Guilty Plea of Taxpayer Who Failed to Report Million Dollars deposit in Israeli Bank.

DOJ Tax announced here that Ben Zion Birman of Los Angeles pled guilty to willfully failing to file a Report of Foreign Bank and Financial Accounts (FBAR).  Here are the relevant excerpts:

According to court documents, Ben Zion Birman, of Los Angeles, California held offshore accounts in Israel at Bank Leumi Le-Israel B.M. from 2006 to 2011. Birman willfully failed to file with the Department of Treasury an FBAR for calendar year 2010, despite having over $1 million in Bank Leumi accounts.  In an effort to further hide his money, Birman instructed Bank Leumi to hold bank mail from delivery to the United States, and obtained access to his offshore funds through the use of “back-to-back” loans, which were designed to enable borrowers to tap their concealed accounts.  These lending arrangements permitted Birman to have funds issued by Leumi’s U.S. branch that were secretly secured by funds in his undeclared accounts in Israel. 

In December 2014, Bank Leumi entered into a deferred prosecution agreementafter the bank admitted to conspiring from at least 2000 until early 2011 to aid and assist U.S. taxpayers to prepare and present false tax returns by hiding income and assets in offshore bank accounts in Israel and other locations around the world.  Under the terms of the deferred prosecution agreement, Bank Leumi paid the United States a total of $270 million and continues to cooperate with respect to civil and criminal tax investigations.

* * * * 

Birman faces a maximum sentence of five years in prison, as well as a period of supervised release, restitution and monetary penalties. Birman's sentencing is scheduled for December 10, 2018.  

Time is running out to catch up on FBAR filings before the IRS catches you.  If you come forward first you can save yourself substantial penalties and criminal prosecution. Email us at ddnelson@gmail.com if you wish help 

AIRBNB TAXES IS NOW WITHHOLDING LODGING TAX FROM BAJA RENTALS - The Hacienda will collect income taxes and IVA next.

Thursday, August 16, 2018

AIRBNB TAXES IS NOW WITHHOLDING LODGING TAX FROM BAJA RENTALS - The Hacienda will collect income taxes and IVA next.

On August 6th the Gringo Gazette published an article by Doris Open regarding the impact of the Airbnb rentals in Mexico.    In Baja California Sur alone there are 2,400 owners registered with Airbnb!

    Now………all these owners renting through Airbnb will be paying the 3% lodging tax to the municipal authorities.  This will be taken out of rental income BEFORE it goes to the owner!!

   Rental owners of property in Mexico also owe Federal Income Tax Mexico and IVA Tax. Failure to pay these taxes on rental income can result in severe penalties.

    One to these two taxes is the Impuesto Sobre la Renta (ISR) is the owner’s tax on income.    The other, the Impuesto al Valor Agregado (IVA) tax is a sales tax which must be paid by the tenant but collected by the owner and delivered to the Mexican authorities.

    These taxes must be declared MONTHLY and paid each month to SAT, the federal tax authority.

    

Many tax authorities and accountants do not believe the 3% hospitality tax is an obligation of the owner of one or two units who rents only occasionally.  This issue has yet to be determined with any certainty.

    No tax expert disputes the legitimacy of the two federal Federal taxes.    With all this publicity however, federal tax authorities will be looking more closely at the Airbnb websites and will be visiting those owners to check their compliance with federal tax laws.  They have already done so in some towns located on the Mexican mainland.

    It is strongly suggested you get legal  with the Mexican tax authorities BEFORE they knock on your door!

If you have questions on IVA and Income Tax owed on your Mexican rental property either in Mexico or in the USA (if you are a US taxpayer), contact us at ddnelson@gmail.com.

To learn more about the details of these Mexican rental taxes visit www.rentaltaxmexico.com 

_____________________________

The Settlement Company® has developed three options for meeting your obligations on income from rental properties located in Mexico.   For additional information; info@settlement-co.com

READ ABOUT THE MAJOR CHANGES IN THE US INCOME TAX LAWS FOR 2018 AND BEYOND

The IRS has put out a summary of most of the tax law changes for 2018. Some are major and will definitely affect your tax planning and return. Read all about those changes here.

UNDER NEW TAX LAW MOST OF YOUR MISCELLANEOUS ITEMIZED DEDUCTIONS ARE NOW GONE!

The 2018 tax law eliminates most of your miscellaneous itemized deductions such as investment expenses, tax return fees, reimbursed job expenses, education expenses, etc.  The only two that remain are investment interest expense and gambling losses.  Read the details of what deductions are now gone READ MORE DETAILS HERE FROM NOLO LEGAL PUBLICATIONS

IRS Streamlined Filing Program (used to catch up for Failing to File Certain Foreign Asset Reporting forms) May Now Be Audited

The IRS may soon begin to audit those who have filed under the Streamlined Program which is used to

catch up the filing of certain foreign asset reporting forms which the taxpayer failed to file. These forms include form 5471, 8865, 114 (FBAR), 8938, etc.  Entering this program avoids certain penalties and may permit you to file or amend the past three years tax returns and six year Forms 114 (FBAR).

Read more about the forthcoming audits and how to prepare here.  If you wish further help email us at ddnelson@gmail.com.  All consultations are protected by attorney/client privilege.

You May Be Denied Your US passport renewal (or your Passport can be Revoked)l if You Owe Taxes

At least 362,000 Americans with overdue tax debts will be denied new or renewed passports if they don’t settle these debts, the Internal Revenue Service says.

Recently IRS officials have provided new details on the enforcement of a law Congress passed in late 2015. It requires the IRS and State Department to deny passports or revoke them for taxpayers who have more than $51,000 of overdue tax debt. Enforcement began in February.  Overdue tax debt includes accrued  penalties and interest which can result after many years a small amount growing quite large.

Best to catch up before you get left without a passport. We can help. Email us for help and guidance on how to proceed.  ddnelson@gmail.com.  All consultations are protected by the privacy of attorney/client privilege.

...

WHERE YOUR TAX DOLLARS GO AFTER YOU PAY THE IRS

The link below goes to an excellent article that states where you tax dollars go after you pay the IRS and also sets forth how much the federal governement borrows to cover the rest of their budget.

https://www.military.com/daily-news/2018/04/24/where-your-tax-dollars-go-after-you-pay-irs.html

Email us if you want to give the IRS less tax dollars.  Don Nelson, US Tax Attorney

WHEN TO REPORT DIGITAL CURRENCY ON YOUR FBAR form 114

The IRS says it is not bound by oral advice.  Ignoring that rule,  we did received the statement below from an IRS agent by email.

Digital currency like Bitcoin would only be reportable if it is held in account with a financial institution or someone acting as a financial institution.   It is digital currency held in a digital wallet, not in a financial institution. The digital wallet is not a foreign financial account.  In that form. it is not reportable on FBAR.

Need FBAR help, email an experienced tax attorney with your questions at ddnelson@gmail.com