Although the IRS is making progress, there are still significant return processing backlogs which among others involve expatriate returns, refunds, etc, such as:
* 6.5 million unprocessed individual returns, as of November 19, 2021;
* 2.6 million unprocessed Forms 1040-X, Amended Individual Income Tax Returns, as of November 27, 2021;
* 3 million unprocessed Forms 941, Employer's Quarterly Federal Tax Return, as of December 1, 2021; and
* 412,000 unprocessed Forms 941-X, Adjusted Employer's Quarterly Federal Tax Return, as of December 1, 2021.
According to the IRS, it may take 90-120 days to process original returns. The timeline depends on how quickly and accurately taxpayers respond to requests for additional information and "the ability of IRS staff trained and working under social distancing requirements to complete the processing of your return." Taxpayers may access "Where's My Refund" (www.irs.gov/refunds<http://se
The ETA for processing amended returns can be more than 20 weeks (although we have heard of far longer timeframes). The IRS has asked that taxpayers not file a second return or contact the IRS about the status of their returns. Taxpayers are directed to check "Where's My Amended Return" (www.irs.gov/filing/wheres-my-
For more information on the IRS delays, see:
www.irs.gov/newsroom/irs-opera
December 9, 2021
IRS TAXPAYER PROCESSING DELAYS CONTINUE AND WILL FOR SOME TIME
December 7, 2021
New online identity verification process for accessing IRS self-help tools for Expatriates and Nonresidents
Taxpayers using the new mobile-friendly verification process can access several IRS online services including:
- Child Tax Credit Update Portal
- Online Account
- Get Transcript Online
- Get an Identity Protection PIN
- Online Payment Agreement
Additional applications will transition to the new process over the next year.
The new process reaches more people through the expanded use of identity documents and increased help desk assistance for taxpayers who encounter a problem when attempting to verify their identity online.
The IRS is using ID.me to provide verification services. The new process part of the IRS’s ongoing commitment to ensure that taxpayer information is only provided to the person who has a legal right to the data.
The IRS integrated this new account-creation process into some applications used by tax professionals, including those they use to request powers of attorney or tax information authorizations online using Tax Pro Account or to submit Forms 2848 and 8821 online.
Accessing IRS tools
Taxpayers will be asked to sign in with an ID.me account. If they already have IRS usernames, they can use their credentials from the old system to sign-in until summer 2022. However, they should create an ID.me account as soon as possible. Anyone with an existing ID.me account from the Child Tax Credit Update Portal, or from another government agency, can sign in with their existing credentials.
To verify their identity with ID.me, taxpayers must do two things:
- Provide a photo of a driver's license, state ID or passport.
- Take a selfie using a smartphone or a computer with a webcam.
Once their identity is verified, they can securely access IRS online services.
Taxpayers who need help verifying their identity or submitting a support ticket should visit the ID.me IRS Help Site
Share this tip on social media -- #IRSTaxTip: New online identity verification process for accessing IRS self-help tools. https://go.usa.gov/xedxr
November 8, 2021
FBAR $10,000 NONWILLFUL FAILURE TO FILE PENALTY IS HELD TO BE $10,000 PER ACCOUNT AND NOT PER FORM
In United States v. Solomon, No. 20-82236-CIV-CAN, 2021 U.S. Dist. LEXIS 210602 (S.D. Fla. Oct. 27, 2021), CL here, in a nonwillful FBAR collection suit, the Court held: 1. The FBAR assessment statute of limitations is an affirmative defense that may be waived by the person assessed the penalty (no distinction here between willful and nonwillful). The FBAR assessment statute of limitations has no provision such as § 6501(c)(4) that requires that extensions by agreement must be made while the otherwise  applicable period of limitations for tax assessments is still open; perhaps the implication is that, except for that explicit limitation on waivers by agreement, a taxpayer could waive with an untimely agreement. (In this regard, the Solomon court does conclude that the FBAR statute of limitations is not jurisdictional and thus can be waived.) Accordingly, the execution of the agreement to extend for the FBAR penalties was a waiver of the statute of limitations that had already expired. (On the jurisdictional issue, see Keith Fogg, IRS Succeeds in Jurisdictional Argument – With a Twist (Procedurally Taxing Blog 11/4/21), here.) 2. The nonwillful penalty is per account rather than per form, adopting the Government’s position on this issue. As the court notes in the following footnote (Slip Op. 10 n. 4):
If you need help, email us at ddnelson@gmail.com. All consultations are absolutely protected under attorney client privilege. |
November 5, 2021
US Taxpayer Pleads Guilty to Failure to File a Foreign Bank Account Report
CONCORD - Georges Mazraani, 57, of Windham, pleaded guilty in federal court on Wednesday to willful failing to file a foreign bank account report, Acting United States Attorney John J. Farley announced today.
According to court documents and statements made in court, federal law requires that a U.S. person having a financial interest in, or signature or other authority over, a bank or other financial account in a foreign country, must file a Foreign Bank Account Report (“FBAR”) with the Treasury Department identifying each foreign account if the aggregate balance of all foreign accounts exceeds $10,000 at any point in the calendar year. FBAR information is used by the federal government in criminal, tax, or regulatory investigations or proceedings. A willful failure to file a required FBAR is a felony.
Defendant Mazraani owned and operated Dot Square, a New Hampshire corporation that exported computers and related goods primarily to Lebanon. He also had a financial interest in bank accounts held in Lebanon, from which he sometimes wired money to Dot Square’s bank account held in Salem, New Hampshire. For calendar year 2012, Mazraani filed an FBAR identifying three accounts in Lebanon. During the years 2013 through 2017, however, Mazraani did not file FBARs, even though he had an interest in at least one Lebanese bank account holding more than $10,000 during each of those years. For example, in calendar year 2017, $554,245 was wired, in 13 separate wire transmissions, from Mazraani’s account at a bank in Beirut to Dot Square’s business checking account in New Hampshire. Although Mazraani’s tax preparer advised the defendant’s bookkeeper about the FBAR filing requirement and Mazraani acknowledged on his 2016 and 2017 tax returns that he was required to file an FBAR, he nevertheless failed to file the report.
Mazraani is scheduled to be sentenced on February 14, 2022.
“Failing to file a Foreign Bank Account Report is a federal crime,” said Acting U.S. Attorney Farley. “By failing to file these reports from 2013 to 2017, the defendant concealed information about foreign bank accounts that he was required to disclose. We will continue to work with our law enforcement partners to identify and prosecute those who commit tax crimes and other financial offenses.”
“The law requires companies who use our country’s financial system to provide financial institutions with truthful information about their business operations, but Georges Mazraani admitted today that he knowingly and willfully failed to do that, over the course of five years. In fact, he went out of his way to conceal his bank accounts in Lebanon, despite a reminder from his bookkeeper,” said Joseph R. Bonavolonta, Special Agent in Charge of the FBI Boston Division. “The FBI will not hesitate to aggressively investigate companies who are doing business in the United States but failing to adhere to our laws.”
“The accurate reporting of foreign bank accounts ensures fairness and integrity in the U.S. tax system. By his own admission today, Mr. Mazraani deliberately avoided his reporting requirements in an attempt to hide assets. As a result of his actions, he is now subject to a federal felony conviction,” said Joleen D. Simpson, Special Agent in Charge of the Internal Revenue Service-Criminal Investigation Division, Boston Field Office.
This matter was investigated by the Internal Revenue Service, Criminal Investigation Division, the Department of Commerce, and the Federal Bureau of Investigation. The case is being prosecuted by Assistant U.S. Attorney John S. Davis.
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If you have not been reporting your foreign bank accounts you could incur heavy penalties and possible criminal prosecution. We can help. Email Us to request a consultation with the absolute privacy of attorney client privilege. Email us at ddnelson@gmail.com
August 18, 2021
Expatriates Living Abroad May be at Risk for an Audit?
Even though you live and work abroad the IRS may still audit your return. This is most often accomplished by mail and telephone. Failure to respond to any audit notice from the IRS will result in assessment for taxes due for all items questioned.
There are some objective factors that may put you as an expatriate
at higher risk for experiencing an IRS audit. Here’s a quick checklist.
- Do you earn over $200,000 annually?
- Have you failed to report past income on your return?
- Have you claimed more itemized deductions than allowed?
- Do you operate a business?
- Did you claim rental losses on your return?
- Did you take a home office deduction?
- Did you claim gambling losses on your return?
- Do you hold a foreign bank account or earn income from a foreign source?
- Do you own a foreign corporation?
- Do you have an interest in a foreign trust>
- Do you own foreign mutual funds (requires special forms be filed with your tax return)?
While none of these factors ensures that you will be audited, they do help create a picture of the type of taxpayer that may draw additional IRS scrutiny. Under the new Presidential administration there will be a significant increase in audits of those who live outside of the USA.
We can help you if your receive an IRS notice with your response and represent you in an audit. Email us at ustax@hotmail.com or phone 949-480-1235 (US)
June 5, 2021
US Social Security Administration Has Three Offices in Mexico to Help Expats Living in Mexico
For comprehensive information on SSA’s services abroad, please visit SSA’s webpage Service Around the World.
If you are already receiving SSA benefits payments, there will be no change in the method of distribution of those payments.
Need help with your US taxes, past due taxes, IRS collection matters, US estate planning contact a US Attorney with 30 years experience assisting expats in Mexico. Email. ddnelson@gmail.com Or send a whats app to 18185199219.
US TAXPAYERS CAN LOSE THEIR PASSPORT FOR UNPAID FEDERAL TAXES
The U.S. Department of State generally will not renew a passport or issue a new passport to taxpayers after receiving a certification of “seriously delinquent” tax debt from the IRS, and they may revoke or place limitations on current passports. Generally, you can use your passport until you’re notified by the U.S. Department of State that it’s taking action to revoke or limit your passport.
Once a taxpayer receives the notice CP508C, they have 30 days to dispute the notice. Taxpayers are cautioned to retain the notice until the issue is resolved. The IRS contact number is in the top right-hand corner of the CP508C notice. If the debt has already been satisfied, the taxpayer will need to have proof of payment available.
Seriously Delinquent Tax Debt - Seriously delinquent tax debt is an individual's unpaid, legally enforceable federal tax debt totaling more than $54,000 (including interest and penalties) for which:
- Notice of federal tax lien has been filed and all administrative remedies under the Internal Revenue Code have lapsed or been exhausted, or
- A levy has been issued.
Getting the Certification Reversed – Once IRS has certified the “seriously delinquent” tax debt to the U.S. Department of State the IRS will reverse the certification when:
- The tax debt is fully satisfied or becomes legally unenforceable.
- The tax debt is no longer seriously delinquent.
- The certification is erroneous. A previously certified debt is no longer seriously delinquent when:
- The taxpayer and the IRS enter into an installment agreement allowing the debt to be paid over time.
- The IRS accepts an offer in compromise to satisfy the debt.
- The U.S. Department of Justice enters into a settlement agreement to satisfy the debt.
- Collection is suspended because the taxpayer requests innocent spouse relief.
- The taxpayer makes a timely request for a collection due process hearing in connection with a levy to collect the debt.
- Who is in bankruptcy.
- Who is identified by the IRS as a victim of tax-related identity theft.
- Whose account the IRS has determined is currently not collectible due to hardship.
- Who is located within a federally declared disaster area
- Who has a request pending for an installment agreement with the IRS.
- Who has a pending offer in compromise with the IRS.
- Who has an IRS-accepted adjustment that will satisfy the debt in full.
If a taxpayer is already overseas when the State Department takes action to revoke or limit the taxpayer’s passport, the agency will either limit the passport only for return travel to the U.S. or issue a limited passport that only permits return travel.
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April 9, 2021
FBAR Form 114 Filing Deadline has not been extended - but there is an automatic Extension
IF you need help with your FBAR or catching up with past unfiled FBAR forms, contact us. There are procedures to avoid the $10,000 late filing penalty if you file the form properly. Remember if your combined highest balances in foreign bank accounts (or other financial accounts in your congtrol) ever exceed $10,000 (even if just for a day) you must file the form. The form must be filed in your sign on someone elses account or corporate accounts also. Email us at
taxmeless. Skype: dondnelson
February 12, 2021
February 10, 2021
A Mini Consultation is Now Available with A US Tax Attorney and Partner in a US CPA Firm about your Expat, Nonresident or International Tax Matters
If you send us an outline of your situation, facts and questions in advance, we prepare in advance and this time is extremely productive and usually resolves all of your questions within the time allowed. We can find a solution to your US or US State tax problems.
And remember as a partner in a US CPA firm we can also prepare the returns, forms, and amended returns to solve your tax problems. We are a one stop solution and make the entire process simple and easy. Our specialty if fiing past due returns and assisting nonresidents with the tax aspects of owning US real estate.
Many hundreds of expat taxpayers located everywhere in the world have used "Mini Consultations" to resolve their tax problems and issues. US Phone (949) 480-1235. US Fax (949) 606-9627 skype address dondnelson. Email:ddnelson@gmail.com Whatsapp No. 1(818) 519-9219. Visit our website at www.taxmeless.com
We look forward to resolving your tax problems and/or preparing your US return. Thank you. Don
February 1, 2021
US Tax Brackets - Tax Tips for Gig Work - Upcoming Tax Deadlines
2021 Adjustments to Tax Brackets and Deductions The IRS recently released a list of federal income tax adjustments for 2021. The most important changes include higher standard deductions and higher income limits for common tax rates. Standard Deduction Increases The standard deduction for individual ... Tax Tip: Tracking Income and Expenses for “Gig” WorkWith working from home becoming more common in 2020 & 2021, many people are taking on freelance or “gig” work to supplement their incomes. Whether you rely on gig work as your primary income source ...  Upcoming Tax DeadlinesFebruary Day 01 Businesses - Give annual information statements to recipients of certain payments you made during 2020. You can use the appropriate version of Form 1099 or other information return. Form 1099 can be issued electronically with .. Call or email us for help with you personal return, business returns, expatriate, international and nonresident tax returns and planning. We have over 30 years experience. Email Us US Phone 949-480-1235. Skype: dondnelson |
January 12, 2021
2020 FAST TAX FACTS FOR US EXPATRIATES LIVING AND WORKING ABROAD IN PLAIN LANGUAGE
As a US expatriate living and working abroad 4/15/,21 your 2020 tax return is automatically extended until 6/15/21 but any taxes due must be paid by 4/15/20 to avoid penalties and interest. The return can be further extended until 10/15/21 if the proper extension form is filed. An even further extension until December may be available if the proper letter is sent to the IRS.
✦ For 2020 if you are a qualified expatriate you get a foreign earned income exclusion (earnings from wages or self employment) of $107,600, but this exclusion is only available if you file a tax return. You must qualify under one of two tests to take this exclusion: (1) bonafide resident test or (2) physical presence test. You can read more about how to qualify in IRS Publication 54. This exclusion only applies to income taxes and does not apply to US self-employment tax (social security plus medicare). You spouse who lives and works abroad with you will also be able to use this exclusion against any earned income they have abroad. You can lose this exclusion if you file your return more than 18 months late. The exclusion can only be claimed on filed tax return and does not apply if you fail to file a tax return.
✦ If you receive a gift of $100,000 or more during 2020 from a nonresident individual or nonresident corporation you must file form 3520 to report that gift. If you fail to file that form you will incur substantial penalties. .
✦ If your foreign earnings from wages or self -employment exceed the foreign earned income exclusion you can claim a housing expense for the rent, utilities and maintenance you pay if those amounts that exceed a minimum non-deductible amount. There is a limit to the housing amount and certain “high-cost” locations there is a higher amount of housing expense which can be considered. (For “high-cost” country limitations see Form 2555 instructions).
✦ You get credits against your US income tax obligation for foreign income taxes paid to a foreign country but you must file a US tax return to claim these credits. This avoids double taxation of the same income.
✦ If you own 10% or more of a Foreign corporation or Foreign partnership (LLC) you must file special IRS forms, or incur substantial penalties which can be greater including criminal prosecution if the IRS discovers you have failed to file these forms.
✦ If you create a foreign trust or are a beneficiary of a foreign trust you may be obligated to file forms 3520 and /or 3520A each year to report those activities or be subject to severe penalties. Foreign foundations and non-profits which indirectly benefit you may be foreign trusts in the eyes of the IRS.
✦ Your net self-employment income in a foreign country (earned as an independent contractor or in your own sole proprietorship) is subject to US self-employment tax (medicare and social security) of 15.3% which cannot be reduced or eliminated by the foreign earned income exclusion or foreign tax credits. The one exception is if you live in one of the very few countries that have a social security agreement with the US and you pay the equivalent of social security in that country.
✦ Forming the correct type of foreign corporation and making the proper US tax election (to cause the income and foreign taxes the foreign corporation pays to flow through to your personal US tax return) with the IRS for that corporation may save you significant income taxes and avoid later adverse tax consequences. You need to take investigate this procedure before you actually form that foreign because it can be difficult to make that election later and only certain types of foreign business entities are eligible to make this election.
✦ If at any time during the tax year your combined highest balances in your foreign bank and financial accounts (when added together) ever equal or exceed $10,000US you must file a FBAR form 114 with the IRS by October 15, 2021 for the 2020 calendar year or incur a penalty of $10,000 or more including criminal prosecution. Foreign financial accounts often include accounts in you sign on for a foreign corporation, foreign partnerships foreign pension plans, stock brokerage accounts, and cash surrender value of foreign life insurance. This form does not go in with your personal income tax return and can only be filed separately on the web at: http://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html
✦ The IRS gets lists of Americans applying or renewing for US passports or entering the country. They will compare these lists with those who are filing US income tax returns and take action against those who do not file US returns but are US residents or citizens.
✦ Often due to foreign tax credits and the foreign earned income tax expats living abroad who file all past year unfiled tax returns end up owing no or very little US taxes. The IRS has a special program which will help you catch up if you are in arrears which will reduce or possibly eliminate all potential penalties for failing to file the required foreign asset reporting forms. We can direct you to the best program for your situation, prepare the returns and forms and represent you before the IRS.
✦ Beginning in 2011 a new law went into effect which requires all US Citizens report all of their worldwide financial assets with their personal tax return if in total the value of those assets exceed certain minimum amounts starting at $50,000. Failure to file that form 8938 on time can result in a penalty of $10,000. The form is complex and has different rules that apply to you if you live abroad or live in the US. This form is required in addition to the FBAR form 114.
✦ Certain types of income of foreign corporations are immediately taxable on the US shareholder's personal income tax return. This is called Subpart F income. The rules are complex and if you own a foreign corporation you need to determine if these rules apply to you when you file the required form 5471 for that corporation. For 2018 a new tax was enacted with the acronym of GILTI tax. This may or may not cause an owner of a Controlled Foreign Corporation (CFC) to owe taxes on the income it does not distribute to its owners. This GILTI tax applies to 10% or more owners of CFCs.
✦ If you own investments in a foreign corporation or own foreign mutual fund shares you may be required to file the IRS form 8621 for owning part of a Passive Foreign Investment Company (PFIC) or incur additional, taxes and penalties for your failure to do so. A PFIC is any foreign corporation that has more than 75% of its gross income from passive income or 50 percent or more of its assets produce or will produce passive income.
There are many more special tax laws too numerous to mention here that apply to expatriates, green card holderd. nonresidents and US taxpayers with foreign assets, businesses, etc. Please need to consult with Kauffman Nelson LLP if you have other offshore matters to be certain what is required to be filed.
Download your 2020 Expatriate Tax Questionnaire HERE Send us your completed questionnaire and we will immediately provide you with a flat fee quote for preparing your return(s).
Don
D. Nelson, US Tax Attorney, Charles Kauffman CPA, Kauffman Nelson,
LLP, CPAs
Huntington
Beach, California USA
US
Phone: (949) 480-1235, US Fax: (949)
606-9627
Email:ddnelson@gmail.com
or ustax@hotmail.com
Skype
address: dondnelson
Visit our International Tax Blog for the Latest Expat and International Tax Developments at www.usexpatriate.blogspot.com / http://us-mexicantax.blogspot.com/
We have been preparing tax returns and assisting US clients located in over 123 countries around the the world for over 35 years. We also assist US Nonresidents meet their US tax obligations and return filing requirements. Email, skype or phone us for immediate assistance.
ARE YOU NOW CONFUSED? WE OFFER MINI TAX CONSULTATIONS BY PHONE, SKYPE OR EMAIL: The mini consultations (with attorney client privilege) to answer your tax questions and resolve your tax issues. Email us: taxmeless@gmail.com to learn more or request a consultation
For additional useful information and tax assistance go to our website at. www.TaxMeLess.com