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Fort Lauderdale Tax Law Blog

Bank secrecy laws affected by FATCA

The long reach of Foreign Account Tax Compliance Act (FATCA) can be seen in concerns raised by the banking system in Lebanon and its bank secrecy laws. Officials from that nation's banks note that despite the disclosure requirements of FATCA, there is "no pressure" to end their privacy rules.

However, if the account holder is an American citizen or suspected of money laundering, the ownership of the account can be disclosed. Holders of U.S. Passports or Green Card holders are asked to sign a consent document with the banks that authorizes disclosure for FATCA purposes.

Does your business comply with non-resident tax requirement?

Nonresident income taxation may be a problem you have never considered, but perhaps you should. Do you or any of your employees work in another state for a period of time? Do you spend part of the year in another location or working onsite for a couple of weeks a few times during the year?

If so, you could be noncompliant with nonresident income tax in those states. In the era of telecommuting, employees who live in one state, but whose business is located in another state could also run afoul of these issues.

What are the elements of tax evasion?

In general terms, most people in Florida understand that tax evasion means not paying your taxes. But simply failing to file a tax return when you should is not the only thing that can lead to the IRS pursuing money and even criminal charges against you.

Cornell University Law School defines tax evasion as using illegal means to avoid paying taxes. One common way for taxpayers to do this is to misrepresent their income in their federal tax return. For example, the individual or business might try to hide some of their income in offshore bank accounts, underreport the income, or claim too much in deductions.

When beneficial status may not be so beneficial

Tax law is complex because it does many things. It, of course, raises revenue that allows the federal government to operate, and that includes everything from the National Weather Service and the air traffic controllers for the Miami airport and South Florida to the U.S. Navy and the federal courts.

But it also serves many policy purposes, from the home mortgage deduction encouraging people to buy homes to federal taxes on cigarettes, designed to dissuade people from smoking. Because money and taxes provide an incentive for behavior, tax policy can be used to sometimes change behavior.

The IRS wants to tax the mayor of London?

Well, sort of. Boris Johnson, mayor of London, holds dual citizenship. Apparently he was born in New York. And like everyone who hold dual citizenship, he has found that causes a problem with the U.S. Internal Revenue Service.

The IRS wants to tax the gain on the sale of his home in the U.K. That sale was exempt in the U.K., but he is refusing to pay the IRS and he finds imposition of U.S. taxes on citizens outside of the U.S. "outrageous."

Nonetheless, the Foreign Account Tax Compliance Act (FACTA) demands that he pay. His other option, besides paying the tax, is to renounce his citizenship. 

Don't let innate fears of IRS audits lead to rash action

The only sure thing in life is death and taxes. No one is really certain who the first person was to come up with that line. If you Google it, you'll find that it's been attributed to all sorts of people, including Benjamin Franklin.

One thing that is certain is that the phrase is so ensconced in our culture that people are as likely to associate images of the Grim Reaper with the Internal Revenue Service as they are with the notion of death.

The basis of such fear is likely that most people really don't know how the IRS operates. That puts innocent individuals at a huge disadvantage. But it doesn't have to be that way. Anyone faced with an apparent tax controversy should know that the process can be navigated whether it's an audit or other tax investigation.

What does Weil verdict mean for U.S. efforts against tax evasion?

The verdict is in and the determination of the jury is that former Swiss banker Raoul Weil is not guilty of conspiring to aid thousands of Americans evade paying billions of dollars in U.S. taxes by shielding money in UBS AG bank accounts overseas.

As we posted previously, the trial in Fort Lauderdale marked one of the biggest cases brought by the Department of Justice in connection with efforts to clamp down on suspected tax evasion. The trial lasted about three weeks and the jury reportedly took only about an hour to come back with an acquittal. The question that many are now bandying about is what the decision means for the future of the Justice Department's crackdown efforts.   

Until the next clear action by prosecutors, any views in this regard will have to be deemed speculation. But there is plenty of that going on. 

What's the tax implication of forgoing health insurance?

2014 marked the first full year of the federal health insurance marketplace. The launch was more than a bit rocky in many states. The government confirms that more than 8 million people took advantage of the exchange system to get personal insurance coverage.

But the Centers for Disease Control and Prevention estimates that about 41 million American adults just said no. Those folks in Florida and elsewhere opted to face the tax implications of going that route rather than get coverage. A survey done by the Kaiser Family Foundation found that for most the decision was driven by simple math. The expected tax hit was easier to take than the cost of the insurance.

FATCA's ripple continues to wash over Americans overseas

Back on Independence Day of this year, we posted about the effects that the Foreign Account Tax Compliance Act might have on American citizens.

That item didn't simply deal with people living in the U.S. who might have funds in foreign banks and were unaware of all the tax implications attached to them. It also discussed the threat that Americans who happen to live and work overseas might come to face as a result of the burdens of FATCA. 

Fort Lauderdale trial of Ex-UBS exec could be just the start

The trial of a former top official of Switzerland's UBS bank is getting underway in Florida. The U.S. government is alleging that Raoul Weil was instrumental in aiding thousands of U.S. citizens evade taxes by hiding as much as $20 billion in his bank's secret accounts.

He has pleaded not guilty and Weil's attorney indicated to the jury during his opening that the prosecution's case is weak. Bloomberg reports that former employees of Weil's who are expected to be called by the government to testify were "rogue" operators who participated in illegal actions without Weil's knowledge. And he says their implications of Weil are a bid to escape punishment.

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