by Catherine | Oct 9, 2014 | IRS, News |
Same-Sex Marriage in more US States The Supreme Court in Washington, D.C. on Monday, October 6, 2014 turned away appeals from five states seeking to prohibit same-sex marriages. As October began, a total of 19 states had legalized same-sex marriages, before the Supreme Court decision on Monday to deny the appeals from: Virginia, Utah, Oklahoma, Indiana, and Wisconsin. A day later, a three-judge panel of the 9th US Circuit Court of Appeals in San Francisco ruled the bans in Idaho and Nevada violated the constitution and cannot be enforced, adding to a growing list of states where same-sex unions are now legal. Rulings by the court are binding on all states in it’s region including three states that do not permit gay marriage, Arizona, Montana and Alaska. IRS and Same-Sex Marriage The IRS recognized same-sex marriage on Federal Tax returns beginning September 16, 2013. Treasury Secretary Jacob Lew said the rules provide “clear, coherent tax-filing guidance for all legally married same-sex couples.” This guidance clarified that same-sex couples that are legally married in any state or foreign jurisdiction are considered married for federal tax purposes—irrespective of where they now live. This guidance defines “state” to include any territory or possession of the United States and “any foreign jurisdiction having the legal authority to sanction marriages.” The term “marriage” does not include domestic partnerships, civil unions, and other similar formal relationships under state law. To determine marital status based on the current state of residence would create a compliance disaster. This uniform guidance from the IRS provided welcome clarification regarding who will be considered married under federal law. Treasury-Internal Revenue Service...
by Catherine | Sep 30, 2014 | IRS, News |
Tax filing extension expires on October 15. More than a quarter of the nearly 13 million taxpayers who requested an automatic six-month extension this year have yet to file. “If you still need to file, don’t forget that you can still use IRS e-file through October 15,” said IRS Commissioner John Koskinen. “Many people may not realize they can still file their tax return for free through the IRS Free File program available on IRS.gov. Even if you’re filing in the final days, e-file remains easy, safe and the most accurate way to file your taxes.” Taxpayers with extensions should file their returns by Oct. 15, even if they can’t pay the full amount due. Doing so will avoid the late-filing penalty, normally five percent per month, that would otherwise apply to any unpaid balance after Oct. 15. However, interest, currently at the rate of 3 percent per year compounded daily, and late-payment penalties, normally 0.5 percent per month, will continue to accrue. If you need to file you’re 2013 tax return, and would like to use e-file, contact me. I offer e-file services. ...
by Catherine | Sep 30, 2014 | IRS, News |
In US Tax Court – Topsnik v IRS, it was determined that a US Lawful Permanent Resident (LPR) or Green Card Holder, must continue to file taxes with the IRS unless or until their Green Card is Revoked. Specifically, form I-407 must be filed with the INS. Mr. Topsnik applied for his Green Card in 1977. He began a business in California in 1986. He then sold his interest in the business in 2004, taking a down payment and installments through 2009. He filed a tax return for 2004 and 2005 (both years late) but did not file from 2006 – 2009 so the IRS created tax returns on his behalf. Mr. Topsnik retained his LPR status until November 20, 2010, when he abandoned it by filing a U.S. Citizenship and Immigration Services (USCIS) Form I-407, Abandonment of Lawful Permanent Resident Status, on which he stated that his “intended or actual permanent residence abroad” would be in the Philippines, and he surrendered his green card to the USCIS. A U.S. resident alien is taxable by the United States on his worldwide taxable income. According to the findings of the court “Lawful permanent resident.–(1) Green card test. A lawful permanent resident is an individual who has been lawfully granted the privilege of residing permanently in the United States as an immigrant in accordance with the immigration laws. Resident status is deemed to continue unless it is rescinded or administratively or judicially determined to have been abandoned.” Section 7701(b)(6) also concerns the duration of an individual’s status as an LPR and provides as follows:- 20 – (6) Lawful permanent resident.–For purposes of this subsection, an...
by Catherine | Sep 29, 2014 | IRS, News |
Sorrentino was faces charges that he avoided paying taxes on 8.9 million. He pleaded not guilty to one count of conspiracy to defraud the United States; two counts of filing false tax returns for 2010 and 2012 and one count for allegedly failing to file a tax return for 2011. Mike’s brother, Marc, was charged with one count of conspiracy and three counts of filing false tax returns. Failure to file a tax return is exactly what it sounds like. Mike allegedly failed to file a personal tax return in 2011, despite earning nearly $2 million that year. In total, Mike and Marc are accused of failing to pay tax on nearly $9 million. “According to the indictment, Michael and Marc Sorrentino filed false tax returns that incorrectly reported millions made from promotions and appearances,” said U.S. Attorney Paul J. Fishman. “The brothers allegedly also claimed costly clothes and cars as business expenses and funneled company money into personal accounts. The law is absolutely clear: telling the truth to the IRS is not optional.” “Most individuals file truthful tax returns and pay their fair share of taxes. However, as alleged in today’s indictment, rather than living in reality and reporting their true income, Michael Sorrentino and his brother Marc created the illusion that they earned less income by filing false and fraudulent tax returns,” stated Jonathan D. Larsen, Acting Special Agent in Charge, IRS-Criminal Investigation, Newark Field Office. “No matter what your occupation or status in life, if you attempt to cheat on your taxes for personal financial gain, you face real consequences including criminal prosecution and a possible...
by Catherine | Sep 27, 2014 | IRS, News |
The Internal Revenue Service issued a fraud alert for international financial institutions complying with the Foreign Account Tax Compliance Act (FATCA). Scam artists posing as the IRS have fradulently solicited financial institutions seeking account holder identity and financial account information. The IRS does not require financial institutions to provie specific account holder identity information or financial account information over yhe phone or by fax or email. Further, the IRS does not solicit FATCA registration passwords or similar confidential account access information. “Tax scams using the IRS name can take many forms and they are not limited by national borders,” said IRS Commissioner John Koskinen. “People should always be cautious before sending sensitive information to anyone.” Financial institutions directly registered to comply with FATCA and those in jurisdictions that are treated as having in effect intergovernmental agreements (IGAs) to implement FATCA through intergovernmental cooperation have been approached by persons representing themselves as the IRS. The IRS has reports of incidents from multiple countries and continents. These fraudulent solicitations are known as “phishing” scams. These types of scams are typically carried out through the use of unsolicited emails and/or websites that pose as legitimate contacts in order to deceptively obtain personal or financial information. Financial institutions or their representatives that suspect they are the subject of a “phishing” scam should report the matter to the Treasury Inspector General for Tax Administration (TIGTA) at 800-366-4484, or through TIGTA’s secure website. Any suspicious emails that contain attachments or links in the message should not be opened, and the email should be forwarded to phishing@irs.gov (Press release from the...
by Catherine | Sep 24, 2014 | News |
The State Department interim rule just raised the fee for “Renunciation of US Citizenship” from $450 to $2350 USD. Critics note that it’s more than 20 times the level of other high income countries. The State Department says it’s about demand on their services and all the extra workload to process people. “Renunciation” Section 349(a)(5) of the Immigration and Nationality Act (INA) (8 U.S.C. 1481(a)(5)) is the section of law governing the right of a United States citizen to renounce his or her U.S. citizenship. That section of law provides for the loss of nationality by voluntarily “(5) making a formal renunciation of nationality before a diplomatic or consular officer of the United States in a foreign state , in such form as may be prescribed by the Secretary of State” (emphasis added). To Renounce your US Citizenship, you generally must prove 5 years of U.S. tax compliance. If you have a net worth greater than $2 million or average annual net income tax for the 5 previous years of $157,000 or more for 2014 (that’s tax, not income), you pay an exit tax. Long-term residents giving up a Green Card can be required to pay the tax too. “Relinquishment” “Relinquishment” of US Nationality is an alternative method to Renunciation for losing one’s US nationality. “Relinquishment” involves a formal confirmation of a prior “expatriating act” and affirmation of the person’s voluntary intent to give up the rights and privileges of US citizenship, by a person who is at least 18 years of age. The Department of State’s website describes Potentially Expatriating Acts to include certain specified acts voluntarilyand with the intention to...
