In 2014, Credit Suisse pleaded guilty in U.S. federal court to facilitating tax fraud by Americans via secret bank accounts in Switzerland. This was among the largest guilty pleas ever by a foreign bank, and Credit Suisse agreed to pay $2.6 billion in fines to the U.S. and New York State. (Our previous report from 2014 is here, along with a Bloomberg Businessweek article that quoted Asher Rubinstein in 2014.) Now, Credit Suisse is again facing similar allegations, this time for the bank’s “Israel desk” facilitating tax fraud by Israeli-Americans.
The current accusations stem from the Department of Justice prosecution of Dan Horsky, who held joint U.S. and Israeli citizenship and kept millions of dollars in cash and stock accounts at unreported Credit Suisse accounts in Switzerland. Mr. Horsky pled guilty, cooperated with DOJ and provided information about Credit Suisse that could result in a new prosecution or… Read More
Annual tax season is upon us, and we remind readers of important tax reporting requirements that must be met with respect to foreign assets.
If you had signature authority or a financial interest (e.g., ownership) in a foreign financial account (including a bank account, securities account, brokerage account, etc.) at any time during 2016, you must “check the box” on your IRS Form 1040, Schedule B, Part III, Line 7. If your foreign account(s) were valued at more than $10,000 in the aggregate, you must also “check the box” on line 7 regarding the FBAR form, FinCEN 114 (see item 5, below). This requirement is applicable to taxpayers who had beneficial ownership of, or signature authority or other authority over, such financial accounts in a foreign country. Even if you closed the accounts during 2016, you must still “check the… Read More
In the latest step by the IRS to address taxation issues in the digital on-line economy, the IRS has filed its first enforcement against convertible virtual currency, targeting tax abuse of “Bitcoin” transactions. On November 20, 2016, a Federal Court in California authorized the IRS to issue a “John Doe” summons to Coinbase, Inc., a web-based global digital currency wallet and platform. The IRS has in the past successfully used the John Doe summons to obtain information from financial institutions (e.g., UBS, HSBC and Cayman Islands banks) for a broad class of U.S. clients who are not individually named but who the IRS has reason to believe have utilized the financial institution to improperly evade tax. The John Doe summons seeks records from 2013 through 2015 for any Coinbase user with a US address, telephone number, e-mail domain, etc., and all records related to disbursement of funds to any… Read More
If you are the owner of a foreign account or other foreign financial asset that has not been properly reported to the IRS, what are your options now?
Option One: come forward now. The IRS Offshore Voluntary Disclosure Program (OVDP), still remains open. Criminal prosecution is usually avoided if you come forward before you are caught. In addition, the penalties are much higher outside the OVDP in the event you are caught by the IRS. You may be caught because of FATCA, an investigation, an audit, an information request to a foreign bank, a subpoena upon a foreign bank, or another person’s disclosure of account info. Thus, if you have not entered the Offshore Voluntary Disclosure Program, you may still come forward; you will pay penalties, but the penalties will still be significantly lower than if you don’t come forward and the IRS catches you. In that case,… Read More
Year-end is a good time to reflect upon your estate planning wishes, whether they are current and whether your survivors will be able to efficiently inherit. To this end, we offer the following questions to direct you:
Please contact us for assistance with your estate planning.… Read More
The year 2016 was an epic year in the offshore world due to the leaks of confidential offshore financial information known as the “Panama Papers”. In addition, in 2016, more countries began to report offshore financial information to the IRS under FACTA (the Foreign Account Tax Compliance Act).
Also in 2016, the IRS and U.S. Department of Justice (DOJ) continued to successfully attack offshore banking “secrecy”, moving beyond Switzerland to other foreign jurisdictions. “Going offshore” for the purposes of hiding money from the IRS is now impossible. Going offshore for asset protection from civil creditors and for tax minimization is still viable and effective, but must be tax-compliant.
Further Erosion of Offshore Bank Secrecy and Encouraging Tax Compliance
While major changes are likely on the Federal level following national elections last month (see our post here on tax changes post-elections) including the repeal of the federal estate tax, many states will still retain their own estate tax. Readers should keep in mind that on the state level, the exclusions from state estate taxes can be much lower than on the federal level. In New York, the current estate tax exemption is $4,187,500.00 and rises to $5,250,000 on April 1, 2017. New York estates valued at 105% (or greater) of the exemption lose the exemption entirely. In Connecticut, the exemption is now $2 million and the estate tax ranges from 7% to 12%, depending on the amount above the Connecticut estate tax exemption. (Connecticut, along with Minnesota, are the only two states in America which also impose a gift tax.)
On September 30, 2016, New Jersey Governor Chris Christie… Read More
Donald Trump has promised to rewrite the U.S. tax code, much like Ronald Reagan did in 1986. With a Republican House and Senate, a tax code overhaul is likely. Trump’s plan is likely to include:
Each year, we begin our end-of-year suggestions with a reminder to clients who own FLPs, LLCs and family business ventures, that they should take advantage of year-end gifting to lower estate taxes. This year the message is even more crucial, because discounted gifting of family enterprises is about to go away entirely. The recent election results will not alter (at least for now) this change in tax law.
Take Advantage of Year-End Gifting to Lower Estate Tax – Before the Law Changes: New IRS Regulations Eliminate the Ability to Discount the Value of FLP and LLC Gifts to Family Members
In August 2016, the IRS finally issued proposed regulations that will eliminate (or severely limit) the ability to discount the value of transfers of interests in closely held entities (FLPs, LLCs, family corporations) to family members. Such “leveraged gifting” has been an extremely important and common method… Read More
Throughout 2016, the IRS and Department of Justice (DOJ) have continued to aggressively pursue offshore tax fraud investigations of many foreign banks in countries across the world. Moreover, according to the DOJ Tax Division, DOJ is “now fully staffed [with] 370 attorneys and 500 employees to pursue the department’s priorities, including offshore enforcement.” Now, more than ever, U.S. taxpayers are subject to the risk of criminal prosecution and various financial penalties if they fail to report foreign assets.
Taxpayers may, however, eliminate these risks by voluntarily becoming tax-compliant through the IRS’s Offshore Voluntary Disclosure Program (OVDP), but they must do so before the IRS learns about the unreported foreign assets. There are many ways for the IRS to learn about unreported foreign assets. The Foreign Account Tax Compliance Act (“FATCA”), a U.S. law passed in 2010, requires foreign banks and financial institutions to automatically report to the IRS… Read More
On September 29, 2016, Asher Rubinstein will be the featured speaker in a live webinar, FBAR and U.S. Tax Reporting and Compliance Requirements for Foreign Assets.
Since the Foreign Account Tax Compliance Act (FATCA) was passed in 2010, most countries around the world will report foreign accounts to the IRS. American taxpayers who do not report foreign assets and income to the IRS (whether innocently or willfully) can be investigated and charged with significant penalties. In this webinar, you’ll learn about foreign reporting requirements and how to comply with the law and avoid penalties. Upon completion of this course, you will be able to:
We have previously written about Israel’s willingness to enforce the Foreign Accounts Tax Compliance Act (FATCA) on behalf of the IRS. See, for example, my article “Israel Is Becoming the IRS’s Strictest Enforcer of FATCA” (Tax Notes International, Volume 75, No. 6, August 11, 2014). Recent events in Israel further support that conclusion. The lesson is that if you have foreign financial accounts in Israel that are not in U.S. tax compliance, the window to come into compliance is closing rapidly.
Earlier this month, the Israeli Supreme Court rejected a challenge to the implementation of FATCA in Israel. The plaintiffs in Israel argued that FATCA violated Israeli sovereignty and violated their individual privacy. The Israeli Supreme Court rejected these arguments and thereby cleared the way for banks in Israel to report account information to the Israeli Tax Authority, which will then transmit the information to the IRS. This… Read More
This month, the IRS finally issued proposed regulations that will eliminate (or severely limit) the ability to discount the value of transfers of interests in closely held entities (FLPs, LLCs, family corporations) to family members.
Such “leveraged gifting” has been an extremely important and common method used by estate planners to eliminate estate taxes.
The proposed regulations will undergo a ninety day comment period and a public hearing on December 1, 2016. Shortly after that the IRS will publish final regulations which will take effect within thirty days after publication.
While we do not venture into political discussion, we point out that Hillary Clinton has stated that she will reduce the estate tax exclusion from $5,450,000 per person ($10,900,000 for a married couple) currently in effect, to $3,500,000 per person ($7,000,000 for a married couple)… Read More
The “Panama Papers” purportedly show how one law firm in Panama City with branches from Switzerland to Hong Kong utilized offshore entities and bank accounts to hide money for a world-wide clientele of wealthy people, including political leaders in various governments. While foreign entities and bank accounts are legal, it is against the laws of many countries to hide income from taxation, to launder bribe money and other proceeds of corruption and criminal activities. If the reports are true, the Panamanian law firm of Mossack Fonseca participated in tax evasion and money laundering on a global scale.
In 2012, I visited Panama and met with trustees, attorneys and bankers, all eager for business and client referrals. While I was witness to the explosion of Panama’s banking industry, and I… Read More