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Financial crime investigations, part 2: Money laundering and the BSA

In the first part of this post, we noted that the Criminal Investigation (CI) division of the IRS is involved in the investigation of several financial crimes that do not directly involve tax law. These crimes include fraud, money laundering and violations of the Bank Secrecy Act.

In our September 15 post, we gave an example of how allegations of money laundering and tax evasion can become bargaining tools for prosecutors when included in an already-long list of charges.

Rand Paul and Expats Suffer Setback in Suit to Overturn FATCA

Senator Rand Paul and a group of American expatriates suffered a huge setback in their attempt to overturn the Foreign Account Tax Compliance Act (FATCA), as the judge denied their motion for preliminary injunction, saying that they lack standing for the suit and are unlikely to succeed on the merits.

Enacted in 2010, FATCA is a federal law requiring foreign financial institutions to provide information about U.S. account-holders to the United States government on an annual basis. Since the law was enacted, the US government has negotiated intergovernmental agreements (IGAs) with more than 100 countries to implement the law, including most of the world's prominent tax havens.

Belize Next on IRS Radar

The IRS has served John Doe summonses to a number of banks in Belize, seeking information about American account holders, as the U.S. federal government continues its onslaught against offshore tax evasion. Long known as a tax haven, Belize has been a popular destination for wealthy individuals seeking to avoid taxes by holding assets offshore.

A John Doe Summons is a summons that seeks information about taxpayers whose identities are unknown to the U.S. government. It was a John Doe Summons issued to UBS in 2008 that pierced the veil of secrecy related to Swiss bank accounts. A federal judge in the Southern District of Florida approved this new summons related to financial institutions in Belize, which seeks documents related any U.S. taxpayers who, at any time during 2006-2014, directly or indirectly had interests in or signature authority over accounts maintained at or managed by Belize Bank International Limited, Belize Bank Limited, or Belize Corporate Services Limited, as well as their predecessors, subsidiaries, and affiliates. 

How do alimony payments affect your taxes?

Many states have moved away from using the term "alimony" for court-ordered payments from one former spouse to another to provide financial support in cases of separation or divorce. But whatever these payments are called -- alimony, spousal maintenance, spousal support or something else -- they do have tax implications.

How do alimony or spousal support payments affect taxes? In this post, we will address that question.

IRS Expands List of Foreign Facilitators

Over the summer, the IRS continued its fight against offshore tax evasion by reaching nonprosecution agreements with dozens of Swiss banks, bringing the total list of "facilitators" to nearly fifty. This list should continue to grow over the next few months. As part of the new reforms made to the ongoing Offshore Voluntary Disclosure Program (OVDP), individuals with one or more accounts at a bank included on this list must pay an increased offshore penalty of 50%, rather than the usual 27.5% that has been required since 2012.

In 2009, the IRS offered its first Offshore Voluntary Disclosure Initiative, an opportunity for taxpayers with undisclosed foreign accounts to voluntarily come into compliance and pay a civil penalty, in exchange for immunity from prosecution. Due to the success of the program, it was offered again in 2011. In 2012, the current OVDP was opened on an indefinite basis.

Audits are becoming more and more rare in the U.S.

Nobody wants to be audited by the IRS, but most taxpayers have had nightmares of an agent showing up at their door, asking a lot of questions about their tax returns. While it is natural to worry about an audit, the reality is that audits are increasingly rare.

As CBS News reports, in 1963, the IRS audited about 5.6 percent of taxpayers. Fifty-two years later, that rate has dropped to less than 1 percent. This is due to declines in the IRS workforce, changes in the tax code, and other factors.

Investigating financial crimes, part 1: What is the IRS role?

Financial crimes such as fraud, money laundering or violations of the Bank Secrecy Act do not necessarily relate directly to tax law. Why then is the Criminal Investigation division of the IRS involved in enforcing these laws?

In this two-part post, we will address that question. In part one, we will take note of some of the key responsibilities of the Criminal Investigation (CI) division. In part two, we will look specifically at the IRS's role in money laundering investigations.

Investment losses, part 2: What is tax-loss harvesting?

Let's continue the discussion of tax losses we began in our previous post.

As we noted last week, tax laws allow for certain deductions for investment losses. In this part of the post, let's look at an example of a sophisticated strategy called tax-loss harvesting that some taxpayers use to make the most of these deductions. What is this exactly?

Making the most of investment losses, part 1: deduction limits

In tax planning as in life, success isn't always about big victories. In many cases, it involves making the most of your losses.

This can occur, for example, in the context of making proper use of tax deductions for casualty losses. We discussed that issue in our June 26 post.

Offer in Compromise Acceptance Rate Hits a New High

Newly released statistics show that the IRS has been accepting Offers in Compromise at a higher rate than at any other time during the 21st century. During 2013 and 2014, the IRS accepted 40% or more of all submitted offers.

An Offer in Compromise (OIC) is essentially an offer by a taxpayer to settle tax debt for less than the full amount owed. You have probably heard commercials on TV and the radio from companies promising to help settle tax debt with the IRS "for pennies on the dollar." Many of these nationally advertised tax resolution firms have been forced out of business by consumer protection laws, due to their false advertising.