24 Jul Denver IRS Practitioner Meeting July 2014 – A Summary Review with Excellent References for FBAR and FinCEN Matters
Meeting Summary as produced by IRS Senior Stakeholder Liaison Deborah Rodgers
Nancy Carver, IRS Local Area Counsel
Counsel continues to assist in training employees on partnership audits, and TEFRA. Counsel is also assisting in the investigations of promoters.
Virtual currency is on the radar for Internal Revenue Service.
Controlling ID Theft is a task that continues to use a lot of IRS resources.
Conservation easements are overvalued and continue to be a problem.
Counsel has a busy calendar in December. Denver is fully staffed, despite many retirements nationwide.
Stephanie Valencia, Taxpayer Advocate
Taxpayer Advocate is working on the Marijuana Banking issue. They are trying to get legislation changed to allow banks to operate with the marijuana businesses without fear of reprisal from the federal government. That will require a change to Code Section 280E.
A stop gap measure that will keep marijuana businesses from being penalized for depositing cash will soon be available through Taxpayer Advocate’s involvement
Tammy Hobson, ACS
Atlanta, Kansas City and Denver ACS call sites were working Accounts Management call sites for 1 ½ years. All ACS call sites are back to normal operations.
ACS support inventory is over 10,000 cases, in which 8700 of those cases are overage. Denver along with Des Moines, Brookhaven and Philadelphia are charged with working the backlog of cases.
Internal Revenue Service will be combining SBSE and W&I ACS call sites early next year.
The Toll Free number for Identity Theft is 1-800-908-4490
The Identity Theft form is 14039
Michael Rogers, Governmental Liaison
Governmental Liaison is working Congressional inquiries on refund scams. They are implementing a memo of understanding with the Department of Corrections to stop prison fraud.
The top congressional cases received include, Tax Exempt status, Affordable Care Act (ACA), and ID Theft.
IMPORTANT changes for FBAR Filers:
Effective July 1, 2013, filers must electronically file the FBAR through the BSA E-File System. If unable to E-file, filers may contact the FinCEN Regulatory Helpline at 800-949-2732 to request an exemption.
There is no need to register or login to the system in order to file the Individual FBAR. Go to http://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html to file an individual FBAR.
Institutions, businesses, and professional preparers batch-filing multiple FBARs must sign up for Bank Secrecy Act (BSA) E-Filing, at http://bsaefiling.fincen.treas.gov/Enroll_Now.html, and establish an account before being able to use the electronic filing service.
Help in completing the FBAR is available Monday – Friday, 8 a.m. to 4:30 p.m. Eastern Time, at (866) 270-0733 (toll-free inside the U.S.) or (313) 234-6146 (not toll-free, for callers outside the U.S.). Questions regarding the FBAR can be sent to FBARquestions@irs.gov. Filers residing abroad may also contact U.S. embassies and consulates for assistance.
For E-Filing system questions, call the FinCEN E-Filing Help Desk at (866) 346-9478, option 1 (M-F, 8-6 Eastern time) or email at BSAEFilingHelp@fincen.gov.
A detailed technical review (PPT 1MB, 09/2013) of the new FBAR electronic filing requirements is available on the FinCEN website, including an explanation of the new FBAR FinCEN Form 114 (PDF 190KB).
FBAR is an information report required when:
A US Person owns or has signature or other authority over foreign financial accounts
o Worth over $10,000
o In any calendar year.
Congress set up the penalties because some taxpayers use these accounts to evade US taxation. This report is also an important money laundering tool. FBAR penalties promote voluntary compliance.
FBAR Penalty Mitigation Guidelines
LB&I FBAR Field Support – A list of technical specialists responsible for providing FBAR technical support for LB&I examiners.
LB&I Division Counsel FBAR Coordinators – LB&I examiners must submit FBAR case to Counsel for concurrence, if penalties exceed the maximum $10,000 non-willful penalty (in other words, only if willful penalties are recommended).
IIC Cases: Counsel review of FBAR Penalties for IIC cases is required since there is no special agreement. See IRM 22.214.171.124.3, Closing Cases with FBAR Penalties.
FinCEN Notice 2011-1 (PDF), revised 6/6/2011 granted an extension to June 30, 20012 on 2010 and prior years for an employee or officer with only signature authority on foreign accounts of certain foreign subsidiaries under 31 CFR § 1010.350(f)(2)(i)-(v).
FinCEN issued Notice 2011-2 (PDF), 6/17/11 granted an extension to June 30, 20012 for officers and employees of investment advisors registered with the Securities and Exchange Commission having only signature or other authority in certain foreign financial accounts.
Notice 2011-54 (6/16/2011) Further extends the filing date until November 1, 2011 for individuals with only signature authority whose filing requirements were properly deferred under Notice 2010-23 or Notice 2009-62. This extension only applies to reports for the 2009 or earlier calendar years. This Notice did NOT extend the reporting deadline for calendar year 2010.
Notice 2010-23 Further extends the filing date to June 30, 2011 for U.S. persons having only signature authority over the foreign account for 2010 and prior calendar years. The Notice also waives the filing requirement for calendar year 2009 and earlier calendar years for persons who have a financial interest in a commingled fund (foreign hedge fund or private equity fund) that is not a mutual fund. FBAR requirements still apply to foreign mutual funds. Notice 2009-62 is modified.
Announcement 2010-16 Continues the suspension for the FBAR filing requirements due on June 30, 2010 for the 2009 and prior calendar years for persons who are not U.S. citizens, U.S. residents or domestic entities. Announcement 2009-51 is supplemented and superseded.
Revised FBAR Regulations (PDF 103 KB) – 31 CFR Part 1010 – Section 1010.350 (FR Doc. 2011-4048) Published 2/24/2011 and effective March 28, 2011 for reports (FBARs) required to be filed by June 30, 2011 relating to accounts maintained during calendar year 2010 and subsequent years. Filers who properly deferred filing under Notice 2011-54 and Notice 2010-23 apply these final regulations in determining their FBAR filing. The FBAR form and instructions (PDF) have been revised to reflect the amendments made by the final regulations.
Notice 2011-31 provides guidance to taxpayers regarding how to answer questions related to foreign financial accounts (FFAs), found on 2010 federal income tax and information returns, e.g., Schedule B of Form 1040, and Schedule N of Form 1120, among others, etc. For tax returns filed after March 28, new Regs, Form and Instructions may be used. For returns filed prior to March 28, 2011 can reference old Regs or new Regs and instructions.
Kenneth Cooper, Examination
Exam continues a strong emphasis on identifying and stopping abusive tax schemes and abusive preparers through use of our Lead Development Center (LDC).
Exam conducts promoter/preparer investigations that may result in penalties and injunctions.
o Leads for investigations are received from internal and external sources including tax professionals.
o The Lead Development Center works closely with the Wage & Investment Division and the Return Preparers Office to identify questionable preparers.
o Exam also conducts parallel investigations where Criminal Investigation and Examination conduct separate but contemporaneous investigations
Offshore Tax Evasion – OVDI
Stopping offshore tax cheating and bringing individuals, especially high net-worth individuals, back into the tax system has been a top priority of the Internal Revenue Service for several years.
IRS offshore voluntary disclosure programs are designed to encourage taxpayers with undisclosed offshore assets to become current with their tax liabilities. The programs have been part of a wider effort to stop offshore tax evasion, which includes enhanced enforcement, criminal prosecutions and implementation of third-party reporting via the Foreign Account Tax Compliance Act (FATCA).
The voluntary programs began in 2009. Overall, the three voluntary programs (2009, 2011 and 2012) have resulted in more than 45,000 voluntary disclosures from individuals who have paid about $6.5 billion in back taxes, interest and penalties.
OVDI certifications are being worked by SB/SE and LB&I. Exam is working the treaty cases and any cases from the private banking initiatives as examinations. These exams will address the impact of all offshore accounts and the full range of examination techniques will be utilized. Each case will be decided based on the facts of that case, including expansion to all periods of non-compliance, as appropriate. Penalties (for both Title 26 and 31) will be pursued, as appropriate.
2014 Changes to Offshore Programs
In June 2014, the IRS announced major changes in the 2012 offshore account compliance programs, providing new options to help taxpayers residing in the United States and overseas. The changes are anticipated to provide thousands of people a new avenue to come back into compliance with their tax obligations.
With the expansion of the streamlined procedures for non-willful taxpayers, the IRS will also adjust the terms for taxpayers participating in the OVDP, whose conduct may reflect willful non-compliance. The changes modify the OVDP program to make it suited for taxpayers seeking relief from potential criminal prosecution.
IRS.gov has much more information on the changes to the current program; see News Release IR-2014-73, June 18, 2014; and Fact Sheets FS-2014-6 andFS-2014-7, June 2014:
IRS Makes Changes to Offshore Programs; Revisions Ease Burden and Help More Taxpayers Come into Compliance
Offshore Income and Filing Information for Taxpayers with Offshore Accounts
IRS Offshore Voluntary Disclosure Efforts Produce $6.5 Billion; 45,000 Taxpayers Participate