IRS Extends Deadline for Disclosing Hidden Offshore Accounts

The Internal Revenue Service recently announced a one-time extension of the deadline for special disclosures for taxpayers with unreported income from hidden offshore accounts.  Those taxpayers now have until October 15, 2009 to comply with the voluntary disclosure program requirements. Taxpayers who do not voluntarily disclose their hidden accounts by the new deadline face much harsher civil penalties, where applicable, and possilbe criminal prosecution.


Important Distribution Decisions Regarding Inherited IRAs By Taxpayers Under
Age 59 ½  

A Taxpayer who inherits an individual retirement account (IRAs) from a decedent pays no income tax if he directly roll over the funds into IRAs in his own name; however the taxpayer will pay a 10% tax on premature distributions if he is under age 59 ½. The money does not retain its character as an amount received by a beneficiary from an inherited IRA after it is rolled over. The IRA becomes the taxpayer’s when he chose to have the funds rolled over into his IRA. Once that rollover takes place, the only way for him to avoid the 10 percent penalty for a premature distribution is to qualify for one of the other exceptions listed under IRC section 72(t).  A subsequent distribution from his IRA is not considered made to a beneficiary on account of death.

Generally, if the taxpayer receives distributions directly from the inherited IRA, the distributions are
taxed, but the 10 percent penalty tax on premature withdrawals does not apply, even if the beneficiary
is under the age of 59½.

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THE IRS, STATES AND CERTAIN CITIES FORM PARTNERSHIP TO SHARE INFORMATION

The Internal Revenue Service has recently announced a top enforcement priority to combat the use of abusive tax avoidance schemes by high-income individuals and others.  Casework will be coordinated and leads will be shared with the States.

The IRS, states and certain cities will coordinate efforts to address common compliance concerns in the area of Abusive Tax Avoidance Transactions (ATAT) by working in tandem and avoid repeating each other’s efforts.  Abusive tax shelthers are frequently hidden through many layers of business transactions and money shifts.  Each agency may have a few pieces of the puzzle but by working together, they can fit it all together for the benefits of taxpayers.

The initial leads transferred to states involved scams using offshore transactions, abusive trusts, employee leasing, home-based businesses, employment taxes and other tax-avoidance schemes. The IRS, states and cities will subsequently share information on any resulting tax adjustments from audits allowing them to piggyback on the results of each other’s work. The process allows the agencies to leverage resources by greatly decreasing the possibility of two or even three tax agencies performing a lengthy examination of the same taxpayer.
 
The cities and states that have signed partnership agreements and that received information include:  Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Montana, New Hampshire, New Jersey, New Mexico, New York City, New York State, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia and Wisconsin.

 

 
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TAX ATTORNEY & C.P.A.
THOMAS F. DILULLO, C.P.A., M.B.A., J.D., AND LL.M. (in taxation)
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