IRS Fines Tax Payer 200% for Failure to File FBAR
The IRS has started to impose failure to file FBAR penalties, which sometimes exceed criminal fines, as a weapon in their criminal crackdown on offshore tax evasion by US citizens. Many of the more than 70 taxpayers charged since 2009 have pleaded guilty, paying an FBAR penalty of 50 percent of the high account balance in their offshore account for only one year.
The threat of such penalties has helped to drive U.S. taxpayers into an IRS amnesty program that lets holders of undeclared offshore accounts avoid prosecution. They must pay back taxes, fines and penalties and tell the IRS which banks and bankers helped them hide their money. Since 2009, more than 43,000 Americans have taken advantage of the amnesty program, paying US $6 billion to the U.S. Credit Suisse AG pleaded guilty of Americans evade taxes and agreed to pay $2.6 billion in penalties.
Other US tax payers have paid higher FBAR penalties in dollars, not as a percentage of the account. H. Ty Warner, the billionaire creator of Beanie Babies plush toys, pleaded guilty last year to evading taxes on secret Swiss accounts that held as much as $107 million. He paid an FBAR penalty of $53.6 million. more »
Canada Revenue Agency Shut Down Tax Filing Secure Web Access
Canada Revenue Agency has shut down all access to its secure web server, effective April 8, 2014.
Secure web services affected by this shut down are CRA online services like, EFILE, NETFILE, My Account, My Business Account and Represent a Client.
CRA website state that, April 8, late afternoon, it came to their attention that the software CRA is using to make internet transmission of our data secure is vulnerable to a bug named “Heartbleed Bug” and it was affecting the secure data transmission software worldwide. As a preventive measure, CRA temporarily shut down public access to their online secure services to safeguard the integrity of the information they hold.
USA Canada Border Crossings Will Be Scanned
In my tax practice I deal with many Canadians who are consistently travelling back and forth between Canada and the USA, staying in USA for extended period of time. This creates a big problem, due to the fact for a longer time of stay in USA, you could become a USA tax residence even you are a Canadian citizen. In this case you have to file income tax return both to the USA and Canada.
Clients never seem to figure out, how long they have stayed in USA, since the border authority does not stamp their Canadian Passport. There are specific schedule in the USA tax form to provide your travel information to the IRS, to determine, if you are a primary USA tax residence.
Looks like, things will start to change starting July 1, 2014. Under a new agreement, Canada and U.S. border authorities will now scan your passport when you enter and exit their country to determine how long a person has actually been out of their own country of residence in a given year.
Once U.S. and Canada have access to a travel day count for its citizens, both countries can track a person’s physical presence and use it to apply various immigration and tax laws. more »
Canada and U.S. Sign Tax Information Sharing Agreement
Canada and the United States agreed to a new tax information sharing agreement which will potentially affect all American citizens living in Canada.
Effective July 1, 2014 Canadian banks and investment institutions will be required to report information regarding Americans with financial accounts held in Canada holding more than $50,000. This requirement relates to the Foreign Account Tax Compliance Act (“FATCA”) which was enacted in 2010 in response to a scandal relating to Americans hiding money offshore in Swiss bank accounts.
For each applicable account held by an American , Canadian banks and investment institutions will have to report the account holder’s name, taxpayer identification number, account number, ending account balance, and any income earned in the account on an annual basis. Banks will submit the information to the CRA which will in turn transmit the information to the IRS. more »
2013 Tax Planning, What Can You Do Now?
Happy New Year 2014.
Yes, it’s a very happy new year for taxman.
Your income is going to be taxed more, starting January 1, 2014. If you are an employee, you will see your net take home income going down a bit, because of increased contribution of CPP and EI.
As I was reading my Daily Newspaper on January 2nd, I saw a news headline “Now is the best time for Tax Planning” featuring a prominent tax expert. I thought he was referring to 2014 tax planning, now is the best time to plan ahead of how much tax you would like to pay in 2014.
To my surprise, in the article, he was mentioning about tax planning for 2013. He must have a time machine, to plan for 2013 taxes after January 2nd, 2014. more »