Friday, December 2, 2016

IRS Wins Summons Challenge From Virtual Currency Exchanger Coinbase Inc.

According to Law 360 a California federal court Thursday authorized a John Doe summons by the IRS to obtain information from virtual currency exchanger Coinbase Inc. so it can investigate whether the company’s customers avoided paying taxes on transactions made through the company.

San Francisco-based Coinbase itself has not been accused by the IRS of engaging in nefarious activity, but the agency believes records of transactions made via the company’s currency exchange business could reveal the identities of individuals who have failed to pay taxes on transactions made via encrypted digital currencies between 2013 and 2015.

“Transactions in virtual currency are taxable just like those in any other property,” said IRS Commissioner John Koskinen in a statement. “The John Doe summons is a step designed to help the IRS ensure people doing business in the emerging economy are following the tax laws and meeting their responsibilities.”

Unlike traditional cash or banking transactions, exchanges made via cryptocurrencies like bitcoin are anonymous and free of third-party reporting.

According to the IRS’s petition for the John Doe summons, the agency has identified at least one individual and two corporations that held Coinbase accounts and used bitcoin transactions to conceal taxable activities including repatriation of untaxed offshore assets.

The IRS also notes that because exchange rates of virtual currency against traditional currencies are fluid, gains made through the purchase or sale of cryptocurrency are taxable under U.S. law.

The summons will allow the IRS to gain access to Coinbase’s database of customers in order to establish whether those customers have paid their tax liabilities.

In granting the summons U.S. District Judge Jacqueline Scott Corley found there is a reasonable basis for the government to believe virtual currency users may not be in compliance with federal tax laws.

Have a Tax Problem? 
Contact the Tax Lawyers at
Marini & Associates, P.A.
for a FREE Tax Consultation
or Toll Free at 888-8TaxAid (888 882-9243).


Thursday, December 1, 2016

Panama Papers - Global Effects Thus Far & Continuing Impact

On April 4, 2016 we posted Huge Leak From the Panamanian Law Firm Mossack Fonseca! where we discuss that the offshore planning world was set on fire with the news that 11 million documents were leaked from the Panamanian law firm Mossack Fonseca.
They show how Mossack Fonseca has helped clients launder money, dodge sanctions and evade tax. The company says it has operated beyond reproach for 40 years and has never been charged with criminal wrong-doing.

Gerard Ryle, director of the ICIJ, said at the time, that the documents covered the day-to-day business at Mossack Fonseca over the past 40 years.

While no reference was initially made regarding U.S. clients; we correctly speculated that U.S. persons will probably show up, given that Mossack Fonseca apparently maintained a branch in Las Vegas, Nevada, under the name of M.F. Company Services and Mossack Fonseca Company Services was currently attempting to fight a subpoena brought in the U.S. District Court for the District of Nevada seeking information on at least 123 companies that it created.
Fast-forward 8 months later and the investigation has produced an almost daily drumbeat of regulatory moves, follow-up stories and calls by politicians and activists for more action to combat offshore financial secrecy and ICIJ recently posted Panama Papers Have Had Historic Global Effects — and the Impacts Keep Coming where they cover the following repercussions:                 
  • At least 150 inquiries, audits or investigations into Panama Papers revelations have been announced in 79 countries around the world
  • An estimated $135 billion was wiped off the value of nearly 400 companies after the Panama Papers
  • Governments are investigating more than 6,500 taxpayers and companies, and have recouped at least $110 million so far in unpaid taxes or asset seizures
  • Nine Mossack Fonseca offices have shuttered around the world, and the law firm has been fined close to half a million dollars 
Our Blog "The Tax Times" lists the following as fallout from the Mossack Fonseca a/k/a "Panama Papers" leak:
Do You Have Undeclared Income 
From A Foreign Company
Formed By Mossack Fonseca ?

 Want to Know if the OVDP Program is Right for You?

Contact the Tax Lawyers at 
Marini& Associates, P.A.  
for a FREE Tax Consultation
Toll Free at 888-8TaxAid (888) 882-9243


Tuesday, November 29, 2016

Set up Your 2017 Calendar to Reflect New Filing Dates for 2016 US Tax Returns

On July 31, 2015, President Obama signed into law P.L. 114-41, the “Surface Transportation and Veterans Health Care Choice Improvement Act of 2015,” which includes a number of important tax provisions, including revised due dates for partnership, S corporations and C corporation returns and revised extended due dates for some returns.

Revised Due Dates for Partnership, S &C Corporation Returns 
Under the new law, there is a major restructuring of entity return due dates, effective generally for returns for tax years beginning after Dec. 31, 2015:
  • Partnerships and S corporations will have to file their returns by the March 15th following the end of the tax year. This results in the filing deadline for partnerships being accelerated by one month with the filing deadline for S corporations staying as March 15. 
    • By having most partnership returns due one month before individual returns are due, taxpayers and practitioners will generally not have to extend, or scurry around at the last minute to file, the returns of individuals who are partners in partnerships.
  • C corporations will have to file by April 15th after the end of the tax year resulting in the filing deadline for C corporations being deferred for one month.
These changes to the filing deadlines generally go into effect for 2016 returns. Under a special rule for C corporations with fiscal years ending on June 30, the change is deferred for ten years and it won't apply until tax years beginning after Dec. 31, 2025. 

Revised Extended Due Dates for Various Returns
Taxpayers who can't file a tax form on time, can request an extension to file the requisite form. Effective for tax returns for tax years beginning after Dec. 31, 2015, the new law directs the IRS to modify its regulations to provide for a longer extension to file a number of forms, including the following:

  • Form 1065 - U.S. Return of Partnership Income will have a maximum extension of 6 months. The extension will end on Sept. 15 for calendar year taxpayers.
  • Form 1041 -U.S. Income Tax Return for Estates and Trusts will have a maximum extension of 5 1/2 months. The extension will end on Sept. 30 for calendar year taxpayers.
  • The Form 5500 - Annual Return/Report of Employee Benefit Plan will have a maximum automatic extension of 3 1/2. The extension will end on Nov. 15 for calendar year filers.
FinCEN Report Due Date Revised
Taxpayers with a financial interest in or signature authority over certain foreign financial accounts must file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR). Currently, this form must be filed by June 30 of the year immediately following the calendar year being reported, and no extensions are allowed.
Under the new law, for returns for tax years beginning after Dec. 31, 2015, the due date of FinCEN Report 114 will be Apr. 15, with a maximum extension of 6 months ending on Oct. 15. The IRS may also waive the penalty for failure to timely request an extension for filing the Report, for any taxpayer required to file FinCEN Form 114 for the first time.

Form 3520 And Form 3520-A Due Date Revised
Form 3520-A is now due on March 15th and will have a maximum extension of 6 months until September 15th.

The IRS or FinCEN need to provide clarification on the format or forms for such extensions, which may be similar to Form 4868, which is the form for requesting extensions on Individual tax returns currently. There may also be a requirement that these extensions be filed on the BSA Website as in the case of the FBAR forms.

 Have a Tax Problem? 
Contact the Tax Lawyers at
Marini & Associates, P.A.
for a FREE Tax Consultation
or Toll Free at 888-8TaxAid (888 882-9243).