John Bullis: Some tax cheaters are being caught

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Sometimes folks ask, “Is IRS really trying to collect from those who try to cheat on their taxes or not report all the income?”

Acting Assistant Attorney General Caroline Ciraolo gave some information about what is being done on folks and banks who try to hide foreign bank accounts and not report the income earned.

“Since 2008, the Justice Department has publicly charged more than 100 account holders and nearly 50 individuals who have aided and assisted U.S. taxpayers in concealing foreign accounts and evading their U.S. tax obligations,” Ciraolo said.

The Justice Department has focused on foreign financial institutions. For example, Credit Suisse pled guilty in May 2014 and agreed to pay $2.6 billion for its role in assisting U.S. taxpayers evade (not report, not pay) their U.S. tax on foreign accounts.

In March 2015, HSZH (a foreign bank) paid a penalty of more than $49 million dollars for its wrongful activities.

IRS reported it has collected more than $8 billion in taxes, penalties and interest from just 54,000 voluntary offshore disclosures. That is mainly because of the cooperation by Swiss banks.

It is not only banks in Switzerland. Banks and organizations in Belize, the British Virgin Islands, the Cayman Islands, the Cook Island, India, Israel, Liechtenstein, Luxembourg, the Marshall Islands and Panama are also being looked at by IRS and the Justice Department.

The form 1040, Schedule B (reporting interest and dividend income individuals received) has a question at the bottom of the form — “At any time during 2015 did you have a financial interest in or signature authority over a financial account (such as a bank account, securities account, or brokerage account) located in a foreign country?”

It is not a crime or a problem to have a foreign account, but U.S. citizens are required to report the earnings and pay taxes on those earnings. Also, if the account at any time in the year was worth $10,000 or more, a Report of Foreign Bank and Financial Accounts (FBAR), form FinCEN form 114 is to be filed separately with IRS. That form is to be filed electronically by June 30, 2016 for the year 2015.

Also, if you received a distribution from a foreign trust, or if you were a grantor (the person that set up the foreign trust), you may have to file Form 3520.

Caroline Ciraolo also said thee Tax Division (of the Justice Department) hired more than 80 new attorneys in 2015. That means more than 350 attorneys are involved (with IRS) in trying to enforce the U.S. tax laws through both criminal and civil litigation.

Didn’t Al Capone go to jail for not paying his income taxes?

Did you hear? “It’s a great country, but you can’t live in it for nothing,” by Will Rogers.

John Bullis is a certified public accountant, personal financial specialist and certified senior adviser who has served Carson City for 45 years. He is founder emeritus of Bullis and Company CPAs.


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