taxation law services

Third Quarter of 2016 IRS Interest Rates

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The Internal Revenue Service recently announced that Third Quarter of 2016 IRS Interest Rates will remain the same for the. Third quarter begins on July 1, 2016 and ends on September 30, 2016) The Third Quarter of 2016 IRS Interest Rates:

four (4) percent for overpayments [three (3) percent in the case of a corporation];
four (4) percent for underpayments;
six (6) percent for large corporate underpayments; and
1 and one-half (1.5) 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; therefore, US taxpayers and tax professionals should refer to IRS announcements of IRS interest rates on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.

Third Quarter of 2016 IRS Interest Rates are relevant for various reasons; among these reasons, three main uses stand out. First, these are the rates that will be used to charge an interest on any tax owed by a taxpayer. Second, these rates will be used to calculate the interest rate that the IRS owes with respect to tax refunds on the amended US tax returns.

Finally, Third Quarter of 2016 IRS Interest Rates are relevant to PFIC default 1291 calculations. The PFIC tax that is levied on “excess distribution” is subject to IRS interest rates. Hence, if a PFIC’s holding period includes the third quarter of 2016, the tax attorney who calculates PFIC interest on the PFIC tax will need to use Third Quarter of 2016 IRS Interest Rates.

The IRS interest rates were stagnant at 3% for a very long time (from 2010 through first quarter of 2016). However, in the second quarter of 2016, the IRS raised the interest rates from 3% to 4% following the increase of the federal short-term rate from 0% to 1%. Sherayzen Law Office will continue to closely monitor the moves of the Federal Reserve to increase its interest rates in the future.

Experienced International Tax Law Firm of Sherayzen Law Office

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Most U.S. taxpayers who need international tax services look for an experienced international tax law firm to help them. Sherayzen Law Office, Ltd. is a highly experienced international tax law firm. In this essay, I will conduct the analysis explaining why Sherayzen Law Office is considered such an experienced international tax law firm.

Areas of Law Covered by an Experienced International Tax Law Firm

In order for a firm to be considered an experienced international tax law firm, it must have sufficient breadth of coverage of international law – i.e. a firm cannot be considered experienced if it only operates on the margins of international tax law. Sherayzen Law Office covers the full range of areas of international tax law, including: Offshore Voluntary Disclosures (all types – OVDP (now closed),  Streamlined Domestic Offshore Procedures, Streamlined Foreign Offshore Procedures, Delinquent FBAR Submission Procedures, Delinquent International Information Return Submission Procedures, Noisy Disclosures and Reasonable Cause Disclosures); Annual International Compliance with respect to PFICs (Form 8621), foreign business ownership (5471, 8865, 8858, et cetera), foreign business transactions (926 and other related forms) and ownership of foreign accounts (FBAR, Form 8938, et cetera); Foreign Gifts and Inheritance (Form 3520), Beneficiary and/or Owner of a Foreign Trust (Form 3520 and 3520-A); Anti-Deferral Regimes (PFICs, Subpart F rules, et cetera); full domestic compliance (1040, 1065, 1120, et cetera); tax withholding; International Tax Planning; FATCA compliance; and numerous other areas and sub-areas of international tax law.

Furthermore, Sherayzen Law Office helps clients with IRS audits (including FBAR audits), IRS Appeals, and tax court appeals.

The expertise developed by Sherayzen Law Office covers both legal and accounting aspects of international tax law. This means that this is one of the few law firms in the United States where a client’s U.S. legal and accounting needs are fully met without the expense and inconvenience of involving third parties.

Experienced International Tax Law Firm and its Clients

Sherayzen Law Office is an experienced international tax law firm not only because it is in this business for more than 10 years, but also because, during this period of time, it has helped hundreds of U.S. taxpayers throughout the world to resolve their U.S. international tax matters. While a minority of our clients belong to middle class, the majority of our clients consist of the upper middle-class and high-net-worth individuals (including owners of foreign and domestic businesses) with highly complex international tax issues.

Countries Covered by an Experienced International Tax Law Firm

The breadth of the geographical experience is one of the most important characteristics of an experienced international tax law firm. Sherayzen Law Office is proud to state that it has worked with U.S. taxpayers with foreign accounts and/or assets in countries in all continents inhabited by humans: North America (Canada, Mexico and the United States), Central America (Costa Rica, Nicaragua and Panama – geographically, part of the North American continent), South America (Argentina, Brazil, Chile and Colombia), the Caribbean region (Bahamas, Barbados, Saint Kitts and Nevis and Cayman Islands), Europe (Austria, Belarus, Belgium, Croatia, Cyprus, Czech Republic, France, Germany, Hungary, Ireland, Italy, Luxembourg, Monaco, Poland, Portugal, Russia, Spain, Switzerland, Ukraine and the United Kingdom), Middle East (Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Turkey and United Arab Emirates – geographically part of Asia), Australia, New Zealand, Africa (Cote D’Ivore, Ethiopia, Morocco and Nigeria), and Asia (Bangladesh, China, India, Hong Kong, Japan, Philippines, Singapore, South Korea and Thailand).

Such a broad geographical spread qualifies Sherayzen Law Office as one of the most experienced international tax law firms in the United States.

Contact Sherayzen Law Office for Professional Help with Your International Tax Issues

U.S. international tax law is extremely complex with numerous reporting requirements and traps for the unwary. This is why you need to make sure that you have the right team of international tax professionals on your side, especially for the purpose of voluntary disclosure of your foreign accounts and income. Sherayzen Law Office is your best choice; our international tax firm is highly knowledgeable and experienced in international tax law and we can help you!

Contact Us Today to Schedule Your Confidential Consultation!

IRS Uses Panama Papers to Identify Noncompliant Taxpayers

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In April of 2016, the IRS acknowledged its participation in meetings with Joint International Tax Shelter Information and Collaboration network (“JITSIC”), International Monetary Fund (IMF) and World Bank to take advantage of the data about more than 200,000 offshore companies identified in the Panama Papers. At the same time, the IRS urged noncompliant U.S. taxpayers to come forward before the IRS finds them.

JITSIC and IMF/World Bank Meetings on Panama Papers

The JITSIC meeting regarding Panama Papers brought together senior tax officials from more than forty countries to discuss, per OECD, “opportunities for obtaining data, co-operation and information-sharing in light of the ‘Panama Papers’ revelations”. The IRS officials said they could not discuss who participated and what, specifically, was discussed. But in its statement to NBC News, the IRS described the meeting as “productive and timely” and said “governments around the world are working together cooperatively” to respond to the information released in the Panama Papers, with JITSIC setting itself up as a coordinator.

The following day, the IRS further discussed Panama Papers in gatherings that were part of the annual IMF and World Bank meetings.

After those meetings regarding Panama papers, bankers and finance ministers from the world’s twenty largest economies warned tax havens about their future efforts to punish governments that continue to hide billions of dollars in offshore accounts. The IRS also encouraged any U.S. citizens and companies that may have money in offshore accounts to do a voluntary disclosure with respect to these accounts.

Panama Papers Increase Pressure on IRS to Move Forward Against Cayman Islands, Singapore, Bermuda and Other Tax Shelters

According to media reports, the Panama papers may contain information on potentially thousands of U.S. citizens and firms that have at least an indirect connection to offshore accounts affiliated with Mossack Fonseca. The Panama papers, however, are not likely to contain any spectacular information with respect to U.S. taxpayers because these taxpayers mostly prefer to use Cayman Islands, Singapore and Bermuda.

Nevertheless, while the Panama papers might not be very informative about the U.S. citizens, these documents have increased the political pressure on the IRS to move forward against other tax shelters. Therefore, we should not be surprised if we see new bold IRS initiatives in Cayman Islands, Singapore and Bermuda.

This means that the U.S. taxpayers who have undisclosed foreign assets in Cayman Islands, Singapore and Bermuda should analyze their voluntary disclosure options before it is too late. After the IRS discovery, most (and, perhaps, all) of their voluntary disclosure options will be foreclosed due to IRS examinations.

Contact Sherayzen Law Office for Professional Help With Your Offshore Voluntary Disclosure

If you own, directly or indirectly (through a domestic or foreign corporation, LLC, partnership or trust) undisclosed foreign accounts, you should contact the professional legal team of Sherayzen Law Office as soon as possible. Our highly-experienced legal team is headed by one of the leading experts in U.S. international tax law, attorney Eugene Sherayzen. We will thoroughly review the facts of your case, analyze your current U.S. tax exposure and available voluntary disclosure options, prepare all of the necessary legal documents and tax forms and defend your case against the IRS until its completion. We have helped U.S. taxpayers around the world and we can help You!

Contact Us Today to Schedule Your Confidential Consultation!

FBAR and Form 8938 Filings Continue to Grow

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On March 15, 2016, the IRS announced that there was continuous growth in the FBAR and Form 8938 filings. While the IRS attributes this growth in FBAR and Form 8938 filings to the greater awareness of taxpayers, one cannot underestimate the impact of the FATCA letter and the increasing knowledge of foreign financial institutions with respect to U.S. tax reporting requirements.

Background Information for the FBAR and Form 8938 Filings

FBAR and Form 8938 are the main forms with respect to reporting of foreign financial accounts and (in the case of Form 8938) “other specified assets”. The Report of Foreign Bank and Financial Accounts, FinCEN Form 114 (commonly known as “FBAR”) should be filed by U.S. taxpayers to report a financial interest in or signatory authority over foreign financial accounts if the aggregate value of these accounts exceeds $10,000. This form is associated with draconian noncompliance penalties.

IRS Form 8938 was created by the famous Foreign Account Tax Compliance Act (“FATCA”). Generally, 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 the required thresholds (the lowest threshold is $50,000, but it varies by taxpayer). The noncompliance with respect to Form 8938 may result in additional penalties, including $10,000 per form.

IRS Registers Sustained Increase in the FBAR and Form 8938 Filings

Compliance with FBAR and, later, Form 8938 is one of the top priorities for the IRS according to the IRS Commissioner John Koskinen. Recent statistics with respect to the FBAR and Form 8938 filings support the conclusion that the IRS has been largely successful in achieving this task.

The IRS states that the FBAR filings have grown on average by 17 percent per year during the last five years, according to FinCEN data. In fact, in 2015, FinCEN received a record high 1,163,229 FBARs.

Similar, but far less successful trends can be seen with respect to Form 8938 filings. In 2011, the IRS received about 200,000 Forms 8938, but the number rose to 300,000 by the tax year 2013. However, it seems to have stagnated at the same number judging from the statistics for the tax year 2014.

While the lower number of Forms 8938 could be explained by the novelty of the form as well as higher thresholds, it appears that some Forms 8938 might not also be filed due to mistaken calculation of the asset base used to determine whether Form 8938 filing requirements were met.

Nevertheless, overall, it appears that the FBAR and Form 8938 filings have grown sufficiently for the IRS to be satisfied with its progress.

Contact Sherayzen Law Office for Professional Help with Your FBAR and Form 8938 Filings

U.S. international tax law is incredibly complex and the penalties are excessively high. If you were supposed to file FBARs and Forms 8938 in the past, but you have not done so, you need to contact Sherayzen Law Office as soon as possible. Mr. Sherayzen and his legal team will thoroughly analyze your case, assess your potential tax liabilities, determine the available voluntary disclosure options, and implement (including the preparation of all legal documents and tax forms) the voluntary disclosure option that fits your case best.

Contact Us Today to Schedule Your Confidential Consultation!

SDOP Voluntary Disclosure Period and Tax Return Filing Deadline

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A lot of tax professionals and taxpayers fail to recognize the vital connection between a tax return filing deadline (like April 18, 2016) and the determination of the SDOP Voluntary Disclosure Period. In this article, I will explain what the SDOP Voluntary Disclosure Period and how it is related to tax return filing deadlines.

SDOP Background

Streamlined Domestic Offshore Procedure exists in its current format since June 18, 2014, when the IRS announced the most dramatic changes to its Offshore Voluntary Disclosure Program (OVDP) since 2009 OVDP. In essence, SDOP is an alternative to OVDP and allows taxpayers to bring their tax affairs into full compliance with US tax laws in a simpler way with a lower penalty.

SDOP Voluntary Disclosure Period

One of the most important differences between SDOP and OVDP is the Voluntary Disclosure Period – i.e. how many tax years should the voluntary disclosure cover. While OVDP voluntary disclosure period covers the past eight years for FBARs and tax returns, SDOP voluntary disclosure period covers only six past years of FBARs and only three years of past tax returns.

Connection Between SDOP Voluntary Disclosure Period and the Tax Return Filing Deadline

There is an important connection between SDOP voluntary disclosure period and the Tax Return Filing Deadline. As it mentioned above, SDOP Voluntary Disclosure Period covers “past” three years of tax returns.

What does “past year” mean in this context? It means a year for which the U.S. tax return due date (or properly applied for extended due date) has passed. The connection between SDOP voluntary disclosure period and the tax return filing deadline now becomes clear.

Let’s illustrate it further with a hypothetical example. If SDOP is scheduled to be completed on April 1, 2016, the SDOP voluntary disclosure period will cover the most recent three years of U.S. tax returns for which the Tax Return filing Deadline has passed. As of April 1, 2016, the deadline for the 2015 tax return has not yet passed; this means that the SDOP voluntary disclosure period (for tax return purposes) will cover tax years 2012-2014.

If SDOP is scheduled to be completed on April 30, 2016 and the 2015 tax return was timely filed (if not and no extension was filed, the taxpayer will likely be disqualified from participating in SDOP), then the SDOP voluntary disclosure period will shift to the tax years 2013-2015.

What if SDOP is completed on April 30, 2016, and an extension was filed for the 2015 tax return? In this case, the SDOP voluntary disclosure period will remain limited to 2012-2014 tax years.

SDOP Voluntary Disclosure Period’s Relationship to Tax Filing Deadline Offers Planning Opportunities

This relationship between SDOP voluntary disclosure period and the tax filing deadline offers plenty of planning opportunities for SDOP disclosures which are completed around the tax filing deadline because it allows the taxpayer’s attorney (who is doing SDOP on behalf of his client) exercise a certain degree of control over which years will be included in the SDOP voluntary disclosure period.

For example, if a taxpayer has a large tax liability in the tax year 2012 if the return is amended and a small tax liability in the tax year 2015, then the taxpayer’s attorney will likely choose to prepare and file timely 2015 tax return. On the other hand, there are situations where the taxpayer would like to include tax year 2012 in the SDOP voluntary disclosure period (for example, if there is a large foreign capital loss), then the taxpayer’s attorney would opt for filing an extension for the 2015 tax return.

It is important to emphasize that a decision with respect to SDOP voluntary disclosure period should always rest with an international tax attorney who is handling the SDOP disclosure. There may be complex reasons for excluding and including years within SDOP voluntary disclosure period and only an experienced tax professional should make these decisions.

Contact Sherayzen Law Office for Professional Help with Your Voluntary Disclosure

Offshore Voluntary Disclosures with respect to unreported foreign income and foreign assets can be extraordinarily complex, especially in light of draconian IRS penalties that U.S. taxpayers often face. This is why these matters should always be handled by an experienced international tax attorney.

Sherayzen Law Office is one of the most experienced international tax laws firms, especially when it comes to offshore voluntary disclosures. We have helped clients around the world to participate in every major voluntary disclosure program, including 2009 OVDP, 2011 OVDI, 2012 OVDP, 2014 OVDP (now closed), Streamlined Domestic Offshore Procedures, Streamlined Foreign Offshore Procedures and other related voluntary disclosure options. Not only did we help our clients to go through these complex legal procedures and prepared all of their tax forms (including those related to foreign business ownership, trust ownership and PFICs), but we also saved our clients millions in potential penalties and tax liabilities!

We can help You! Contact Us Today to Schedule Your Confidential Consultation!