. Then he used Swiss Bank accounts and the help of another individual to keep the assets (over $220 million) hidden.

Reporting requirements cut into foreign investments returns

U.S. citizens are taxed on worldwide income. To collect on these taxes, the IRS requires annual reports disclosing foreign financial assets. What triggers the reporting requirements? It varies on the type of asset and amount in an account.

Consider not only the taxes but also reporting fees when reviewing the returns on foreign investments. While they may still make up a component of a diversified portfolio, mistakes can prove costly and lead to significant losses.

Business deduction mistakes that trigger penalties

Challenging an IRS determination can take years. If not successful, you may also face an accuracy-related penalty.

A couple learned these lessons the hard way. The basic facts contained in the Forbes article were that they claimed a business deduction in 2006 and 2007 on a motor home they used to attend RV rallies and sell insurance policies tailored to RV owners. After years and a trip to all the way up to the Ninth Circuit Court of Appeals, they lost and were assessed the accuracy penalty.

Tax season officially kicks off: What you need to know

The IRS announced this week that it had started accepting and processing 2016 tax returns. This year you have until April 18, 2017 to file and pay any taxes due to avoid penalties.

The later deadline this year is because the 15th falls on a Saturday. On Monday, April 17 federal offices are closed in observation of Emancipation Day, a D.C. holiday. A six-month extension request will come with an October 16, 2017 deadline.

Tax disputes and you: Five fundamental rights

The phrase "fundamental rights" likely evokes images of civil rights marches and women's rights protests. The term is not likely to create images of tax forms, but maybe it should.

As a taxpayer, you have certain fundamental rights. These rights are beneficial for everyone, but are of particular importance for those who face a tax dispute or other issue with the Internal Revenue Service (IRS). Five examples of these rights include:

IRS wage garnishment: A continuous levy

Debt is not all created the same. Certain creditors - the IRS for example - have additional powers to collect past due balances. Failing to deal with a tax problem could mean the agency seizes your wages or even Social Security benefits.

What is the process to levy wages? How much can the IRS take each pay period? When does wage garnishment stop? Do you have any rights? We’ll answer these basic questions in this post

Bitcoin: Latest target of IRS John Doe Summons

Why does the IRS use a John Doe Summons to get tax-related information? This type of request is used by the Service when it does not know the identity of a taxpayer.

The IRS successfully used a John Doe Summons against UBS to obtain the names of account holders. In that case, collections topped $10 billion in taxes and fines against those who had not disclosed their offshore bank accounts.

Self-employment tax and S corporations

Make a mistake with the choice of entity or contract terms when starting up a company and it could have serious consequences down the road. A warning comes in the form of a tax court case decision at the end of December.

Forbes reported on the facts of the case. The outcome was that a licensed financial consultant was hit with a significant self-employment tax liability after income was assigned to him rather than his S corporation. 

The streamlined offshore reporting processes and willfulness

The concept of willfulness in the context of non-compliance with tax reporting and payment regulations concerning offshore accounts has been a popular topic in legal circles lately. So much so that the American Bar Association recently held a conference dealing specifically with important issues in that arena.

Much of the ABA's National Institute on Criminal Tax Fraud and Institute on Tax Controversy dealt with the distinctions between the streamlined IRS process for becoming compliant with FBAR and FATCA reporting mandates and the more in-depth Offshore Voluntary Disclosure Program (better known as the OVDP). The streamlined process, known as Streamlined Foreign Offshore Procedures (for non-U.S. residents) or the Streamlined Domestic Offshore Procedures (for U.S. residents) isn't appropriate for everyone, and those who fear that willful conduct could potentially subject them to criminal consequences should definitely consider the OVDP first.

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