2012 Offshore Voluntary Disclosure Initiative Announced by IRS

If you have to file US tax returns, doing nothing is no longer an option. You have to file a US Tax Return, if you are,

1. A USA Citizen
2. A Dual USA Citizen Living Abroad
3. A USA Resident
4. A USA Green Card Holder Living Abroad

United States Internal Revenue Service (IRS) has been aggressively pursuing US persons (including US citizens and green-card holders living abroad) who have failed to report foreign income on their US income-tax returns and/or failed to report foreign bank and investment accounts on a Foreign Bank Account Report (FBAR). A US Person, must file income tax return with IRS, regardless of their residency.

IRS implemented amnesty programs since 2009 for US citizens to come forward with their foreign income reporting. More than 30,000 people have voluntarily complied since 2009, at least 30 have been criminally indicted and the IRS has netted a total of $4.4 billion in unpaid taxes, interest and penalties.

The State Department estimates that more than 6 million citizens live overseas, excluding those in the military, yet the IRS receives only 1.6 million tax returns each year with foreign addresses. And just over 500,000 FBARs were filed in 2009.

On January 9, 2012 the IRS announced a third amnesty, formally known as the Offshore Voluntary Disclosure Program. It is substantially the same as the 2011 amnesty (aka 2011 OVDI), with some exceptions:
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How Would You Like To Pay Tax Like A USA Corporation

A major study of USA corporations published today, proved again that even though USA has a high 35% corporate income tax rate, none of the biggest corporations in the world, operating in USA pay taxes at that rate.

These are companies listed on the top of Fortune 500 rankings and admired by professionals, investors and consumers all over the world. Their net profits are in billions of dollars, huge cash stashed in offshore accounts, and they are being subsidized by tax rebates from the USA Federal government.

The study of 280 fortune 500 companies identified,

• They have received about $223 billion in tax subsidies.
• Financial service companies (Banks) received the largest share of subsidy (17% or $37bn).
• Over the last three years 2008-2010, 50% of the tax subsidy was awarded to financial services, utilities, telecoms and oil, gas pipelines. more »

Donation Tax Shelter in Canada How it Works?

In Canada a tax payer can claim 75% of his income as donation and get a Tax Credit of 43% (combined Federal and BC Province) as a tax payable reduction or cash refund.

Donation is a very attractive Tax Shelter for people in higher income tax bracket.

Donations to Canadian registered charities and other qualified donees approved by CRA can only be claimed as charitable donations.

At the end of each calendar year many tax shelter advocate give attractive and compelling presentation to tax payers to donate money to their tax shelter and either reduce tax or get a big refund.
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Illegal Tax Saving Schemes Promoted by Charity Promoters

At the end of the year with Holidays, Christmas and Gift of Giving makes us all charitable and there are these Charity Promoters, who take advantage of your Good Will by tying your charity/donation contribution with tax savings.

Donations in excess of $200 each year will save you 44% in taxes. That is the amount you get as Tax Credit to reduce your overall tax bill.

This is where the Charity Promoters take advantage of you. They promise to give you a charitable contribution receipt many times more than the actual cash contribution. Even with your good will to help the needy, you fall hostage to your greed and give in to their shady scheme. These charity promoters offer you a receipt in the range of $4,000 to $5,000 for every $1,000 cash donation. Their reason for offering the additional money in the donation receipt is that your $1,000 will have such a great effect on the needy, that it could be easily valued at $5,000, so they can issue a $5,000 donation receipt for you.

The problem is this kind over valuation of Cash donation is in violation of Canada Revenue Agency regulation.

If you are given a donation receipt in excess of your Cash donation by a charity promoter, be sure that your tax return will be audited and your donation contribution for tax savings purposes will be disallowed

Donation to your favourite charity is a great way to help the needy also reduce your taxes. There are many other legitimate ways for tax savings other than inflating your actual cash donation.

CRA is actively prosecuting these kinds of Charity promoters.

How to Face a CRA Audit?

Did you get a letter from Canada Revenue Agency (CRA), requesting supporting documents for your Income Tax Return? It does not say explicitly that you are being audited, but actually, your return has been selected for a random audit to see compliance with Canadian Tax Laws.

CRA usually have all the information regarding your income, in their database. Because by law, in Canada every company is required to send CRA a statement at the end of the year, of taxable payments they made to all employees and/or individuals.

Sometime, your income tax return may raise a audit flag for some information, or you just might be randomly selected for an audit. It should be a matter of concern for taxpayers, if you are selected for an audit. Because you don’t know, why you are being audited. After the audit, they may re assess your tax liability and send you a bill for additional taxes with fines and interest.

If your return is done correctly and you can provide all the supporting documents, usually there is nothing to worry about. Working with CRA auditors, I have personally found them to be friendly, courteous, knowledgeable and sympathetic to taxpayers.

If you want to face the CRA audit on your own, you sure can represent yourself to CRA. In that case, the auditor knows that you are not familiar with audit procedures and policies and probably you did your income tax return with off the shelf tax software. He already has advantage against you and can overwhelm you with complex questions about your tax return and in the end, send you a new tax bill.

It is always a prudent decision to work with an experienced, professional tax advisor when being audited. This decision can mean thousands of dollars savings for you and peace of mind. Consulting with a professional can be expensive, but your return on investment is many times of the money that you will spend for the advice.

A professional tax advisor who has handled audits in the past won’t be intimidated by the CRA auditors. Also, they are familiar with CRA’s audit proceeding and can answer correctly to CRA’s complex audit questions.

We have successfully represented our clients to CRA auditors and the peace of mind our clients experienced is priceless, knowing they are in good hands to deal with CRA