Here they come… IRS Builds New International Tax Group

The IRS has started putting together a new group to focus on international tax issues, including offshore bank accounts used to evade taxes.

An IRS unit that deals with large corporations and large partnerships has posted job openings for several positions in a new group that will “focus on examinations involving the complicated business arrangements and entities controlled by the high-wealth taxpayer segment,” according to IRS spokesman Frank Keith.

It shows the agency is “taking this very seriously,” says Roy Black, an attorney at Black, Srebnick, Kornspan & Stumpf.  The IRS looks to be assembling a “more sophisticated” group of examiners for the group, judging from the job postings, Black adds.

The group was formed to follow on a pledge by IRS Commissioner Doug Shulman to beef up international tax compliance, partly through a crackdown on people who use offshore accounts to evade taxes. President Obama’s 2010 budget earmarked extra IRS funds for this purpose.

IRS spokesman Keith said it would “be premature at this time to discuss further specifics” of the group that’s being formed.

 

I think the IRS should open up more than one phone line for international entities and actually have their officers be patient and understanding that those who are calling from say, Canada, may not understand the IRS way of operating and may need some tender love and care.  As it is, they come across on this line, from Pennsylvania, as being pompous, arrogant know-it-alls, unwilling to take a few minutes to explain anything to the callers.

At least that is my impression in the dozens of times I have called this line and spoke to a Mr. Jones, Mr. Smith or Agent 345678.

Is it too much to ask for some customer service too… Not everyone calling is a criminal!

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IRS Qualified Intermediary (QI) – Know Your Client Rules

Logo of the Internal Revenue Service
Logo of the Internal Revenue Service (Photo credit: Wikipedia)

List of Approved Know-Your-Client Rules

Revenue Procedure 2000-12 states that the IRS will not enter into a qualified intermediary (QI) withholding agreement that provides for the use of documentary evidence obtained under a country’s know-your-customer rules if it has not received the know-your-customer practices and procedures for opening accounts and responses to 18 specific questions listed in the revenue procedure.This document lists those countries that have submitted know-your-customer rules and those rules have been approved.The QI agreement contains an attachment that lists the specific types of know-your-customer documentary evidence for each country that is sufficient for purposes of the QI.  The IRS is working together with the organizations that have submitted acceptable know-your-customer rules to develop standardized attachments.  The attachments can be seen here as soon as they are available.

If a country is on the approved list, entities and branches located in that country may submit their QI applications. Once a specific attachment has been developed for a particular country, the IRS will associate the attachment with the QI agreement it sends for signature. A QI may suggest amendments to the attachment, but departures from the standardized attachment may delay processing of an application.

To determine whether the know-your-customer rules that have been submitted to the IRS cover a particular QI applicant, the applicant should look to the specific country attachment. For example, in some countries, different rules apply to banks and brokers. A QI applicant that is a bank or a broker should verify that the know-your-customer rules that have been submitted cover all the rules applicable to that applicant.

For a list of countries, follow this URL: http://www.irs.gov/businesses/international/article/0,,id=96618,00.html

In-TAX-icating

In-TAX-icating.

Definition:

a: To excite or stupefy by taxation to the point where physical and mental control is markedly diminished

b: to excite or elate to the point of enthusiasm or frenzy… about taxation.

Passionate about Taxation.  Passionate about helping you!

Could a Canadian FATCA be in the works?

Since this case broke in February, governments around the world have been investigating the possibility that their citizens have offshore accounts set up mainly to avoid paying taxes.  Germany, which as of late 2008, is leading the international crackdown on tax evaders, has reportedly collected up to 250 million euros from more than 200 tax evaders who have turned themselves in, and  from 330 citizens who wrongly believed they were on the list of accounts stolen from LGT Group (the largest family-owned private wealth and asset manager in Europe, owned by the Prince of Liechtenstein and thought by many to be the factor behind the US crackdown on tax evasion through their FATCA legislation.

When prompted for a comment regarding Canadians, the CRA refuses to comment.

The CRA would not even throw the press a bone by offering how many Canadians are involved, if the CRA is investigating, and if the CRA would accept voluntary disclosure from those involved in order to help them come clean without the fear of penalties and / or prosecution.

One can wonder if the silence is a result of a crack team of CRA staff who have known about and are working on resolving the Canadians attached to this list, or whether this whole situation came out of left field and the CRA is scrambling to get more information before they can respond publicly.

For those of you who are unaware, this came to light when in February when a former LGT computer technician name Heinrich Kieber stole and sold account information of about 1,400 wealthy clients to the German foreign intelligence service, the Bundesnachrichtendienst.  Germany then shared the data with other countries which triggered an international crackdown on tax evasion.

Kieber, for his part, has been given a new identity and placed in witness protection in an undisclosed country.  During a hearing in the US, surrounding US citizens’ use of banks in Liechtenstein and Switzerland, Kieber answered questions and outlined the extensive efforts and schemes enlisted by the bank to ensure secrecy.

Swiss banks will now refuse to hold offshore money from US citizens and the US plans on suing the bank.  This is just the beginning!

Should Canada follow the lead of other countries investigating their citizens who have accounts in Liechtenstein?   Those countries have made public the number of people who have stepped forward and declared their offshore income.  Is there is reason why Canada remains quiet?

Only time will tell.