Second Quarter of 2014 IRS Underpayment and Overpayment Interest Rates

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On March 14, 2014, the IRS announced that the underpayment and overpayment interest rates will remain the same for the calendar quarter beginning April 1, 2014. The rates will be:

three (3) percent for overpayments [two (2) percent in the case of a corporation];
three (3) percent for underpayments;
five (5) percent for large corporate underpayments; and
one-half (0.5) percent for the portion of a corporate overpayment exceeding $10,000.

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.

Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

Interest factors for daily compound interest for annual rates of 0.5 percent are published in Appendix A of Revenue Ruling 2011-32. Interest factors for daily compound interest for annual rates of 2 percent, 3 percent and 5 percent are published in Tables 7, 9, 11, and 15 of Rev. Proc. 95-17, 1995-1 C.B. 561, 563, 565, and 569.

OVDP International Tax Attorney: Letters from Swiss Banks & OVDP

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This is a natural question for an OVDP International Tax Attorney: in light of the ongoing U.S. Department of Justice (“DOJ”) The Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks (the “Program”), should every U.S. taxpayer with undisclosed Swiss accounts enter the Program?

As everything in international tax law, the answer of whether you should enter the OVDP program (now closed) after receiving a letter from the Swiss Bank is not that simple and depends (as any good OVDP International Tax Attorney will tell you) on the particular circumstances of your case. The article below is not intended to give legal advice, but it is merely a discussion of various possibilities – please contact Mr. Eugene Sherayzen, an experienced international tax attorney of Sherayzen Law Office for professional advice with respect to your undisclosed foreign accounts.

OVDP International Tax Attorney: Letters from Swiss Banks

Ever since more than a hundred banks officially announced (and a lot of private banks did so unofficially) that they will enter the Program, U.S. taxpayers with undisclosed Swiss bank accounts have received letters from their Swiss banks asking the taxpayers whether they are in compliance with U.S. tax laws, whether they have filed their FBARs (Report of Foreign Bank and Financial Accounts, currently Form FinCen 114 (formely TD F 90-22.1))and, if not, whether they entered the IRS Offshore Voluntary Disclosure Program (OVDP).

Indeed the emphasis in all of the letters has been on the OVDP without any regard to the individual circumstances of the taxpayers and despite the fact that many of these taxpayers learned about the existence of the FBARs from the very letters from their Swiss banks.

OVDP International Tax Attorney: Common Chorus to Join OVDP

It is not only the Swiss banks that are urging these taxpayers to enter the OVDP. The IRS is also very eager to see as many people enter the OVDP as possible. Shockingly, the great majority of accountants readily take on the legal (not accounting) issue of whether a client should enter the OVDP. The accountants herd their clients into the OVDP without ever discussing the consequences of doing so or any other legal alternatives.

The end result of this common stance has been to convince the terrified taxpayers that OVDP is the only route available to them irrespective of their circumstances, whether the FBAR non-compliance was willful or non-willful, whether they have reasonable cause for the delayed filing of their FBARs or not, whether they owe any taxes or not, and so on.

OVDP International Tax Attorney: OVDP is Option #1

Of course, as an OVDP International Tax Attorney, I agree that there is no doubt that OVDP is Option #1 that must be considered by U.S. taxpayers who received a letter from their Swiss banks However, being Option #1 does not mean the only option and does not mean that it should be automatically followed.

Moreover, even under the OVDP, there are many issues, strategies and possibilities that must be explored by your OVDP International Tax Attorney.

Undoubtedly, OVDP has tremendous benefits to offer to U.S. taxpayers with willful non-compliance and who may be facing realistic criminal penalties. On the other hand, the calculation becomes much more complicated when your client simply did not know about the FBARs and the IRS is not likely to be able to sustain its burden of proof on the willfulness issue.

Comprehensive Legal Analysis of the Voluntary Disclosure Alternatives Must Be Considered

In all cases, but even more so in the non-willful cases, a very complex calculation and cost-benefit analysis must be conducted by your OVDP International Tax Attorney, comparing traditional FBAR penalty structure with the OVDP penalty structure. Outside factors, such as time, legal fees, complexity of the issues, impact on tax returns, appeal possibilities, and many others, should be considered your OVDP International Tax Attorney. Once all factors are considered, the Attorney should advise you on the available Voluntary Disclosure alternatives and the probability of success.

Only then, armed with this knowledge and based on the analysis of a good OVDP International Tax Attorney, should a U.S. taxpayer with undisclosed Swiss accounts make his decision.

Contact Sherayzen Law Office for Professional Legal and Tax Help With the Voluntary Disclosure of Your Foreign Accounts

The point of this article is not to diminish the value of the OVDP, but to argue that all U.S. taxpayers with undisclosed foreign accounts should be given a chance to consider all of their voluntary disclosure options based on the comprehensive analysis of their particular circumstances.

This is precisely what Sherayzen Law Office experienced international tax firm can do for you. We will thoroughly analyze the facts of your case, assess the potential FBAR and OVDP penalties and tax liabilities, analyze the voluntary disclosure alternatives, create a comprehensive voluntary disclosure plan for you, and implement this plan (including the preparation of all legal documents and tax forms).

Contact Us to schedule a Confidential Consultation with an experienced International Tax Attorney.

OVDP Foreign Accounts Lawyers: Swiss Banks Disclosure Deadline on April 30, 2014

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As many OVDP Foreign Accounts Lawyers know, April 30, 2014 is a crucial deadline for the U.S. Department of Justice (“DOJ”) The Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks (the “Program”). By this date, numerous Swiss banks will have to disclose the names of US accountholders, account balance information, and various other data with respect to U.S. accountholders.

OVDP Foreign Accounts Lawyers: What Banks Will Disclose U.S. Taxpayers by April 30, 2014

The list of Swiss Banks who will disclose their U.S. taxpayers to the IRS and DOJ by April 30, 2014 is very large and includes prominent banks such as:

Aargauische Kantonalbank
Acrevis Bank AG
AEK Bank 1826
Appenzeller Kantonalbank
Baloise Bank SoBa
Bank am Bellevue
Bank Coop AG
Banque Cantonale de Fribourg
Banque Cantonale de Genève
Banque cantonale du Jura
Banque cantonale du Valais
Banque Cantonale Neuchâteloise
Banque Cantonale Vaudois
Banque Privee Edmond de Rothschild
Basellandschaftliche Kantonalbank
Berner Kantonalbank
Cembra Money Bank AG
Cornèr Banca SA
Edmond de Rothschild Group
EFG International AG
Glarus Bank
Graubündner Kantonalbank
Hyposwiss Privatbank Zurich AG
Hyposwiss Private Bank Geneve SA
Hypothekarbank Lenzburg
Linth Bank
Lombard Odier & Cie.
Luzerner Kantonalbank
Migros Bank
Nidwaldner Kantonalbank
Piquet Galland & Cie SA
Post Finance
Raiffeisen
Rothschild Bank AG, Zurich
Saanen Bank
Schaffhauser Kantonalbank
Schwyzer Kantonalbank
St. Galler Kantonalbank
Ticino Cantonal Bank
Union Bancaire Privee
Valartis Bank (Switzerland)
Valiant Holding AG
Vontobel Holding AG
VP Bank (Switzerland)
Walliser Kantonalbank
Zuger Kantonalbank

Note: this is just a selective list – many other banks that are not named here are participating in the Program. This is particularly true for many private banks that are not required to disclose publicly whether they are participating in the Program.

OVDP Foreign Accounts Lawyers: Two Cantonal Banks and Other Category 1 Banks Excluded from the Program

The US Department of Justice (DOJ) previously launched investigations against two other Swiss cantonal banks, such as Baser Kantonalbank and Zürcher Kantonalbank. These banks are classified as Category 1 banks and will not be allowed to enroll in the Program. Similarly, otehr Category 1 banks cannot participate in the program Credit Suisse, Julius Baer, Pictet, HSBC Privatbank, Liechtensteinische Landesbank, Bank Leumi, Bank Hapoalim, Bank Mizrahi, Rahn & Bodmer, Bank Wegelin, Bank Frey, Neue Zürcher Bank.

OVDP Foreign Accounts Lawyers: Letters from Banks

As part of their “voluntary disclosure” under the Program, the Swiss Banks have already sent out letters to the majority of their U.S. account holders. These letters are not mere warnings (though, they also are exactly that to many unsuspecting U.S. taxpayers) to U.S. taxpayers with undisclosed Swiss accounts, but they are also a way for the Swiss Banks to minimize their penalty exposure (because, in calculating their own penalty base, Category 2 banks do not have to count the bank accounts which are already disclosed to the IRS).

OVDP Foreign Accounts Lawyers: What Does April 30, 2014 Mean for U.S. Taxpayers With Undisclosed Foreign Accounts

As most OVDP Foreign Accounts Lawyers indicate, April 30, 2014, marks a very important deadline for U.S. taxpayers with undisclosed foreign accounts in Switzerland. The reason is found in the Offshore Voluntary Disclosure Program (“OVDP”) acceptance rules.

The rules basically state that if the IRS receives the information about undisclosed foreign accounts from a third party before U.S. owner of these accounts enters the OVDP program, then the IRS will likely reject (or, as it was in the case with some OVDP participants last year – eject such U.S. owner from the OVDP) such U.S. owner’s application to participate in the OVDP program.

Therefore, OVDP Foreign Accounts Lawyers advise their clients that a very important and the most official route to voluntary disclosure will simply become completely closed to many U.S. taxpayers who fail to enter OVDP and disclose their Swiss accounts prior to April 30, 2014.

Of course, it is important to note, that it is possible that some of the Swiss banks have already disclosed such unreported accounts owned by U.S. taxpayers and many more are likely to do it in advance of the April 30, 2014, deadline.

In such case, U.S. taxpayers who either hold or previously held undisclosed bank accounts at any of the Swiss cantonal banks eligible for enrollment in the Program, or any bank already under investigation, may face substantial civil and potential criminal penalties if they do nothing or if their cases are not handled properly.

Therefore, it is imperative for U.S. taxpayers with undisclosed Swiss bank and financial accounts to contact OVDP Foreign Accounts Lawyers who specializes in the OVDP disclosure of foreign accounts.

Contact Sherayzen Law Office for Professional Help with Undisclosed Swiss Accounts

Experienced OVDP (program now closed) foreign accounts lawyer Eugene Sherayzen of Sherayzen Law Office, Ltd. can help you with all of your voluntary disclosure issues. Our experienced tax law office will thoroughly review your case, estimate your existing tax and FBAR liability in the United States, identify the available voluntary disclosure options, prepare your voluntary disclosure package (including all legal documents and tax forms) and rigorously defend your interests during your negotiations with the IRS.

Contact Us Now to schedule a Confidential Consultation as soon as possible.

Minnesota Tax Attorneys: Corporate Deadlines on March 17, 2014

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Minnesota tax attorneys and attorneys in other states warn their clients that there are two important IRS deadlines next Monday, March 17, 2014.

First, corporate income tax returns are due for corporations with fiscal year ending on December 31, 2013. Normally, the deadline would be on March 15, but because this date falls on Saturday, the deadline in 2014 is March 17.

If you are not ready to file corporate income tax return, you can request an extension using Form 7004 for an additional six months until September 15, 2014. Note, if you file an extension, you still must pay the corporate taxes due by March 17, 2014 (in such a case, Minnesota tax attorneys estimate the final tax liability of the corporation for 2013 and ask their corporate clients to pay the amount due with extension). As Minnesota tax attorneys advise, in most cases, EFTPS system should be used by the corporations to make such a payment.

Minnesota tax attorneys also warn about a second important deadline on March 17 ,2014. This deadline concerns the Subchapter S election for the corporations with tax years ending on December 31, 2013. The corporation can make such an election no later than two months and fifteen days after the beginning of the tax year in which the election is to take place. Again, since March 15 is Saturday, the deadline for this election is moved to March 17, 2014.

Whether your corporation may benefit from becoming an S-corporation is a question that depends on your particular facts. In such case, Minnesota tax attorneys weigh in multiple consideration, legal and tax, before giving an advice to their corporation clients.

Of course, corporations with fiscal years ending on a date other than December 31, 2013, have their own deadlines, but the rule behind calculating the deadlines in such cases are similar. Therefore, you should contact your Minnesota tax attorney to determine the exact due date of the income tax return of your corporation.

Canada FATCA: Canada Agrees to Implement FATCA

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On February 5, 2014, the U.S. Department of the Treasury announced that the United States signed an intergovernmental agreement (IGA) with Canada to implement the Foreign Account Tax Compliance Act (FATCA). Since Treasury last announced multiple IGA signings in mid-December 2013, agreements have also been signed with Italy and Mauritius, the latter of which also signed a new tax information exchange agreement.

Congress enacted FATCA in 2010 to target non-compliance by U.S. taxpayers using foreign accounts, and the provision has since become the global standard for promoting tax transparency. As of February 5, 2014, the United States had signed 22 IGAs and had 12 agreements in substance.  Canada FATCA Agreement is one of the most recent IGAs to be signed.

In general, FATCA seeks to obtain information on accounts held by U.S. taxpayers in other countries. It requires U.S. financial institutions to withhold a portion of certain payments made to foreign financial institutions (FFIs) who do not agree to identify and report information on U.S. account holders. Governments have the option of permitting their FFIs to enter into agreements directly with the IRS to comply with FATCA under U.S. Treasury Regulations or to implement FATCA by entering into one of two alternative Model IGAs with the United States.

Canada FATCA: Model 1 IGA Signed by Canada

Canada FATCA implementation agreement is classified as Model 1 IGA. Under the Canada FATCA implementation agreement, FFIs will report the information required under FATCA about U.S. accounts to Canada Revenue Agency (“CRA”) , which in turn will report the information (as required by the Canada FATCA IGA) to the IRS.

Canada FATCA: US Taxpayers with Undisclosed Canadian Bank and Financial Accounts Are in Danger

What do these Canada FATCA developments mean for US taxpayers with undisclosed Canadian Bank and Financial Accounts? It means that all of these accounts are likely to be disclosed by the Canadian banks to the IRS, and these taxpayers have very little time to act.

If the IRS finds out about these undisclosed accounts, these U.S. taxpayers may face draconian willful civil and even criminal FBAR penalties.

This means that the owners of undisclosed Canadian accounts should consult an international tax expert in undisclosed foreign accounts as soon as possible.

Contact Sherayzen Law Office for Professional Help with the Voluntary Disclosure of Your Canadian Bank and Financial Accounts

If you have undisclosed financial accounts in Canada, contact Sherayzen Law Office as soon as possible to schedule a consultation. Our law firm has experienced expertise in voluntary disclosure of undisclosed foreign accounts and foreign assets. We have helped U.S. taxpayers around the world to bring themselves back into US tax compliance, while minimizing their tax and FBAR penalty exposure. Call or email us NOW!