Tax Blog/Blawg

For tax year 2011, individual taxpayers with certain specified foreign financial assets found themselves subject to a new reporting requirement, Form 8938, Statement of Specified Foreign Financial Assets. Form 8938 is required if a taxpayer has a specified foreign financial asset in excess of various thresholds.  See Form 8938 – Foreign Reporting Trap for the Unwary.  Unlike Form T.D. 90-22.1, Report of Foreign Bank Account and Financial Accounts which is due by June 30^th of every year, Form 8938 is attached to a taxpayer’s Form 1040.

Although many aspects of the Form 8938 and FBAR ...

Concerned about the extent of international tax non-compliance, Congress enacted the Foreign Account Tax Compliance Act (“FATCA”).  Among other provisions found in FATCA was Section 6038D, which requires certain individuals to annually report to the IRS data about their interests in foreign financial assets.  Sounds simple enough, right?  Well, this seemingly straightforward obligation has been causing significant havoc for taxpayers and their advisors in 2012, as they wrestle for the first time with tricky new issues when deciding whether and/or how to complete Form 8938 ...

Noooo!  But the IRS does seem to be getting more rational in a couple of respects.

On May 18, an IRS Associate Area Counsel for Philadelphia explained that the IRS may send warning letters in lieu of asserting penalties for failure to file a Form TD F 90-22.1, also known as an FBAR.  This will occur in situations where the IRS concludes a letter would be “sufficient to bring the individual into compliance.”  The speaker indicated that the IRS Office of Chief Counsel reviews every proposed FBAR penalty to ensure “that adequate facts exist to support the proposed assessment.”  The ...

Late late year, we asked what's next for foreign bank account holders after OVDI?  Although the answer to this question continues to evolve, it is becoming increasingly clear that the risks of detection have only grown – and will continue to do so.  The latest news on this front comes from Business Week, which reported Sunday that the IRS has requested account holder information from Liechtenstein's second largest bank, LLB.  Specifically, the IRS has asked for information pertaining to accounts holding $500,000 or more anytime since 2004.  Current and former LLB account holders who ...

David J. Shakow is counsel in the Philadelphia office of Chamberlain, Hrdlicka, White, Williams & Aughtry and is professor emeritus at the University of Pennsylvania Law School.

The Supreme Court's decision in Home Concrete raises new questions about the deference to be given to administrative pronouncements that conflict with prior judicial decisions. Unfortunately, the opinions of a divided Court leave practitioners to puzzle over the boundaries of its decision.

This article originally appeared in Tax Notes. Copyright 2012 David J. Shakow.

All rights reserved.

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The ...

Beginning with the 2011 tax year (i.e., for returns filed April 17, 2012 or later), individual taxpayers will be required to file Form 8938 if he or she has an interest in a “specified foreign financial asset” (“SFFA”) (click for additional information on FATCA requirements) that has a value exceeding a certain threshold.  A Taxpayer has an interest in a SFFA if any income, gains, losses, deductions, credits, gross proceeds or distributions from the asset would be required to be reported on the income tax return.

The reporting thresholds differ depending on whether the ...

Recently, the IRS issued "Tax Tip 2012-39" regarding important issues concerning mortgage debt forgiveness.  While anyone capable of reading this Blawg is capable of pulling that up from the IRS website and reading it, no action should be undertaken without making sure your tax professional has covered the positives and negatives of doing so.

Right now, a lot of people are "under water" on their home mortgage, and faced with possible foreclosure, short sale, or other transactions in which their mortgage debt is partly or entirely "forgiven" during this tax year.  There are several ...

The Hiring Incentives to Restore Employment Act of 2010 (“HIRE Act”) enacted the Foreign Account Tax Compliance Act (“FATCA”).  P.L. 111-47.  FATCA greatly increases disclosure requirements and penalties on taxpayers with foreign accounts and assets.  These reporting requirements will affect individuals beginning with the 2011 tax year, and are expected to apply to certain domestic entities beginning with the 2012 tax year.

FATCA reporting is in addition to the Form T.D. F 90-22.1, Report of Foreign Bank Accounts (“FBAR”) requirements and other foreign reporting ...

In February, the IRS published its annual "Dirty Dozen" listing of tax scams to caution taxpayers about problems they may face in this filing season.  They range from self-inflicted—too good to be true—to situations where third parties prey upon the unsuspecting.

Several are fairly common and familiar, ranging from reporting income that was not earned in order to maximize refundable credit, claiming excessive fuel tax credits, or simply claiming deductions one did not incur.  So are the time-worn tax protester arguments that have been thrown out by the courts.  There are ...

Life grants few chances at true redemption. The Internal Revenue Code, likewise, is not known for facilitating taxpayer salvation. Sure, under certain circumstances, taxpayers have an opportunity to file late tax-related elections to rectify an oversight, and other forms of clemency exist. However, the general rule is that taxpayers are stuck with a position once they take it on a tax return filed the IRS. One obscure exception to this rule is the qualified amended return (“QAR”), which can be a powerful self-help remedy for taxpayers who experience the “oh-shoot” moment ...