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August 16, 2015

Are You Guilty of Tax Perjury on your US Tax Return?


Any person who -  

(1) Declarations under penalties of perjury (this is what you sign when you sign your form 1040 tax return on page 2)

Willfully makes and subscribes any return, statement, or other document, which contains or is verified by a written declaration that it is made under the penalties  of perjury, and which  he or she does not believe to be true and correct as to every material  matter...

   shall be guilty of a felony and, upon conviction thereof, shall be fined not more than    $100,000   ($500,000 in the case of a corporation), or imprisoned not more than 3 years, or       both, together    with the costs of prosecution.
   If you may have violated this tax law and want to discuss your exposure with an Attorney/CPA   under the protection of Attorney - client privilege email Don at to set   up a consultation.

US Expats Can Still Vote for President - Here is How

The following US State Department site has all rules and forms to register to vote when you live abroad.  There is still time....over 500 days before the next Presidential election.

August 14, 2015

Arbitration Laws Are Great in Mexico and its Less Costly and Much Faster than the Mexican Court System

Mexico has  excellent arbitration laws.  If you live and work in Mexico, you should consider putting an arbitration clause in your next contract or agreement. Such a clause in the event of a dispute may save you untold amounts of legal fees and time.  It is a fact that in many parts of Mexico the courts are so backlogged that  can take 5 to 18 years to get a decision and during the entire period attorneys are charging additional fees.

If you have an arbitration clause in your agreement you can usually get a decision within 6 months to a year and have that arbitration decision entered with the court as a judgment very quickly.  It is also possible to remove legal disputes from the Mexican Courts and have them resolved with arbitration if both parties agree.  The parties may agree just so they both get a quicker decision and possibly a more knowledgeable decision.

When parties arbitrate they can pick the arbitrator with experience in the particular area of law governing the dispute. Often when disputes are litigated in Court, the judge has little or no background in the governing law and therefore the final decision can be arbitrary and not predictable.

Arbitration decisions in most situations cannot be appealed. But if you have chose a knowledgeable arbitrator (1 or 3 arbitrators can be used ), and it saves you waiting 5,10 or more years for a decision, that disadvantage may be worth ignoring

In lieu of arbitration of disputes, consider mediation.  When parties mediate a neutral mediator with experience in the applicable laws works with the two opposing parties to help them reach a mutually satisfactory resolution.  Statistics show that mediation has a 30 to 50 percent chance of success and it is significantly less expensive than arbitration or litigation in Court.

Want to know more about Arbitration or Mediation in Mexico?  Want the proper provisions included in your legal agreements and  wish to know how to arbitrate your legal dispute in Mexico?  To learn more email us at   Don D. Nelson, Attorney at Law, CPA.

August 2, 2015


The due date of Form 114 (FBAR) will now be April 15th following the end of each calendar year.

The due date of Form 1065 partnership returns is not March 15th for Calendar year partnerships

The due date of Corporate return form 1120 will not be April 15th for Calendar year corporations.

These changed due dates start after 2015.

Read more in this Forbes Article

July 21, 2015

Five Tax Tips about Hobbies that Earn Income

Millions of people enjoy hobbies. They can also be a source of income. Some of these types of hobbies include stamp or coin collecting, craft making and horse breeding. You must report any income you get from a hobby on your tax return. How you report the income is different than how you report income from a business. There are special rules and limits for deductions you can claim for a hobby. Here are five basic tax tips you should know if you get income from your hobby:
  1. Business versus Hobby.  A key feature of a business is that you do the activity to make a profit. This differs from a hobby that you may do for sport or recreation. There are nine factors to consider when you determine if you do the activity to make a profit. Make sure you base your decision on all the facts and circumstances of your situation. Refer to Publication 535, Business Expenses to learn more. You can also visit and type “not-for-profit” in the search box.
  2. Allowable Hobby Deductions.  You may be able to deduct ordinary and necessary hobby expenses. An ordinary expense is one that is common and accepted for the activity. A necessary expense is one that is helpful or appropriate. See Publication 535 for more on these rules.
  3. Limits on Expenses.  As a general rule, you can only deduct your hobby expenses up to the amount of your hobby income. If your expenses are more than your income, you have a loss from the activity. You can’t deduct that loss from your other income.
  4. How to Deduct Expenses.  You must itemize deductions on your tax return in order to deduct hobby expenses. Your costs may fall into three types of expenses. Special rules apply to each type. SeePublication 535 for how you should report them on Schedule A, Itemized Deductions.
  5. Use IRS Free File.  Hobby rules can be complex. IRS Free File can make filing your tax return easier. IRS Free File is available until Oct. 15. If you make $60,000 or less, you can use brand-name tax software. If you earn more, you can use Free File Fillable Forms, an electronic version of IRS paper forms. You can only access Free File through
You can get Publication 535 on at any time. Have questions. Go to 

July 2, 2015


See Forbes article for list of Swiss Banks Included

June 26, 2015


Form BE 10 and its many  sub variations is not a tax form, but is now required by by another Branch of the Government and not the IRS.

As a courtesy, we are making you aware of the potential requirement. It is a survey that is required whenever a U.S. person owns 10% or more of any business enterprise overseas. The form is due June 30th. Read more about it in the following link:

Our firm does  not plan to get involved in these filings as a rule; however, if any of you need help we can see what we can do. If you are conservatively minded you should file the form to avoid any exposure to possible penalties.

June 25, 2015

IRS Videos For US Internatonal Taxpayers, expatriates and nonresidents

The following videos are now available on the IRS YouTube page for expatriates, US international taxpayers and nonresidents.
International Taxpayers-Introduction to the International Taxpayers Web Page   [Text]
Learn about the International Taxpayers section on and the helpful resources available to you.
International Taxpayers-Individual Taxpayer Identification Number (ITIN)   [Text]
This video helps non-U.S. citizens determine if they need an IRS-issued tax reporting number, known as an ITIN, and how to apply for one.
International Taxpayers-Filing Requirements   [Text]
Learn about the requirements for filing an individual income tax return, including income limits while living abroad.
International Taxpayers-Filing Status If Married to a Nonresident Alien   [Text]
Find out different filing status options if you are married to a nonresident alien.
International Taxpayers-Foreign Earned Income Exclusion   [Text]
Find out who is eligible, what income qualifies and how to claim the exclusion.
International Taxpayers-Foreign Tax Credit   [Text]
Find out if you can claim a foreign tax credit for the foreign tax you paid.
If you need individual assistance on any of these matters go to and for attorneys and CPAs with specialized expertise in all of these matters. Email us at 
 References/Related Topics

June 13, 2015

Purchasing, Owning and Selling Real Estate in Mexico ...Almost Everything You Need to Know

Over 65 articles by experts on every aspect of purchasing, owning and selling real estate in Mexico.

June 1, 2015

June 15th Expat Tax Return Deadline and Filing for Extensions

If you were an expat living abroad on 4/15/15, your tax return  for 2014 is due on 6/15/15.  It can be extended further by filing form 4868 by that due date. Then your return is due on 10/15/15. These same due date rules apply to nonresident US tax returns.  This extension can be filed on paper or there are some on line locations which may permit you to file this extension form. Be certain to check the box indicating your are an expat.

If you need additional time to qualify for the bonafide residence foreign earned income exclusion (form 2555) you can file form 2350 to extend your return further out until a date you have qualified for a full calendar year living abroad.

Your Form 114 (FBAR) which reports your foreign financial accounts is due on 6/30/15 for 2014 and cannot be extended any further.  Failure to timely file this reporting form can result in substantial penalties.  You can only file this form on line at

Though expats get these special extension rules, any taxes owed must be paid in by 4/15/15 to avoid penalty and interest charges if any taxes are later due with the return.

May 28, 2015

Form BE10 - Form Required by Bureau of Economic Analysis of Department of Commerce for those who own 10% or more of a foreign corporation

Dear Clients,

Please see below link regarding a potential disclosure requirement for 2014 with the Bureau of Economic Analysis. As a courtesy, we are making you aware of the potential requirement. This is not a tax-related filing but is a survey that is required whenever a U.S. person owns 10% or more of any business enterprise overseas. The form is due May 29th5 but you can file an extension.  June 30.

Our firm does  not plan to get involved in these filings as a rule; however, if any of you need help we can see what we can do. If you are conservatively minded you should file the form to avoid any exposure to possible penalties.

May 21, 2015

Tax Benefits for US Expats Available for College for themselves and Children

There are credits and deductions for many expatriates and residents if they go to college or send their
children to college. Do not overlook these possible tax credits and deductions when doing your return.


May 11, 2015


You can download step by step directions for filing the Form 114 (FBAR) to report your foreign financial accounts HERE   If you need help filing this form or want a CPA/Attorney  to file the form for you email us at   Also if you have questions on whether or not you should file the form or need to file ones for past years (the statute of limitations is six years which means if you are required to file the form you should file the past six years) please contact us. 

Time Sets Forth Taxpayer Characteristic of Those Most Likely To Be Audited

Those most likely to be audited by the IRS include the following individuals:

  • People who show more than $10 million in income or NO income at all!
  • People who file International Tax returns and show International Activies on Their Return
The IRS is using various laws and other techniques to locate the  Seven Million Americans who live outside the US.  It appears that over half of those individuals are still not filing annual tax returns as required by law.  If you do file, you do not get doubled tax since you get credit for taxes you pay to foreign countries which directly offset your US income tax on the same income.

There are special reporting forms for US bank accounts, foreign corporations, foreign trusts, foreign partnerships, foreign mutuals funds, etc. Failing to file these forms can result in penalties of $10,000 or more and often the statue of limitations never runs out on the IRS's ability to audit your return if you fail to file these required forms.

Let us help you catch up and enter the programs which currently exist and may be terminated any day by the IRS which reduce or eliminate many penalties for failing to file or filing late.  Email us at  We offer all clients the absolute  legal privacy  of Attorney/Client privilege if required.  Don D. Nelson, Attorney at Law, CPA.

Time Magazine Article on Taxpayers Most Likely to be Audited

Americans Surrendering Their US Citizenship At an All time High

It is getting more complicated daily to surrender your US Citizenship.  It is a two step process. The legal side is with the State Department and costs $2,350 plus you must fill out their forms.  Part two requires that you file final tax returns with the IRS and file a special form that states all of your assets.  If your total net worth on surrender exceeds $2,000,000 or includes certain types of items, you may have to pay an exit tax on the current fair market value of some or all of those assets.  Also if your total assets exceed $2,000,000US you may also be subject to restrictions and conditions on visits to the US after surrender and gifts and inheritances left to US beneficiaries or relatives.

You must have filed the last five years tax returns and your  the amount of tax you have paid during those past five years on your income must be below a certain amount to qualify to get rid of your citizenship without tax penalties

Proper tax planning  will often reduce or eliminates many of these potential IRS tax problems. We have advised or assisted over 100 individual citizens or green card holders (long term ones are subject to the same rules) with the process and often saved them hundreds of thousands of dollars in taxes.Email us if you need assistance or help with the complex process and planning it out.

May 8, 2015


Print - Click this link to Print this page

Submission Processing Center Street Addresses for Private Delivery Service 

Private Delivery Services should deliver returns to only the following Submission Processing Center street addresses: (Fed Exp and UPS do not deliver to PO Boxes)
Austin - Internal Revenue Submission Processing Center 3651 S IH35,
 Austin TX 78741
Cincinnati - Internal Revenue Submission Processing Center  201 West Rivercenter Blvd.,
 Covington, KY 41011
Fresno - Internal Revenue Submission Processing Center 5045 East Butler Avenue,
 Fresno, CA 93727
Kansas City - Internal Revenue Submission Processing Center 333 W. Pershing,
 Kansas City, MO 64108
Ogden - Internal Revenue Submission Processing Center 1973 North Rulon White Blvd.
 Ogden, UT 84404

Send your returns to the submission processing center designated for your type of return: Where to File Tax Returns - Addresses Listed by Return Type


April 20, 2015

When if Failing to File an FBAR (form 114 - foreign account report) WillFul or Unwillful

The penalty for willfully failing to file the FBAR is the greater of $100,000 or 50% of the account balance at time of violation.  The penalty for a non-willful violation is up to $10,000.  The documents released in late 2014 by the IRS list some of the items that the IRS considers when determining whether an FBAR violation was willful:
Factors supporting a willful FBAR penalty:
  • Opened the foreign bank account
  • Owner of, or a financial interest in, the foreign account
  • Tax non-compliance
  • Did not seek advice, or relied upon the advice of a promoter, foreign banker, or other unqualified tax professional.
  • Violations persist after notification of FBAR reporting requirements
  • Foreign account not disclosed to return preparer
  • No business reason for the foreign account
  • No family or business connection to the foreign country
  • An offshore entity owns the account
  • Previously-filed FBARs do not include all foreign accounts
  • Illegal income in the foreign account
  • Participated in an abusive tax avoidance scheme
Factors not supporting a willful FBAR penalty:
  • Inherited the foreign bank account
  • Only signature authority over the foreign bank account
  • Tax compliance
  • Relied upon the advice of a tax return preparer, a CPA, an attorney, or another
    qualified tax professional.
  • Full compliance after notification of FBAR reporting requirements
  • Foreign account disclosed to return preparer
  • Business reason for the foreign account
  • Family or business connection to the foreign country
  • Person owns the account in his name
This week a district court held that the $10,000 per year penalty was valid and did not result in excessive penalties or denial of due process when the taxpayer had originally marked the Schedule B with a NO stating he had no foreign bank accounts when he actually did and had them for some time.  The amount kept abroad  in foreign banks was approximately $300,000.  The Court apparently felt that marking the box on Schedule B with a NO  was not unwillful.
The FBAR statute does not define what constitutes a separate FBAR "violation."  See 31 U.S. Code § 5321(a)(5).  Therefore,  the IRS could impose multiple FBAR penalties per year.  The documents released by the IRS use the example of an individual who failed to file the FBAR for three years to report two foreign accounts.  The IRS examiner would have the discretion to assert either (i) 6 violations, one per account per year, (ii) 3 violations, one per FBAR, or (iii) one violation for the entire three year period. The document  does state that "assertion of multiple penalties and the assertion of separate penalties for multiple violations with respect to a single FBAR form should only be taken in the most egregious cases." 

April 16, 2015


IRS  2014 Investigative Priorities: Criminal Investigation’s highest priority is to prosecute the following tax crimes:

  Identity Theft Fraud
  Return Preparer Fraud ; Questionable Refund Fraud
  International Tax Fraud
  Fraud Referral Program
  Political/Public Corruption
  Organized Crime Drug Enforcement Task Force (OCDETF)
  Bank Secrecy Act and Suspicious Activity Report (SAR) Review Teams
  Asset Forfeiture
  Voluntary Disclosure Program
  Counterterrorism and Sovereign Citizens FY14 Business Results:

In 2014 there were only 4,297criminal investigations initiated by the IRS and out of this there were only 3,110 criminal convictions..  This is from a total US population of approx 330 million people. Therefore, you have to be a pretty bad person or a special target for the IRS to even bother with seeking criminal prosecution.

If you are one of those pretty bad persons, email us at for help.

April 13, 2015


The Internal Revenue Service  today reminded U.S. citizens and resident aliens, including those with dual citizenship who have lived or worked abroad during all or part of 2014, that they may have a U.S. tax liability and a filing requirement in 2015.
Most People Abroad Need to File
A filing requirement generally applies even if a taxpayer qualifies for tax benefits, such as the foreign earned income exclusion or the foreign tax credit , that substantially reduce or eliminate their U.S. tax liability. These tax benefits are not automatic and are only available if an eligible taxpayer files a U.S. income tax return.
The filing deadline is Monday, June 15, 2015, for U.S. citizens and resident aliens whose tax home and abode are outside the United States and Puerto Rico, and for those serving in the military outside the U.S. and Puerto Rico, on the regular due date of their tax return. To use this automatic two-month extension, taxpayers must attach a statement to their return explaining which of these two situations applies. See U.S. Citizens and Resident Aliens Abroad for details.
Nonresident aliens who received income from U.S. sources in 2014 also must determine whether they have a U.S. tax obligation. The filing deadline for nonresident aliens can be April 15 or June 15 depending on sources of income. See Taxation of Nonresident Aliens on
Special Reporting for Foreign Accounts and Assets
Federal law requires U.S. citizens and resident aliens to report any worldwide income, including income from foreign trusts and foreign bank and securities accounts. In most cases, affected taxpayers need to complete and attach Schedule B to their tax return. Part III of Schedule B asks about the existence of foreign accounts, such as bank and securities accounts, and usually requires U.S. citizens to report the country in which each account is located.
Taxpayers with an interest in, or signature or other authority over, foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2014 must file with the Treasury Department a Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (FBAR). It is due to the Treasury Department by June 30, 2015, must be filed electronically and is only available online through the BSA E-Filing System website. For details regarding the FBAR requirements, see Report of Foreign Bank and Financial Accounts (FBAR).
In addition, certain taxpayers may also have to complete and attach to their return Form 8938, Statement of Foreign Financial Assets.  Generally, U.S. citizens, resident aliens and certain nonresident aliens must report specified foreign financial assets on this form if the aggregate value of those assets exceeds certain thresholds. See the instructions for this form for details.
IRS Simplifies Reporting for Canadian Retirement Accounts
The IRS has eliminated a special annual reporting requirement that has long applied to taxpayers who hold interests in either of two popular Canadian retirement plans. This is part of an IRS change announced in October making it easier for taxpayers with these plans to get favorable U.S. tax treatment. As a result, many Americans and Canadians with registered retirement savings plans (RRSPs) and registered retirement income funds (RRIFs) no longer need to file Form 8891 each year reporting details on these plans. This change does not affect any other reporting requirements that may apply, such as FinCEN Form 114 and Form 8938.
Report in U.S. Dollars
Any income received or deductible expenses paid in foreign currency must be reported on a U.S. return in U.S. dollars. Likewise, any tax payments must be made in U.S. dollars.
Both Form 114 and Form 8938 require the use of a Dec. 31 exchange rate for all transactions, regardless of the actual exchange rate on the date of the transaction.  Generally, the IRS accepts any posted exchange rate that is used consistently. For more information on exchange rates, see Foreign Currency and Currency Exchange Rates.
Expatriate Reporting
Taxpayers who relinquished their U.S. citizenship or ceased to be lawful permanent residents of the United States during 2014 must file a dual-status alien return, attaching Form 8854, Initial and Annual Expatriation Statement. A copy of the Form 8854 must also be filed with Internal Revenue Service Philadelphia, PA 19255-0049, by the due date of the tax return (including extensions). See the instructions for this form and Notice 2009-85, Guidance for Expatriates Under Section 877A, for further details.
For more and help go to  Email

Michael Bolton sings an Emotional Song to the IRS

Go to the last 1/2 of this Video to see Michael Boltons emotional IRS song.