Extension on Offshore Account Disclosure

The US Internal Revenue Service has announced an extension of the deadline for special voluntary disclosures by taxpayers with unreported income from offshore accounts.

The extension, announced by the IRS on September 21, gives taxpayers until October 15, 2009, to make a disclosure.

Under special provisions issued in March, taxpayers with undisclosed offshore accounts originally had until September 23, 2009 to come forward. Those taxpayers who do not voluntarily disclose their hidden accounts by the new deadline face much harsher civil penalties and possible criminal prosecution.

Usually if  the IRS  discovers that a taxpayer has not reported an interest in an offshore account or income on such accounts, the IRS may impose penalties of up to 50% of the balance of each offshore account for each year the account remains undisclosed. The taxpayer will also be liable for additional tax on income earned by the foreign account plus interest on the additional tax. Additional penalties may include a fraud penalty of up to 75% of unpaid taxes and a penalty equal to the greater of $100,000 or 50% of the offshore account balance for willful failure to file a Report of Foreign Bank and Financial Accounts form for each offshore account.

Making a disclosure under this program, the taxpayer will be liable for a reduced single penalty equal to 20% of the amount of the offshore account for the one day in the past six years in which the account had the highest aggregate value. However, this penalty could be reduced to just 5% under certain circumstances.

The IRS warned that it has no intention of extending the deadline and those who do not voluntarily disclose shall face the fullest of the penalties.

Untaxingly,

James Burns, Esq.

Consumers Get Insult to Injury in a Worsening Economy

I was paying my T-mobile bill today when I noticed that if I didn’t sign up for electronic billing and kept the hard copies coming in the mail I am now going to be charged $1.50 per month for the luxury of getting a bill sent to me.

As if it wasn’t bad enough, now you have companies trying to stick it to you even for the bills they need to send to you. I’m not a fan of receiving the electronic bills because I receive so many e-mails and a lot of them are junk and might miss the bill or delete it by accident. I’m old school on my billing and want it in hard copy so I can organize it in a file with dates and make sure they get paid.

This is akin to the airline practice of hitting you up extra for a bag. It started out with no more meals. OK we said, we had enough of that cardboard food anyway but it was nice to get it offered or included in the outrageous price for flying. Now they are charging you not just for an additional bag, but every bag you check; even if it is one. We need to rebel Americans and show them we’re not going to take it. Forget sending a tea bag to your public representatives, start sending tea bags to these company CEOs who allow such caustic policies to be deployed that are not consumer friendly.

If we as consumers don’t work together to show them what is unacceptable they will continue to push us down and before you know it they be billing us for our carry on bag and to bring your own meal on the flight and there will be no stop to their adverse creative ideas to bilk you.

Sincerely,

James Burns, Esq.

“THREE WAYS YOU CAN AVOID GOING BROKE IN THE NEW ECONOMY”

The first thing you can do as illustrated in “The 3 Secret Pillars of Wealth” book is take ownership of your monthly expenditures by having a family budget and a family balance sheet you observe with conviction. If you’re desirous of change, you have to do the work since the only place success comes before work is the dictionary.

Number two, if your home payments are too high because you’re job or industry has fallen off, seek a loan workout with your lender or use a law firm to assist you that has a success rate.

Mr. Burns also states that if you are carrying too much bad debt like credit cards and you’re slowing sinking into the quicksand, think about debt settlement or management services that don’t have an upfront cost and can get you from point A to point B in terms of eliminating this debt. While it may have a temporary blemish on your credit score, at least you get back to the surface where you can breathe.

Lastly, if you’re crunched for cash to invest or pay down bills, look if you or your parents have an old universal life or convertible term life insurance policy that has underperformed or is not really needed and consider having it sold in the secondary market as a life settlement.

More power solutions are available right here so stay tuned, get involved and please send in comments so we can save or pick up lives in this down economy. In numbers we are strong.

James Burns, Esq.

UBS Agreement - The End of Secret Swiss Bank Accounts

As we all heard this week UBS entered into a settlement with the U.S. Internal Revenue Service (IRS) was an upsetting blow for banking confidentiality. The issue on everyone’s mind was would UBS be in breach of Swiss banking confidentiality legislation if it were to meet the United States’ demands to hand over the names of 52,000 account holders. The Swiss Bankers Association said it expects the final agreement will be consistent with Swiss law but will it?

A day or two after the settlement it set off a worldwide fire storm to wit, a Swiss banking executive and a lawyer were charged with conspiring to defraud the U.S. and echoed a warning that the IRS is now looking beyond UBS in its international tax enforcement efforts. The banker, is Hansruedi Schumacher, and was a former regional market manager for UBS’s North America international business who later headed UBS’s cross-border business. At some point in 2002, Mr. Schumacher left UBS to conduct private banking with Zurich-based Neue Zuercher Bank, or NZB. Also, Swiss lawyer Matthias Rickenbach of the firm Rickenbach and Partners traveled regularly to the U.S. to conduct banking and investment activities (seminars) with U.S. clients.

Schumacher and Rickenbach supposedly helped their clients obtain offshore credit cards and created sham loan documents and used other nominee tactics. In addition, they purportedly falsified bank documents to generate the appearance that the assets of their U.S. clients belonged to Swiss citizens, and they falsified documents to disguise their U.S. clients’ repatriation of offshore funds as inheritances from foreign citizens; a huge no-no. One of the clients named is Jeffrey Chernick, who pleaded guilty last month to charges of evading taxes on $8 million in assets. See article here:  Jeffrey Chernick

It appears there is a worldwide currency hunt as this set off an inferno as other countries revenue authorities started their hunt for unreported monies. For instance, in the UK the Tax Chamber of the First-tier Tribunal has ordered over 300 banks to give details to the UK tax authority, HM Revenue and Customs (HMRC), about their customers who hold offshore accounts.

HMRC’s launched an amnesty theme recently which is along the lines of the IRS and reportedly netted some 60,000 individuals who were said to have come forward. About GBP400m in additional tax was raised, but a more ambitious revenue target of GBP2bn has been set.

In Ireland all is not shamrocks and pots of gold as the Revenue Commission set its sights on any undisclosed assets and. The Revenue Commission stated in a brief that taxpayers have until September 1, 2009, to deliver a Notice of Disclosure to the Revenue regarding trusts and offshore structures. Any follow-up disclosure and payment of tax due must then be made by October 31, 2009.

Then in Italy, in a television interview, the General Manager of Italy’s Revenue Agency, Attilio Befera, disclosed that there were 170,000 cases singled out within the Agency’s investigation of undeclared funds held abroad by Italians. In particular, he mentioned that the Agency has obtained 500 foreign bank account holder names from a Swiss lawyer recently arrested in Milan.

What is going on and can we invest outside of the United States without feeling like we are up to something illegal? Will they make investing abroad illegal or create so much difficulty it is not worth it, only time will tell but it feels like the land of the free is not free unless you flee.

Under IRC Section 7623 or the proverbial “Whistleblower Rewards” code, we are wondering if UBS qualifies not, despite involuntary disclosure of accounts. This code rewards 30% of the delinquent tax and if the 4,450 accounts are estimated to be worth $15 billion, then UBS could get $450 million approximately which would offset the settlement payment they have to make. What if someone made a career as a whistleblower? Wow, a couple $100 million for being the wealthiest rat on the planet.

Let us know how you feel about this assault on foreign accounts and if you have one and need assistance on making it compliant please contact my offices.

James Burns, Esq.

Tax Free Retirement Cash Flow

Overfunding is a strategy that focuses on accumulating cash in the policy rather than paying for the death benefit which is the payout to your loved one’s when you pass away. This approach leverages the highest policy premium that is allowed with the lowest life insurance death benefit so that your cash accumulation exceeds your policy net insurance costs over at least 10 years. There are fundamentally 4 steps to determining the combination of maximum premiums and minimum death benefits necessary to selecting the most leveraged indexed universal life policy:

4. Finally, you must pay close attention to the maximum premiums allowable under the  Internal Revenue Code which is referred to as the seven-pay premium limitation.[1] As long as the total premiums for any seven-year period are equal to or less than the maximum allowable premiums for the seven-pay test,[2] you’ll be able to access the cash values in the policy at any time, tax-free and relatively liquid.

In essence, a life insurance contract that fails to meet the seven-pay test will be classified as a modified endowment contract (MEC). The seven-pay test is not met if the accumulated amount paid at any time during the first seven years is more than the total of the net level premiums that would normally have been paid on or before such time if the contract provided for paid-up future benefits after payment of seven level annual premiums

Want to see if this is a fit for you? If you’re healthy it may very well be a great tool in your arsenal to slay the bailout dragon for your retirement.