Our live Federal Tax Amnesty Webinar, recorded on September 15th. Below is the video and transcript. Be sure to check back in for additional live webinars!
Hi, this is Anthony Parent of Parent & Parent LLP, IRSMedic. And in this video we’re gonna go over a quick overview of Federal Tax Amnesty Programs and how everything works.
So what we’re gonna cover today is some of the prerequisites, that is some of the things that you need to do before you start thinking about which program is good for you. We’re gonna talk about Federal Tax Amnesty with those with some tax evasion exposure and also amnesty for those millions of people with little or no tax evasion exposure.
The first thing I wanna talk about is current compliance. Are you in current compliance? Are you currently filed? Are there any estimated taxes you’re paying? The reason I bring it up is I’ve seen a lot of criminal prosecutions go on where an IRS agent is really trying to not prosecute a tax payer. They’re trying to give him every chance they really don’t want to prosecute this person and they’re saying, “Please get into current compliance.” We knew the tax payer doesn’t quite understand what’s going on and they’re just digging a deeper hole.
If you wanna get your tax problem behind you, you need to stop doing whatever is causing the problem in the first place and that means get into current compliance. Well, once the IRS sees that things change, because now your ongoing tax problem becomes something that’s in the past. And so that’s a critical step if you’re trying to find some relief from tax worries.
Now I wanna talk about amnesty for those with actual tax evasion exposure. There are those without foreign income, and there’s some programs for them. And then for those with unreported foreign income. And the first one I’m gonna talk about is for those without foreign income.
If you have, if you’re concerned about tax evasion charges that you may be – if you filed a tax return that didn’t include all your income and you kind of did that on purpose, what you’d be looking for if you had a legal opinion, yes you do have some criminal exposure, is just standard voluntary disclosure. And that process works like this; you send a letter to an IRS criminal investigator and say, “I wish to come clean.” And they’ll accept it or not – they’ll tell you whether or not you’re under investigation. If you’re not, which in most cases people aren’t, then they’ll take your file and returns for the last six years and give some small penalties in your back taxes and that will be the end of it. Now you may have a tax due in the end and you could qualify for some of the regular tax amnesty programs for those without any criminal exposure and we’ll be talking about those in a little bit.
Now the big one that’s going down right now is tax amnesty for those with tax evasion exposure who have unreported foreign income. And this is all over the news. And a lot of people are thinking that this is FBAR Amnesty and if left unfiled there is a heightened risk of criminal prosecution even if, by the way, and this is the thing, even if you actually didn’t do anything criminally, even if you just made an innocent mistake. This is really where the IRS is putting focus on, and one case in particular we had a client who made an innocent mistake and we filed a pre-clearance for an off-shore streamline program; that’s really for somebody who doesn’t have a criminal exposure, and guess what? They were under investigation. We got a call back from the Department of Justice attorney who said, “Yes, this client we are actually investigating right now,” even though they made an innocent mistake. We were able to explain the facts and the Department of Justice attorney said, “Okay. This person doesn’t look like who we’re really looking for. We’ll go after somebody else.” That’s really a thing. It’s very different, and there’s really two different set of rules.
If you have unreported foreign income you have to be very aggressive in the tax amnesty that you’re looking to get. You have to be maybe a little bit more proactive. If you have domestic unreported income chances are you probably don’t need to go for a voluntary disclosure and really what you wanna do is get that legal opinion, because guess what? The IRS doesn’t really want to deal with voluntary disclosures unless you actually need to be in one and so, so many times we’ve seen cases where people have gone through the voluntary disclosure with unreported domestic income and the IRS says, “Why did this person do this?” And we say, “Well, we think they got bad advice.”
Now I’d like to talk about amnesty for those with little or no tax evasion exposure. It’s really hard to say no tax evasion exposure, right? Because we don’t know. There’s weird things that do happen all the time. So the first one is unfiled domestic income. Now this is very common. The amount of non-filers in the US is incredibly common especially those who are self-employed. It’s this common fact that you see that people end up owing taxes and instead of filing their taxes they’ll file it that way they’ll just kind of kick the can down the road. So it’s very common, if you have unfiled returns even if it’s your money, chances are you don’t need to go through a voluntary disclosure you’d just rather keep the file. We will look at the last six years of your returns.
Now if you have understated your domestic income and it doesn’t quite warrant something that is a criminal disclosure, it just might be your best interest to file amended returns. Usually what we look at, we’re looking for that six year look back period. Sometimes though three years is acceptable. Now if you owe back tax debts, owing money to the IRS for returns that you filed is not a crime. Now if you try to willfully defeat the payment of taxes by transferring assets to family members, well the IRS is on top of that one. So it’s not gonna work out all that great. Now if you’re leaning towards the back tax amnesty programs, including how the IRS Fresh Start program works, visit IRSMedic.com and put in the search term “fresh start.” We have a ton of great material on that.
Hope you enjoyed this. This is our quick overview of Federal Tax Amnesty Programs. This is Anthony Parent of Parent & Parent LLP. Thanks for watching.
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