VOLUME 06 – SUMMER 2014

IRS Makes Offshore Voluntary Disclosure Program More Open for Non-willful Tax Evasion, Advises Sigma Tax Pro

A recent announcement by the IRS is intended to bring more offshore taxpayers into compliance with U.S. tax obligations.

Professional tax preparers have often faced challenges in working with clients who have offshore investments or those who earn other income outside of the United States. The IRS’s Offshore Voluntary Disclosure Program was intended to encourage non-compliant taxpayers to come into compliance. However many taxpayers have been unwilling to do so for fear of severe penalties. The new announcement by the IRS is designed to make it easier for those are non-compliant to come to the table and it is hoped it will result in thousands of taxpayers making good on their obligations.

The highlights of the announcement are an expansion of the streamlined filing compliance procedures and important modifications to the Offshore Voluntary Disclosure Program. The important distinction in these cases is between those taxpayers whose non compliance was non-willful and those who intentionally avoided paying taxes. The Department of Justice is also working in tandem with the IRS to identify US based institutions who have willfully assisted taxpayers in their avoidance of taxes. Moreover, thousands of foreign institutions have also agreed to cooperate with the U.S. government and provide information on taxpayers who have assets overseas and are avoiding paying taxes.

The Offshore Voluntary Disclosure Program was launched by the IRS in 2012 and the IRS reports that more than 45,000 taxpayers have used the program paying about $6.5 billion in taxes, interest and penalties.It is hoped the new announcement will convince non compliant taxpayers who have previously been reluctant to come forward to do so. For non-willful taxpayers residing outside the U.S. all penalties will be waived and for those residing inside the U.S. there will be a miscellaneous offshore penalty equal to 5 percent of the foreign financial assets that gave rise to the tax compliance issue..

Sigma Tax Pro provides a full range of essential services for tax professionals.This includes industry leading software solutions as well as technical support, tax preparation support and client retention strategies. Sigma Tax Pro specializes in helping tax preparation firms expand their businesses, open new offices and increase their client base. Clients can already renew their tax software licenses for next year’s tax season and ensure the lowest pricing available in the industry.

NEWS AND TIPS

Sigma Tax Pro Breaks Down Key Tax Provisions of Affordable Care Act

The Affordable Care Act contains some key tax provisions that all professional tax preparers should be aware of.

The Affordable Care Act is a complex piece of legislation that many taxpayers are not well versed in. Furthermore many tax professionals do not fully understand the ramifications of the the current administration’s landmark law. The main items to be aware of are the Premium Tax Credit and the Individual Shared Responsibility payment. The IRS administers these tax provisions and it is essential that accountants, CPAs, enrolled agents and tax preparers can discuss them with their clients when next tax season arrives.

The Premium Tax Credit is applicable to any taxpayers who obtain their health insurance coverage through the Health Insurance Marketplace. Beginning in 2014 any taxpayers who get their coverage in this fashion will be eligible for this tax credit which will make purchasing health insurance more economically viable. The Open Enrollment period for the Health Insurance Marketplace has ended but some individuals may still be able to use it, such as those who have recently become unemployed and no longer have employer sponsored health insurance. In summary if a taxpayer meets any of the following criteria they may be eligible; they buy health insurance through the Marketplace; they are ineligible for coverage through an employer or government plan; they are within certain income limits; they do not file a Married Filing Separately tax return and cannot be claimed as a dependent by another person.

The Individual Shared Responsibility payment refers to the requirement that individuals must have essential minimum health insurance for themselves and each member of their family. If they do not they must have an exemption from the responsibility to have minimum essential coverage, or make a shared responsibility payment when they file their taxes. For this reason it is important their chosen tax professional can correctly advise them on this requirement as it could have a significant impact. The minimum requirement could be met by employer sponsored heath insurance, government sponsored insurance, insurance purchased direct from a company or coverage purchased through the Health Insurance Marketplace.

Sigma Tax Pro provides a full range of essential services for tax professionals. This includes industry leading software solutions as well as technical support, tax preparation support and client retention strategies. Sigma Tax Pro specializes in helping tax preparation firms expand their businesses, open new offices and increase their client base. Clients can already renew their software licenses for next year’s tax season and ensure the lowest pricing available in the industry.

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