Gary S. Wolfe, Esq.

U.S. Taxpayers with UBS accounts face civil tax audit risk. If UBS transfers account information to U.S. Taxpayers (as proposed) the IRS may then commence a civil tax audit (under a 6 year statute of limitations).

On Thursday, March 18, 2010 President Obama signed the Hiring Incentives to Restore Employment Act (H.R. 2847). Included in the bills' provisions is the Foreign Account Tax Compliance Act.

Each U.S. person who has a financial interest in, or signature or other authority over, one or more foreign financial accounts (valued over $10,000, at any time during a calendar year) is required to report the account on Schedule B/Form 1040, and TD F 90-22.1 (Report of Foreign Bank and Financial Accounts (FBAR)), due by June 30 of the succeeding year.

Form TD F 90.22-1 is required to be filed by every U.S. person for each calendar year in which such person has a financial interest in, or signature or other authority over, any foreign financial accounts with an aggregate value exceeding $10,000 at any time during the calendar year.

Section 165 of the Internal Revenue Code of 1954 provides for the deduction of losses arising from theft. The term Theft . . . converting any criminal appropriation of another’s property to the use of the taker, particularly including theft by swindling, false pretenses, and any other form of guile.

A Federal program known as EB-5 (Immigrant-Investor Visa), administered by the U.S. Citizenship & Immigration Services (“USCIS”), encourages foreign investors to invest their way to living in the U.S.A.

This type of Visa will be particularly valuable for foreign nationals who wish to visit the United States for up to 122 days per year (less than 183 days in any one year), and who do not require a Green Card (in order to avoid U.S. income taxation on their world-wide income). The E-2 Visa is particularly suited for international investors who would like a second home in the U.S.

On 3/17/09, IRS Commissioner Doug Shulman told the Senate Finance Committee: ". . . Thousands of Taxpayers have been victimized by dozens of fraudulent investment schemes. These too-good-to-be-true investment uses have often taken the form of so-called "Ponzi schemes" (i.e., the fraud perpetrator promises investments returns, some or all of which are fictitious)...

Any U.S. Person who controls a foreign partnership during the tax year must file a Form 8865 (for a partnership). (IRC §6038.) This form must be filed with the U.S. Person's timely filed federal tax return (including extensions).

Recent Senate reports reveal $100 billion dollars a year not being paid in US taxes for assets held offshore by US taxpayers. The following is a summary of penalties and fines for Tax Payers and Tax Preparers re: unreported income.