No Penalty for Delinquent FBAR Submissions

Several years ago, the IRS passed legislation aimed to catch at tax cheats harboring income producing assets in foreign bank accounts. The legislation required taxpayers to disclose details relating to off shore banking accounts to the U.S. Treasury (and more recently on Form 8938 for the IRS). The form, referred as the Report of Foreign Bank and Financial Accounts, commonly called an “FBAR” (now revised and reported on FinCEN Form 114) carried strict penalties, currently the greater of $100,000 or 50% the account balance for each year  the taxpayer willfully fails to comply. And, yes, I’ve seen clients hit hard, with $10’s of millions in civil penalties.

While this law was aimed at tax cheats, it catches other taxpayers who may not be willfully trying to deceive the government, but could still fall prey to the harsh penalties. If you are a taxpayer who has signature authority over an foreign account with a balance greater than $10,000, have not filed an FBAR in the past, have not been contacted by the IRS, and are not under civil or criminal investigation by the IRS, you may qualify for relief under the new delinquent FBAR submission procedures (note that these are different from the OVDP program).

FBAR’s for the 2014 tax year are due next week, June 30.

For more information on whether or not you are required to file and FBAR, or you have questions on how to qualify under this new procedure, please contact Paul at paul@launchconsultinginc.com

 

“Blow Up the Tax Code and Start Over”

Rand Paul wrote a piece in the Wall Street Journal the other day titled “Blow Up the Tax Code and Start Over”. Can his proposal for a flat 14.5% tax to personal and corporate income be the solution to our nations complex tax code?

Rand states that from 2001 to 2010, there was an average of one “fix” made to the tax code daily, for a total of over 4,400 in that same ten year span. Clearly the code has become much more complex. Rand proposal includes an elimination to all deductions with the exception of mortgage interest and charitable givings, and even goes as far as eliminating payroll taxes. Rand also proposes that the first $50,000 of income for a family of four would not be subject to tax.

The complexity of the tax code has obviously become an issue in America, but government spending needs reformation as well. Rand’s plan may be on the right track, but he doesn’t go in depth about how medicare and social security would be funded if payroll taxes were cut, he doesn’t examine the unforeseen implications of granting families of four or larger their first $50,000 tax free, and the effect it will have on population growth, poverty growth, the food supply, and our resource supply. Despite these issues, I applaud Rand for proposing a solution to a problem that has really impacted growth in America.

What are some of your thoughts?

Email me at paul@launchconsultinginc.com

 

Tax Relief for Disaster Victims in Texas

On its website, the IRS announced relief for taxpayers in Harris, Hayes, and Van Zandt who were affected by the severe storms, tornadoes, straight-line winds, and flooding that took place in Texas beginning on  May 4, 2015.

This means affected taxpayers are eligible for an extension of time to perform time sensitive tasks such as filing and paying taxes. Some of the qualifications include:

  • Taxpayers whose principal residence, or business entity whose principal place of business is located in the counties mentioned above
  • Individuals who are relief workers assisting with the disaster area

Launch Consulting, Inc. sends its deepest gratitude to clients and their friends and families impacted by the flooding caused by adverse weather in the Austin area.

For more information on additional taxpayers who may be eligible for relief, please visit the IRS website.

For questions on the tax implications of losses please contact Paul Glantz, CPA at paul@launchconsultinginc.com

The IRS data breach and how to prevent becoming a victim

5 Tips to Protect Your Identity

We live in a digital era of information. While we try to simplify the way data is stored and accessed, we need to be sure that this information is safeguarded from those who can use it to harm us. Recently, the IRS released a bulletin about the data breach they had just experienced. Out of the 23 million taxpayers that accessed their online transcript service (which has really been a blessing over the traditional fax and snail mail alternatives!), about 100,000 accounts were compromised. While the IRS works to remedy this breach, those who were affected will receive a letter in the mail.

In the meantime, I have compiled a list of 5 tips to help you protect your personal information from scammers:

  1. First and most obvious, DO NOT post personal or financial information publicly on social media.
  2. Protect your social security number. Do not carry your card in your purse or wallet.
  3. Be sure that websites requesting personal data are secure. Look for a padlock in the address bar next to the URL.
  4. Monitor financial accounts often, but only from a personal device. Avoid using public computers or unsecured public networks to view private information.
  5. Shred bank statements and other documents containing personal information

For more information on the IRS Data breach, visit the IRS website.

 

Spring 2015 Statistics of Income IRS Bulletin Released!

Last week, the IRS released the Spring 2015 Statistics of Income Bulletin. The bulletin includes preliminary numbers from the 2013 tax year. Some of the more interesting data points include the following:

  • 147.7 Million tax returns were filed, 1.9% more than the previous year.
  • Although Adjusted Gross Income (AGI) and taxable income was only up 0.8% from 2012 to 2013, total income tax increased 3.6% and total tax liability increased 4.5%, mainly due to the increase in the marginal tax rates implemented in 2013.
  • The Net Investment Income Tax (NII Tax – 3.8%), new for 2013, brought in $11.7 Billion from 3.1 million tax returns.

The complete bulletin can be found here.

CPA, Austin, Texas, Taxes, Tax Refunds, IRS

Spring 2015 Statistics of Income Bulletin