IRS Revenue Officers: What do to when they come knocking

IRS Revenue Officers: What do to when they come knocking

Here;s the video accompaniment to one of our most popular articles: http://bit.ly/2M9OBLP First thing A Revenue Officer is not a Revenue Agent. There is a distinction between an IRS Revenue Officer and an IRS Revenue Agent. A Revenue Officer is employed by an IRS field collection office. Their job is to collect money. A Revenue Agent, on the other hand, is someone who is employed by the IRS to audit taxpayers. While they may send you something called a deficiency notice, the person who increases your taxes through an audit will not be the person who will be attempting to collect the taxes from you. After the IRS assesses the tax and you don't pay, a series of notices will be sent out. If your tax due is low, you may never get assigned a revenue officer. Number two. A Revenue Officer does not carry a gun. I think I would carry a gun. People can be kind of crazy. Third, a Revenue Officer's badge is a plastic card usually attached to a lanyard If someone flashes a gold badge and says they are from the IRS. That's not a Revenue Officer. That is an agent from the IRS Criminal Investigation Division (CID). My advice would to remain silent expect to contact your lawyer. Oh yeah, they do carry a gun.   Forth, a Revenue Officer can not arrest you. If someone brags about how they stopped a revenue officer from arresting you, you don’t have to listen to too much of whatever that person is saying. A revenue officer has no arresting ability. The only thing a revenue officer can do is refer you to CID. Yet CID only accepts a fraction of those cases referred.   Fifth - A Revenue Officer does not need a financial background for the job All that is required for a Revenue Officer position is a four-year degree. A Revenue Officer can have a bachelor of Fine Arts and be qualified for the job. This is why Revenue Officers initially engage in months of training of training on an on-going basis. The IRS has a lot of money and time invested in their best Revenue Officers.     Sixth. A Revenue Officer isn't graded on how much money they collect A Revenue Officer does not get promoted for bringing in the most money. Rather, it's how many cases they successfully remove from their "inventory" of collections matters. A Revenue Officer would rather you enter into a "collection alternative" like an offer in compromise to pay far less than for you to sandbag them for years.  Seventh. A Revenue Officer's powers are sort of limited The IRS's use of seizures of homes and personal assets is way down. The reason is that the Revenue and Reform Act of 1998 made it very difficult to do so. So, what can a Revenue Officer do? Levy any accounts receivable. Lien property. Levy retirement funds. Levy wages and bank accounts. Subpoena documents. Yet if a taxpayer is dedicated to running up new liabilities and trying to hide their personal affairs, this delays and frustrates the IRS. You could get the IRS to close out your case, or your obfuscation could earn a lot of federal attention. If someone at the IRS really wants to make an example out of, they can.   Eighth. A Revenue Officer MUST attempt initial contact in person. The Internal Revenue Manual requires that every Revenue Officer make first contact with a taxpayer in person.   You may not have been home the first time they showed up, so if you are wondering why someone from the IRS left a card for you at your home or on your car, don't ignore it. They will continue to attempt to contact you.   Ninth. Many Revenue Officers are friendly and reasonable. So too of taxpayers. And that's a problem. This can be a bad thing! As stated above, a Revenue Officer just wants to close the case, and many taxpayers just want to get the matter behind them. So both parties, anxious to close the matter, agree to a "collection alternative." The only problem is, in their haste to reach an agreement, neither one looked to see if the agreement is reasonable. Optimism and lack of information about alternatives cause taxpayers to enter into repayment agreements that are not realistic.  Ten. There’s not enough revenue officer and that could be a bad thing The IRS is about at half the effective strength they were 10 years ago. And you might think this is a good thing. And it can be a good thing - we’ve gotten deals we would not have gotten 10 years ago. But this is the problem. Cases are stacked up awaiting to be assigned revenue officers. The problem is that you are likely only going to add to your problem. By laying low, you aren’t able to take advantage of the great deals. Yet the IRS isn’t going away. And they tend to pop up right at the worst time. Taking the initiative when they IRS is overwhelmed could be the best strategy. Parent & Parent LLP 144 South Main Street Wallingford, CT 06492 (203) 269-6699 info@irsmedic.com https://youtu.be/M7ZqeR49l5Y IRS Medic

US taxation of foreign pensions, retirement plans, and social security-type benefits

US taxation of foreign pensions, retirement plans, and social security-type benefits

Link to Strafford Webinar event: http://bit.ly/2SSpUWV http://bit.ly/2AHCKQq Subscribe and comment below for a chance to win free admission! Attorney Robert Hanson, Sean O’Connor and I are offering much more extensive training for CLE/CPE credit with our friends at Strafford Publishing. We will be live on Tuesday January 22nd, 2019, but you will be able to watch on replay. The cost is $177 USD, but we are giving away three free passes. To enter to win, simply subscribe to this channel and leave a comment below telling us you want in. On January 18, 2019, we will be selecting 3 winners who can attend this training for free. Good luck! So now, how do we figure out if your foreign pension is taxable and also, if it is reportable. This is how we start our analysis The first inquiry is if your foreign retirement it a defined benefit plan or a defined contribution. With a defined benefit retirement plan you don’t have an account, do you? So can’t have an account value either right?? So we really shouldn’t see any requirements for foreign reporting forms like a Form 8938 and an FBAR as there are no numbers to put in. If we are dealing with a defined benefit retirement plan, typically our work is much easier and the consequences for getting something wrong are much less severe. No if you do have a defined benefit plan, contributions into that plan are usually treated as income. Yet, unlike earned income, this income can typically not be excluded by the foreign income exclusion. However, foreign tax credits may still be available. So if we don’t have a undefined benefit plan it must be a defined contribution plan. If so, the next question we ask is who funded most of it? The reason why is the IRS treats pension plans that are over 50% funded by the employee as foreign grantor trusts. The problem with this is that foreign grantor trusts can be very time consuming and expensive to properly report. A form 3520-A is likely required each year, and the penalty for not filing or filing incorrectly can be $10,000 per form per year. Additionally there could also be a Form 3520 requirement, where penalties can be even steeper. Yet there is an exception that might apply. The 402(b) exception. The problem is that the default position of the IRS is to reject 402(b) for everything BUT some Australian Superannuations and Singaporean CPFs. The reasoning is more baffling than you could imagine and we will get into that during our full presentation with Strafford. However, it is possible to get 402(b) treatment if your plan is something other than an Australian superannuation fund of Singaporean CPF. And this can save you thousands in tax prep fee alone each year! So when are you going to be taxed? For grantor trusts, you are taxed on the contribution and the growth, but not the distributions. For employee trusts, you are taxed on both the contributions and the distributions, that is, in an employee trust you often are allowed to defer taxes. Employer contributions to retirement plans are not excluded to the the FIE, but they are tax creditable. However, in many jurisdictions, there are no credits to apply. So what questions do you have? Pleas leave them below and please, if you feel you need more detailed training join us live with Strafford on January 22, 2019. Parent & Parent LLP 144 South Main Street Wallingford, CT 06492 (203) 269-6699 info@irsmedic.com https://youtu.be/jsRJVe3048g IRS Medic

GILTI - Global Intangible Low-Tax Income EXPLAINED: An intro

GILTI - Global Intangible Low-Tax Income EXPLAINED: An intro

More on what GILTI is: http://bit.ly/2F51o1o How to avoid GILTI: http://bit.ly/2F513e4 What is GILTI really? We will be getting into the specifics of what GILTI is, but first, we need to understand what its purpose was as that will help us figure out situations in which we should expect to see GILTI liabilities pop up. In 1962 Subpart F was passed to treat passive income overseas harshly. Subpart F is a vile nasty piece of work. But I guess Congress really liked it. Someone then got the idea that if Subpart F could be so effective in ruining most offshore tax planning, well then could we create some sort of taxing regime to hammer active income earned overseas? The answer is yes and GILTI is its name. The purpose of GILTI is to hammer active income of foreign businesses that are controlled by US shareholders. GILTI can hammer them so hard, that for some people, having their income taxed as Subpart F could even be better than GILTI! Oh and by the way, Tax Reform also expanded the definition of what it means for a shareholder to be subject to not just controlled foreign corporation rules that is CFC rules in addition to GILTI regime. Be sure to subscribe as these are these the topics we will be covering in future videos. How to avoid GILTI How to calculate GILTI GILTI vs Subpart F GILTI regualtions GILTI v transition tax GILTI & NIIT GILTI & BEAT GILTI & Intellectual property GILTI & Tangible property GILTI and Section 250 deductions GILTI and foreign partnerships GILTI does not just affect huge corporations overseas, but small and medium sized businesses, and it can even affect someone who is self-employed. Now for some people with income earned abroad, GILTI won’t affect them all that much. But, it could take some real meaningful research and analysis to properly answer that question. For our larger clients, the cost may not be all that noticeable, but I can tell you that for our clients who are working hard to create something for themselves, this amount of research is pushing many beyond their breaking point, forcing them to make a decision they wish they didn’t have to. Just getting a GILTI analysis can cost more than what a taxpayer’s tax bill is. Parent & Parent LLP 144 South Main Street Wallingford, CT 06492 (203) 269-6699 info@irsmedic.com How to mitigate GILTI: http://bit.ly/2F513e4 How to https://youtu.be/AB4ixELMEmE IRS Medic

Tax Fairness for Americans Abroad Act of 2018! Let's get this passed!

Tax Fairness for Americans Abroad Act of 2018! Let's get this passed!

Tax Fairness for Americans Abroad Act of 2018! Let's get this passed! http://bit.ly/2EGkyuh Contact info for key players: http://bit.ly/2EDTmvh https://youtu.be/_WcK1vZtDh0 IRS Medic

Six Ways to avoid GILTI: How to beat the Global Intangible Low Tax Income

Six Ways to avoid GILTI: How to beat the Global Intangible Low Tax Income

Full article: https://ift.tt/2SSi675 What is GILTI: https://ift.tt/2MaYGHr GILTI help :There are six possible ways I know of to avoid, or perhaps more accurately, mitigate GILTI tax exposure. By this time, you probably know that GILTI stands for Global Intangible Low Tax Income. In previous videos I explained the rough idea of what GILTI is and in the next video of this series I will be discussing how to calculate GILTI liabilities. After calculating GILTI liabilities you may now realize how important this topics is. So be sure to subscribe so you don’t miss out on important topics. So now let’s get to those six ways. First, you can elect to covert GILTI to subpart F income. Now you might be scratching your head on this. If you understand a little about international taxation you know that Subpart F is something to be avoided. However GILTI can be so bad, that it can make Subpart F seem good! The second way is a little bit more opaque. You can increase something call QBAI. QBAI stands for Qualified Business Asset Investments. There are a few ways to do this. For instance one can purchase equipment that has been previously leased. The downside is that just because someone is a shareholder in a Controlled Foreign Corporation it does not mean that they can actually control the corporation enough in order to implement this strategy. Management might not be all that hip to this idea. And second, this is a business decision that could have negative effects to cash flow. You might solve a GILTI problem but you could end up with a business problem. Third, GILTI is NOT calculated on a company basis. It is done on a shareholder basis. And what’s worse is that losses in one CFC may not get full credit against gains of another CFC. The way to make sure you don’t miss out on any of your losses is by combining CFCs. Forth, simply avoid either CFC status or US shareholder status. The problem with this is tax reform expanded the definition of what it means to be have a CFC status. However, by adjusting ownership levels with non-US owners, you may be able to find a great solution that avoids this entire mess. The downside is this is not feasible for many people and second, you need to watch those attribution rules — which also have changed for the worse. When you have related parties, you might be considered to have CFC even though you would otherwise not if the parties were not related. The fifth way, and this is proving to be the winner for many of our clients, is to funnel all shares in foreign corporations into a domestic US holding company. This was an overriding theme of the 2017 Tax Cuts & Jobs Act — bring capital back to the US. The reason it works is that US C corporations are allowed to do something US individuals are not. Take what is known as a Section 250 deduction of 50% of GILTI. The downsides are that this does require extra hurdles of having a US domestic corporation which you must honor the corporate formalities of and an additional tax filing requirement of the domestic corporation. However, if your GILTI liabilities are even as low as say $20,000 or even $10,000, it still could be worth the hassle to create this structure. A sixth way I can think of is this. What about putting shares of a CFC into a Private Placement Life Insurance Policy or PPLI. PPLIs are used by the most sophisticated investors for what I consider to be the ultimate tax structure. Essentially how it works is that your assets go into a life insurance policy and you borrow from the death benefit while you are alive. And because death benefits are tax free, you’ve essential avoided all income taxes — both federal and state. This is an even better move to make if you happen to be in a high tax jurisdiction like California or New York. The downside is that life insurance turns most people off, and these are complicated structures and require a flexibility that so many business owners are unwilling to exercise. Additionally the costs are intense. Typically it only starts making sense when you have about $10 million in assets. We are woking on ways to reduce the cost, I’d love to hear from anyone who was able to implement a PPLI for for someone with less in assets. And also, I have yet to hear of a PPLI that has been implemented strictly with CFC stock. There are diversity requirements of a PPLI’s portfolio that could force you to sell your stock so much so that you could no longer have that CFC or US shareholder status. Also you must be very committed to following the structure. People get into trouble with PPLIs when they don’t take the rules seriously. Are there other ways you can think of to eliminate or mitigate GILTI? I’d love to hear about them. Please leave them in the comments below. Parent & Parent LLP 144 South Main Street Wallingford, CT 06492 (203) 269-6699 info@irsmedic.com https://youtu.be/teP8J5y13SM IRS Medic

International Tax Reform December 2018 Updates FATCA - TTFI - GILTI

International Tax Reform December 2018 Updates FATCA - TTFI - GILTI

MORE HERE: https://ift.tt/2G7uT3T Tax Reform 1.0, aka the Tax Cuts and Jobs Act of 2017 has some very unpleasant surprises for those with income and assets overseas. The good news is there is a stand alone bi-partisan legislation that will be presented for Congress to vote on and for President Trump to sign into law that will allow Americans living overseas to "opt-out" of the US tax code by simply filing a certificate that they are in compliance foe the past three years and now live outside the US. If this is passed into law, the burdens of compliance for the US exapt will be greatly reduced. In this video, Advocate for Americans Overseas, Keith Redmond and Attorney John Richardson of citizenshipsolutions.ca join tax attorney Anthony E. Parent as they discuss the proposed laws, regulations and potential law suit that could greatly help those frustrated by a tax regime that seems rather out of control. In particular the three discuss - An end to Citizenship-Based taxation and replacing it with a true territorial tax system - Potential relief for The Transition Tax (Section 965) and Global Intangible Low Tax Income (GILTI) along with the Foreign Account Tax Compliance Act (FATCA). - The IRS's offshore disclosure program for those with criminal exposure. While the acronym has stayed the same as OVDP, it now stands for Offshore Voluntary Disclosure Practice instead he prior Offshore Voluntary Disclosure Program. The three agree that very few expats should ever be scared into an OVDP and if a disclosure program is needed, a Streamlined Disclosure is far for preferential. Ultimately what is needed right now from everyone concerned is unity. No matter your political affilication, the law needs to be changed. The law fails to raise revenue effectively and it is just morally wrong to tax people who are tax residents of outher countries. It is essential that everyone contact Congress and makes their voices be heard: Territorial Tax for Individuals must pass! Parent & Parent LLP 144 South Main Street Wallingford, CT 06492 (203) 269-6699 info@irsmedic.com https://youtu.be/qa5jeq3hM1s IRS Medic

International Tax Reform December 2018 Updates FATCA - TTFI - GILTI

International Tax Reform December 2018 Updates FATCA - TTFI - GILTI

Tax Reform 1.0, aka the Tax Cuts and Jobs Act of 2017 has some very unpleasant surprises for those with income and assets overseas. The good news is there is a stand alone bi-partisan legislation that will be presented for Congress to vote on and for President Trump to sign into law that will allow Americans living overseas to "opt-out" of the US tax code by simply filing a certificate that they are in compliance foe the past three years and now live outside the US. If this is passed into law, the burdens of compliance for the US exapt will be greatly reduced. In this video, Advocate for Americans Overseas, Keith Redmond and Attorney John Richardson of citizenshipsolutions.ca join tax attorney Anthony E. Parent as they discuss the proposed laws, regulations and potential law suit that could greatly help those frustrated by a tax regime that seems rather out of control. In particular the three discuss - An end to Citizenship-Based taxation and replacing it with a true territorial tax system - Potential relief for The Transition Tax (Section 965) and Global Intangible Low Tax Income (GILTI) along with the Foreign Account Tax Compliance Act (FATCA). - The IRS's offshore disclosure program for those with criminal exposure. While the acronym has stayed the same as OVDP, it now stands for Offshore Voluntary Disclosure Practice instead he prior Offshore Voluntary Disclosure Program. The three agree that very few expats should ever be scared into an OVDP and if a disclosure program is needed, a Streamlined Disclosure is far for preferential. Ultimately what is needed right now from everyone concerned is unity. No matter your political affilication, the law needs to be changed. The law fails to raise revenue effectively and it is just morally wrong to tax people who are tax residents of outher countries. It is essential that everyone contact Congress and makes their voices be heard: Territorial Tax for Individuals must pass! Parent & Parent LLP 144 South Main Street Wallingford, CT 06492 (203) 269-6699 info@irsmedic.com https://youtu.be/y9J_stB9OWE IRS Medic