In what seems to a recurring theme, a mass data release - this one known as the "Paradise Papers" - has disclosed the identities of high-profile users of offshore accounts. It is vitally important to note prior to discussing the content of the Paradise Papers that there is nothing inherently wrong with having offshore or foreign accounts. The IRS even recognizes the validity of these accounts, which is why it established protocols for reporting income from them via the FATCA and FBAR.
More Americans than ever before – an estimated one in four – are taking so-called “side gigs” to bring in extra money. Whether it is walking dogs on the weekends, renting out your home occasionally through Air BNB or another similar service, delivering, or hauling passengers with a ride-share service like Lyft or Uber, “side hustles” generate hundreds of billions of income annually.
The difference between tax avoidance and tax evasion may seem solely like a semantic one, but to the IRS, the differences are important.
Anyone with assets diversified in foreign accounts with balances that total $10,000 or more at any time in a given year needs to file a disclosure (FinCEN Form 114 of previously referred to as a FBAR). Fail to file this disclosure and the penalties are draconian.
In neighboring Connecticut, a Chinese restaurant owner accused of using “zapper” software faces serious tax fraud penalties. Massachusetts also assesses a sales tax on meals.
The willful failure to file FBARs (Report of Foreign Bank and Financial Account) increases the associated civil penalties. The exact definition of willful was at the heart of a recent Tax Court case.
As a bar or restaurant owner, you know that taxes are a big concern. In terms of maintaining a healthy business, staying in compliance with all the requirements may rank right up there with pleasing your customers as a key to success.
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.
For the length of nearly two full presidential terms, the IRS has been pushing hard on enforcement of foreign account disclosure requirements.
The twisted tale of former billionaire brother Sam Wyly and his late brother Charles took a new turn recently when a federal bankruptcy judge found that the pair had committed tax fraud with a convoluted scheme of offshore bank accounts, shell corporations, trusts and other tax shelters. The brothers system involved transferring their interest in various commercial enterprises (among them such well-known companies as Michael's arts and crafts stores and Bonanza Steakhouses) to trusts in exchange for private annuities.