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United States v. Paul Manafort and Robert Gates: An Offshore Tax Evasion Case

Houston Tax Attorney

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United States v. Paul Manafort and Robert Gates: An Offshore Tax Evasion Case

On October 27, 2017, the Government filed criminal charges against former Trump aides, Paul J. Manafort and Richard W. Gates, III. While these are only allegations and all defendants should be considered innocent until otherwise proven, the case provides some important lessons in offshore compliance cases. I expect that many with undisclosed offshore assets will be unnerved by this case, but hopefully by understanding the particular facts in this case, such individuals won’t jump to conclusions about the best way to proceed in their situation.

There are a number of federal charges in the case, so I will try to discuss only the facts as they relate to offshore tax non-compliance.

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IRS Audits of Streamlined Applications

Houston Tax Attorney

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IRS Audits of Streamlined Applications

A question that’s asked by every client in a streamlined compliance filing is: “will I get audited?” This article will hopefully shed some light.

Here’s what the IRS says:

Returns submitted under either the Streamlined Foreign Offshore Procedures or the Streamlined Domestic Offshore Procedures will not be subject to IRS audit automatically, but they may be selected for audit under the existing audit selection processes applicable to any U. S. tax return and may also be subject to verification procedures in that the accuracy and completeness of submissions may be checked against information received from banks, financial advisors, and other sources.

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Foreign Life Insurance Taxation

Houston Tax Attorney

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Foreign Life Insurance Taxation

Life insurance can be good way to ensure that loved ones are taken care of in the event of an unfortunate situation. However, owning a foreign life insurance policy with cash value can prove to be more of a headache than it’s worth. We’ve come across such types of investments regularly in our offshore compliance cases; the reporting and tax obligations can be burdensome. Hopefully, this article will help foreign insurance policy owners understand their U.S. tax obligations.

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Willfulness vs. Non-willfulness

Houston Tax Attorney

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Willfulness vs. Non-willfulness: Offshore Compliance Cases Involving Immigrants

Nearly on a daily basis I get a call or email from a potential client with this almost exact same scenario:

Client from Country A moves to the U.S. and leaves behind some accounts and assets in Country A. Client finds out about FBAR filing requirements and learns that foreign income must be reported on the U.S. return. 

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IRS Tax Amnesty & Voluntary Disclosure Practice

Houston Tax Attorney

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IRS Tax Amnesty & Voluntary Disclosure Practice

What do you do if you have committed a serious tax crime but the IRS has not yet discovered it? Tax amnesty has been a longstanding practice of the IRS Criminal Investigation division whereby taxpayers are allowed to make timely, accurate, and complete voluntary disclosures to avoid criminal prosecution.

Taxpayers are given tax amnesty for “coming clean” regarding their tax crimes. There are two such programs depending on whether the tax evasion involves domestic or foreign income:

  1. Domestic Voluntary Disclosure Program (not to be confused with streamlined domestic offshore procedures which is a completely unrelated program)
  2. Offshore Voluntary Disclosure Program (OVDP)

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Casualty Loss Deductions

Houston Tax Attorney

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Hurricane Harvey & IRS Casualty Loss Deduction

As Houston recovers from what some consider to be a 1 in 1,000 year event, only 15% of Houston residents are protected by flood insurance. Undoubtedly, there will be massive personal and business losses. A casualty loss deduction on your tax return can help offset some the cost of repairs. The first few weeks after a natural disaster are very important in properly documenting a casualty loss claim and here are some important things you need to know for tax purposes.

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Gifts from Foreign Persons

Houston Tax Attorney

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IRS Form 3520 – What are the Reporting Requirements and Tax Consequences of Receiving a Gift from a Foreign Person?

It is a common scenario where a U.S. person receives a gift from a parent or relative who lives abroad. Such transactions usually trigger a Form 3520 filing requirement. There are two steps to determining the tax and reporting consequences of such transactions.

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Community Property and Tax Liabilities

Houston Tax Attorney

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Community Property and IRS Tax Liabilities

What is Community Property?

Texas is a community property state, which means that all “community property” is owned jointly and equally by both spouses.  In Texas, all property accumulated during marriage is community property unless it is received by gift, devise, or inheritance.  Tex. Fam. Code Ann. § 5.01.  Even income derived from separate property—including interest and dividends from separately owned securities—is considered community property.  Commissioner of Internal Revenue v. Chase Manhattan Bank, 259 F.2d 231, 239 (5th Cir. 1958), cert. den., 359 U.S. 913 (1959).  Texas’s community property laws can have unusual implications for married couples’ federal income tax liabilities.

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What Happens After an IRS Audit?

Houston Tax Attorney

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What Happens After an IRS Audit?

Clients often come to us after going through an IRS audit and receiving a large tax bill. They either represented themselves or hired someone who did not represent them effectively. This article is not about audit representation, but rather the steps that occur after an audit has concluded, and what taxpayers can do to challenge an audit determination. Read more

IRS Form 8938 Filing Requirements

Houston Tax Attorney

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IRS Form 8938 (FATCA) Filing Requirements

The “FATCA” (Foreign Account Tax Compliance Act) provisions require specified individuals to report ownership of specified foreign financial assets if the total value exceeds the applicable reporting threshold. The IRS created Form 8938, Statement of Specified Foreign Financial Assets, for this purpose. Form 8938 must be included with the individual’s tax return. Failure to include the Form 8938, if required, could lead to significant penalties. Note that the Form 8938 is also referred to as “FATCA” which can cause confusion since that term also refers to the regulations themselves. Read more