Foreign Banks Take Advantage of Tax Amnesty Offer

Posted on January 27, 2014 by Kursti Nakagawa

Foreign Banks Take Advantage of Tax Amnesty Offer: In its latest attempt to tackle the problem of offshore tax evasion, the United States Department of Justice offered Swiss banks that are not currently under criminal investigation the chance to apply for tax amnesty. Banks that chose to accept the offer were given until December 31^st to turn over information on any undeclared foreign accounts and to provide information as to how they helped United States citizens hide their foreign assets. A recent report indicated that over one third of the 300 banks that were extended this recent amnesty option have accepted the terms and agreed to cooperate.

Under the terms of this latest tax amnesty program, foreign banks must pay penalties equal to a certain percentage of the value of their undisclosed American accounts in order to avoid prosecution. This percentage is determined by when the undisclosed accounts were opened and is highest for those accounts opened after the 2009 prosecution of UBS. The fines range from 20 percent of the value of undisclosed assets for those accounts opened before August, 2008 up to 50 % for those opened after February, 2009. While the Swiss government is critical of these steeply escalating percentages, it has apparently encouraged banks to cooperate.

The crackdown on offshore tax evasion increased in intensity after the 2009 conviction of UBS, the largest Swiss bank, for hiding over $20 billion dollars in United States assets. As part of this conviction, UBS paid a penalty of over $700 million and turned over in excess of 4000 foreign accounts. In addition, 100 United States taxpayers and financial advisers were criminally prosecuted while over 30,000 others avoided prosecution by disclosing their offshore accounts and paying the back taxes and penalties associated with the disclosures. Since that time, the Unites States Department of Justice has allocated more and more resources to identifying offshore assets and penalizing those institutions and individuals who attempt to hide them. This latest tax amnesty offer is part of that ongoing effort.

If you have questions about the reporting of assets held in foreign accounts or about a tax debt you are unable to pay, our tax settlement professionals are happy to discuss your situation free of charge. For more information about our services, call us today at 877.889.6527 or visit us at www.professionaltaxresolution.com. With over 16 years in the business of resolving tax problems, we have a thorough understanding of both domestic and foreign tax law tax together with the experience to know how to apply that knowledge to your specific financial situation.

Out with the Old……Extended Tax Provisions 2014

Posted on January 14, 2014 by Kursti Nakagawa

Extended Tax Provisions 2014 – It is common knowledge that tax law is constantly changing and it seems that Tax Year 2014 will be no exception. Every year the government makes some changes to the tax code in an attempt to make it fit the current economic climate. These changes include doing away with existing tax laws, initiating new laws and either renewing temporary tax provisions or allowing them to expire. When the American Taxpayer Relief Act was signed into law in January of 2013, it established some new tax laws as well as extending some temporary provisions through the end of the year. Fifty-five of those temporary provisions expired on December 31^st. Although some of those measures are sure to be renewed, there is no telling which ones that will be or when the renewals will take place.

Listed below are a few of the changes that are on the books for Tax Year 2014:

Affordable Health Care Penalty Taxpayers who fail to buy a health insurance plan before the enrollment deadline of March 31, 2014 will be assessed a penalty equal to either 1% of the yearly household income or a set amount for each uninsured individual or family, whichever is higher. The penalty will be due with the filing of the 2014 tax return.
Joint Tax Returns for Same-Sex Couples Starting in 2014 with returns, same sex couples will file their federal tax returns either jointly or as married filing separately, regardless of whether they live in a state that recognizes same-sex marriage. However, if they live in a state that does not recognize same-sex unions they will have to file separate state returns as single taxpayers.
Regulation of Tax Preparers A final decision on the regulation of professional taxpayers will probably be made some time in 2014. The IRS wants tax preparers who are not already licensed CPAs, Enrolled Agents or attorneys to be required to pass a competency exam and complete continuing education hours. However, a lawsuit has been filed against the IRS with reference to this issue and an appellate court decision is now pending.
Tax Brackets and Personal Exemption Income tax brackets have been widened for 2014 and the personal exemption amount has been increased slightly, from $3900 to $3950.

If you have questions about changes to the tax code for 2014 or need help resolving a tax debt that you are unable to pay, our experienced professionals can provide you with the help you are looking for. Visit us today at www.professionaltaxresolution.com to find out more about our services or call us at 877.889.6527 to set up a free, no obligation consultation. With over 16 years in the business of resolving tax debt, we have the experience to know which settlement option will be the best fit for your specific set of circumstances.

Happy New Year 2014!

Posted on January 3, 2014 by Kursti Nakagawa

Happy New Year 2014!

Wishing you a Happy New Year from Professional Tax Resolution!

Wishing You a Happy, Healthy & Prosperous 2014 …

Professional Tax Resolution!

If you have tax questions or a tax debt you are unable to pay, our tax settlement professionals are happy to discuss your tax resolution options free of charge. For more information about our services, visit us today at www.professionaltaxresolution.com or call us at 877.889.6527. With over 16 years in the business of resolving tax debt, we have a thorough understanding of tax law together with the experience to know which settlement option will be the best fit for your specific set of circumstances.

End of the Year Tax Planning for Investors

Posted on December 17, 2013 by Kursti Nakagawa

Year End Investment Planning

Although tax planning is important for investors year round, it is most important as the calendar year draws to a close. While investment decisions are made throughout the year, they are particularly critical at year end because of the potential tax implications. The United States tax code provides many tax planning opportunities for investors but the majority neglect to use what is available to their maximum advantage. The failure of investors to implement end of the year tax planning strategies (summarized below) can have a significant negative impact on overall investment performance.

Realizing Capital Losses

Consider the following points related to selling investments at a loss before the end of the year:

Up to $3000 in capital losses can be used to offset ordinary income.
Capital losses can be strategically paired with capital gains to lighten the tax burden of selling other investments at a profit.
Any capital loss in excess of the $3000 limit that can be used to offset ordinary income that is not used to offset capital gains can be carried forward into the next tax year.
Short term capital losses are paired against short term gains and long term losses against long term gains until either category is used up. Once that happens, leftover losses and gains are paired against each other.
A taxpayer who projects a significant decrease in income for the next calendar year might be wise to realize capital losses in the current year so that the tax benefits of those losses will be applied at the higher tax bracket.

Realizing Capital Gains

Consider the following points related to selling investments for a gain before the end of the year:

Short term capital gains (gains on investments held less than 12 months) are taxed at a taxpayer’s ordinary income tax rate which is anywhere from 0% to 39.6% (the new top rate in 2013). In addition, those taxpayers who have an adjusted gross income of over $200,000 or $250,000 for a married couple have an additional Net Investment Income Tax of 3.8% added to the 39.6% for a total tax rate of 43.4%. With this in mind, investors may want to defer selling assets that would be subject to short term capital gains rates and hold them until the lower long term rates would apply.
Taxpayers who are in the 10% and 15% tax brackets pay 0% tax on long term capital gains and may want to think about realizing any such gains while the 0% rate still applies. On the other hand, those who are in the top tax bracket currently pay 20% on long term gains plus the Net Income Tax surcharge of 3.8% for a total or 23.8%. Taxpayers in this category may want to think twice about realizing long term gains at the end of the year unless they have losses to offset them.
A taxpayer who projects a significant increase in income for the next calendar year might be wise to realize capital gains in the current year so that the tax consequences of those gains will be applied at the lower tax bracket.

In addition to decisions related to realizing capital gains and losses, end of year tax planning for investors may involve such other considerations as gifting of assets, Roth conversions and allocation of assets between dividend and non-dividend paying stocks. While investment decisions are always important, they are most critical as the tax year closes because they determine the final balance sheet that will be carried over into tax season. Proper tax planning, especially at this time of year, can a very important factor in determining what percentage of the yearly investment returns are retained in the portfolio and what percentage must be passed on to the government.

If you have questions relating to capital gains or losses ,asset allocation for tax purposes, Roth conversions, gifting of assets or any other tax related investment topic, our certified tax professionals can provide you with the answers you are looking for. For more information about our services, visit us today at www.professionaltaxresolution.com or call us at 877.889.6527. We have a thorough understanding of tax law together with the experience to know how to apply it to its maximum advantage for your specific set of circumstances.

Taxpayers Beware – IRS Scams!

Posted on December 2, 2013 by Kursti Nakagawa

IRS Warns of Tax Scams

Taxpayers Beware – IRS Scams! Every year the IRS publishes a list of the most popular tax scams so that taxpayers will be better able to protect themselves against schemes that develop in an around the preparation of tax returns. With the 2014 tax season fast approaching, it is a good time to be reminded of the some of the items that were on the list published by this past March. Although the IRS is aware of these problem areas, it is likely that some of these same issues will surface again once tax season gets underway at the beginning of the year.

Summarized below are three of the culprits that appeared last year’s list of the “Dirty Dozen Tax Scams” published by the IRS:

Identity Theft

Identity theft occurs when someone uses a legitimate taxpayer’s identifying information without their permission to file fraudulent tax returns and claim refunds. Although the IRS has made identity theft a top priority by updating and improving their policies and practices, the identity thieves themselves have become more aggressive in their tactics. For this reason, the IRS encourages all taxpayers to be educated on this practice, including what steps to take should it occur. There is a special identity theft section (https://www.irs.gov/uac/Identity-Protection) on IRS.gov that gives tips on how to protect against this type of taxpayer fraud and instructions on how to contact the Identity Theft Specialized Unit should it occur.

Phishing

Phishing is the practice of sending out unsolicited emails or using a website that resembles a legitimate website to obtain a taxpayer’s personal information, usually for the purpose of committing identity theft. As with identity theft itself, the IRS is well aware of this type of fraudulent behavior and has a special section (https://www.irs.gov/uac/Report-Phishing) dedicated to it on their website. It is important to be aware of the fact that the IRS never solicits identifying information from taxpayers through any type of electronic communication, including text messages and email.

Return Preparer Fraud

Another common type of taxpayer fraud is the preparation of returns by unethical tax preparers. Although most preparers are honest, sharing important tax information with one who is not can have serious consequences including identity theft and lost refund money. In addition, each person is legally responsible for any return submitted under their Social Security number. With these things in mind, it is important for taxpayers to only use preparers who sign the returns and have a valid IRS Tax Preparer Identification Number. The IRS website has a special section (https://www.irs.gov/Tax-Professionals/Choosing-a-Tax-Professional) on selection of a tax professional which gives both preparer qualifications and red flags to look for in the selection process.