IRS updates voluntary disclosure practices for hidden offshore funds

The Internal Revenue Service has updated its voluntary disclosure procedures for taxpayers with previously undisclosed funds, instituting tougher procedures. 
IRS deputy commissioner for services and enforcement Kirsten Wielobob issued a memorandum last week that the IRS posted publicly Thursday, outlining the process for all voluntary disclosures following the closing of the IRS’s Offshore Voluntary Disclosure Program on Sept. 28, 2018. She noted in the memo that the 2014 OVDP began as a modified version of the OVDP that launched in 2012 after earlier programs in 2009 and 2011. “These programs were designed for taxpayers with exposure to potential criminal liability or substantial civil penalties due to a willful failure to report foreign financial assets and pay all tax due in respect of those assets,” she wrote. “They provided taxpayers with such exposure potential protection from criminal liability and terms for resolving their civil tax and penalty obligations.” The new procedures are effective for all disclosures after Sept. 28, 2018. The penalties have grown steadily stiffer for taxpayers who continue to hide their funds in foreign bank accounts, and the latest version of the program may give taxpayers and tax practitioners pause. “Under the new procedures, taxpayers will find that the cost of making a disclosure has increased,” commented Barbara Kaplan, a tax attorney and shareholder at the law firm Greenberg Traurig, in an email from the firm. “A number of things have changed: the number of years for the program, the application of penalties, a right to go to Appeals to contest the IRS findings after examination, the making of the offshore and domestic programs the same and the requirement to include an explanatory narrative. It also appears that the examination phase is more like a true IRS audit than just a compliance review.” A fraud penalty, and a willful FBAR penalty for offshore cases where taxpayers intentionally failed to file a foreign bank account report, will now be applied to one of the six years of the disclosure period, or less if the noncompliance occurred over a shorter period of time, she noted. “Additional civil penalties can be expected,” Kaplan wrote in an email. “CI [IRS Criminal Investigation] will continue to screen all disclosures to determine if a taxpayer is eligible to make the disclosure. Once pre-clearance is granted, the taxpayer will have to disclose the nature of the non-compliance, including a narrative providing facts and circumstances, assets, entities and any related parties or professional advisors involved in the noncompliance.” That could have an impact on tax professionals who have advised taxpayers who have been hiding their funds. But taxpayers and their representatives will have to weigh the pros and cons of the new procedures. “The amended or delinquent returns will be examined and, at the end of the process, it is expected that an agreement will be reached,” said Kaplan. “Cooperation with the civil examination is required and, if not given, could lead to revocation of preliminary acceptance into the program. At the end of the day, taxpayers who afford themselves of this process will be relieved of criminal exposure but not the civil ramifications. For those who do not have criminal exposure, this program should not be used.”

140,300 new accounting and auditing jobs predicted by 2026

Approximately 140,300 new jobs for accountants and auditors are expected to be created by the year 2026, according to a new forecast.

The Knowledge Academy, a training and qualification provider, analyzed the findings from a Glassdoor report, “What’s Ahead for Jobs? Five Disruptions to Watch in 2018,” and estimated the number of jobs expected to grow the most by 2026. It found that the U.S. will see large growth in tech-related roles in non-tech industries such as finance, consulting and retail. However, many traditional jobs will also increase through the ranks as technology continues to develop.

The expected job gains come despite fears that artificial intelligence and automation will eliminate jobs in many sectors. AI is already helping the accounting, auditing and financial sectors, as well as many others. A recent study by the Pew Research Centre found that 48 percent of Americans are somewhat worried their job could be taken over by a robot and 25 percent are very worried at this prospect. Despite those fears, the unemployment rate is at its lowest point since 1969. According to the U.S Bureau of Labor Statistics, the unemployment rate in October was 3.7 percent, with the number of unemployed people in the U.S. around 6.1 million.

Besides accounting and auditing, other sectors are expected to gain an even greater number of jobs by 2026, according to The Knowledge Academy. They include home health and professional care aides (1.1 million new jobs), waiters, food service and cooks (907,700 new jobs), registered nurses (437,000 new jobs), software developers (253,400 new jobs), janitors and cleaners (233,000 new jobs), operations managers (205,900 new jobs), medical assistants (184,600 new jobs), nursing assistants (164,000 new jobs), and construction laborers (153,300 new jobs).

Cómo Miami se convirtió en la capital de la clase media de América Latina

Mientras muchos inmigrantes llegan a Estados Unidos a pie por la frontera con México, otros, con más recursos se instalan en la ciudad más hispana del país en busca de seguridad y prosperidad.

Desde hace años, Miami es un paraíso de sol, playa, fiesta y compras. Pero la capital más latina de Estados Unidos no sólo atrae a turistas, sino también a latinos profesionales y pudientes que buscan proteger sus inversiones y una vida tranquila.

Mientras miles de inmigrantes pobres tratan de cruzar a Estados Unidos por la frontera sur de México, otros, mucho más pudientes, llegan a Miami sin atraer tanta atención mediática y sin tanta polémica.

Armados con permisos de trabajo, con mayor formación que los latinos que llegan a pie por la frontera, con altas expectativas y deseos de avanzar, muchos de ellos llegan a Miami y compran casas con piscina, jardín y acceso a buenas escuelas.

Mientras el candidato republicano a la presidencia Donald Trump promete construir un muro a lo largo de la frontera con México, apenas se habla de los migrantes que llegan a Miami, una metrópolis de 2,5 millones de habitantes, en la que casi el 70% de la población es hispana.

El español se habla en casi todas las partes y la mayoría lo asume sin verlo como un problema.

Puente entre culturas

Juan Pablo Restrepo es de Colombia. Vive con su mujer y su hijo cerca a la playa. Trabaja de curador musical en Mood Media, una compañía que suministra música que se escucha en los comercios en todo el país.

"Miami es muy atractivo para los latinoamericanos. Pueden estar en Estados Unidos, con todas su ventajas, pero al mismo tiempo mantener su raíces culturales", dice Restrepo a BBC Mundo.

"También es un puente entre ambas culturas, la anglo y la hispana. Si vas a otros lugares en el país, sientes mucho más las tensiones raciales y culturales".

Restrepo es parte de la diáspora latina que ha convertido Miami en la ciudad de Estados Unidos con el mayor porcentaje de residentes nacidos fuera del país, cerca de un 51% de la población, según Guillermo Grenier, profesor de Sociología de Florida International University.

"Los cubanos comenzaron a llegar (después de la Revolución) en 1959 y después de eso fueron llegando latinos desde diferentes países", dice Grenier.

En los últimos años han seguido a los cubanos cerca de 100.000 latinoamericanos de ingresos medios desde Colombia, Argentina, Venezuela y Brasil, entre otros, dice el sociólogo a BBC Mundo.

"Si eres un empresario de América Latina puedes venir a Miami, porque tienes una audiencia, un mercado. Puedes hacer cinco llamadas en español y establecer la infraestructura para tu negocio", añade, y subraya que cerca del 25% de los negocios en el estado de Florida son de propiedad de inmigrantes latinoamericanos.

IRS provides info on tax reform changes to moving, mileage and travel expenses

The Internal Revenue Service offered information Friday about changes from the Tax Cuts and Jobs Act on the rules for moving expenses, vehicle expenses and unreimbursed employee expenses, along with higher depreciation limits for some vehicles.

The TCJA, the tax overhaul that Congress passed last December, suspends the deduction for moving expenses for tax years beginning after Dec. 31, 2017, until Jan. 1, 2026. During that suspension period, the IRS won’t allow deductions for use of an automobile as part of a move using the mileage rate listed in Notice 2018-03. However, the suspension doesn’t apply to members of the armed forces on active duty who move because of a military order related to a permanent change of station.

Unreimbursed employee expense deduction

The new tax law also suspends all miscellaneous itemized deductions subject to the 2 percent of adjusted gross income floor. The change has an impact on expenses such as uniforms, union dues and the deduction for business-related meals, travel and entertainment that the employer isn’t reimbursing.

That means the business standard mileage rate listed in Notice 2018-03, which was issued before the tax overhaul passed, can’t be used to claim an itemized deduction for unreimbursed employee travel expenses in taxable years starting after Dec. 31, 2017, and before Jan. 1, 2026. The IRS issued revised guidance on the matter Friday in Notice 2018-42. It supersedes the earlier notice and includes info about the update to the standard mileage rates, along with details about the suspension of the deduction for operating a vehicle for moving purposes.

2018 standard mileage rates

In Notice 2018-03, which the IRS issued earlier this year, the standard mileage rates for use of a car, van, pickup or panel truck for 2018 remain:

- 54.5 cents for every mile of business travel driven, a 1 cent increase from 2017.

- 18 cents per mile driven for medical purposes, a 1 cent increase from 2017.

- 14 cents per mile driven in service of charitable organizations, which is set by statute and remains unchanged.

The standard mileage rate for business comes from a yearly study of fixed and variable costs of operating an automobile, while the rate for medical purposes depends on variable costs.

Taxpayers can opt to calculate the actual costs of using their vehicle instead of using the standard mileage rates.

A taxpayer can’t use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System or after claiming a Section 179 deduction for that vehicle, however. On top of that, the business standard mileage rate can’t be used for more than four vehicles simultaneously.

Increased depreciation limits

The new tax law ups the depreciation limitations for passenger automobiles that have been placed in service after Dec. 31, 2017, for purposes of calculating the allowance under a fixed and variable rate plan. The maximum standard automobile cost can’t exceed $50,000 for passenger automobiles, trucks and vans that have been placed in service after Dec. 31, 2017. Prior to the change, the maximum standard automobile cost was $27,300 for passenger automobiles and $31,000 for trucks and vans.

IRS details new reporting requirements for life insurance

The Internal Revenue Service spelled out new information reporting requirements Thursday for some life insurance contracts under the recently enacted Tax Cuts and Jobs Act.

The new requirements will apply to reportable death benefits paid, along with reportable policy sales, that were made after Dec. 31, 2017. The IRS provided transitional guidance Thursday postponing any reporting under Section 6050Y of the tax code until the final regulations are issued. The transitional guidance gives taxpayers some extra time to satisfy any reporting obligations that could occur before the IRS and the Treasury publish the final regulations.

Information returns have to be filed in the situations below, according to the IRS:

- By anyone who acquires a life insurance contract, or any interest in a life insurance contract, in a “reportable policy sale”;

- By an issuer of a life insurance contract upon notice of a transaction required to be reported above or upon any notice of a transfer of a life insurance contract, or any interest in a life insurance contract, to a foreign person; and

- By any payor of “reportable death benefits.”

A “reportable policy sale” is usually the acquisition of an interest in a life insurance contract, either directly or indirectly, if the acquirer has no substantial family, business or financial relationship to the insured. A “reportable death benefit” is an amount paid when an insured person dies under a life insurance contract that was transferred in a reportable policy sale.

The IRS is asking for public comments on the proposed regulations to implement the new reporting requirements.

‘Sure things’ in tax reform

As Congress prepared to begin the process of reconciling its various tax reform bills in the first week of December, the final shape of the Senate’s Tax Cuts and Jobs Act gave important clues as to the shape the changes to the Tax Code may ultimately take.

In the run-up to the passage of the bill at 2 a.m. on Saturday morning, the Senate made a number of changes to its original proposal, many of them aimed at bringing it more into line with the House proposal that passed in mid-November, and others aimed at addressing the concerns of individual Republican senators.

With those changes as a guide, it’s possible to compare the two acts and get a much clearer idea of where Congress can – and can’t – reach a consensus. With that in mind, here are six things that are highly likely to be part of any final tax reform legislation.

1. Lower corporate tax rates. Lowering the overall rate for businesses is a core goal of GOP leaders, and is included in both the Senate and House bills. The aim of both is to take the overall rate from 35 percent down to 20 percent; the Senate nixed a proposal to raise the rate to 22 percent. That said, the House proposal would institute the cuts immediately, while the Senate would postpone them for a year.

2. An increased standard deduction. Both bills would significantly boost this to $12,000 for individuals and $24,000 for married couples.

3. Goodbye to the personal exemption. The House and the Senate agree on eliminating the current $4,050 personal exemption that taxpayers can claim for themselves, their spouses and each of their dependents.

4. A higher estate tax exemption. Both the House and Senate bills double the size of estates that are subject to the estate tax – from $5.5 million to $11 million. The House wants to kill the so-called “Death Tax” entirely after six years, however, while the upper house wants to leave it in place.

5. Keeping a rump of the state and local tax deduction. The Senate bill had originally eliminated all deductions for state and local taxes; Sen. Susan Collins, R-Maine, championed keeping a $10,000 deduction for state and local property taxes (but not income or sales taxes). This brought the Senate bill in line with the House proposal.

6. Taxing assets held abroad. The House would tax corporations on cash held abroad at 14 percent, at 7 percent on non-cash assets. The Senate bill originally had lower rates, but raised them to get more in line with the House.

Starting a business from home. Legal, tax and financial conerns

It is easy for just about anyone to start a business from home. Whether people have left an office job because of downsizing or retirement, or have chosen to star a sideline activity for extra income, working from home reduces startup costs and may provide personal benefits (e.g., managing child care). 

Technology enables an entrepreneur working in a home office to connect with customers, clients, and other business associates around the world. 

The Small Business Association's Office of Advocacy reported in March 2014 that 52% of all business in the United States are home based. The ease of starting a home business does not, however, detract from the various legal, tax, and financial concerns that must be addressed.


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