Just wanted to pass this info along to all USA folks...


Don D. Nelson, Attorney, CPA | http://ww.TaxMeLess.com | IRS Offshore Disclosure Ends 9/23/09

NOTICE TO ALL EXPATRIATES OR U.S. TAXPAYERS WITH OFFSHORE INVESTMENT, BANK, CORPORATE, TRUST, LLC OR BUSINESS INTERESTS –

THE IRS OFFSHORE VOLUNTARY DISCLOSURE PROGRAM'S DEADLINE TO PARTICIPATE ENDS 9/23/09.

If you wish to participate in this program in order to reduce possible interest and very high penalties for not reporting foreign income, foreign corporations, foreign investment or bank accounts, foreign trusts, fideicomisos, foreign partnerships, investment companies or LLCs, you must act now and send the required letter to the IRS by the deadline date of September 23, 2009. The returns and/or appropriate forms can then be prepared and filed afterwards. But they cannot be submitted after the deadline without the required letter being submitted by the deadline - no extensions will be available.


? Read more about the program and all of its details at http://www.taxmeless.com/IRS%20Disclosure.htm . You can then determine if this program applies to your particular situation. This web page lists the 52 questions which explain most aspects of the program and how to send a letter if you wish to participate by the deadline. If you do have undisclosed income and have not filed the Offshore IRS forms (some of which are listed below) the IRS will limit your penalties to 20% of the highest value of your offshore assets during any one of the six year period plus taxes, interest and the 20% negligence penalty.

? If you reported all foreign income, business income, interest, etc on your tax return, or if the offshore activity produced no income, but you failed to file the required forms (some of which are listed below) you must file those forms before 9/23/09 with your personal tax returns for those years showing that income was reported or risk possible large penalties. If you follow the procedure set forth in the 52 questions listed above you can avoid any of the huge penalties which are often attached to those forms.

? Just a few of the IRS forms which you may not have filed but should file now include 5471 (foreign corporation ownership), 3520 and 3520A ( foreign trusts or Mexican Fideicomisos), TDF 90-22.1 (foreign bank and financial account report), 8865 (foreign partnership), Form 926 (contribution of capital to a foreign corporation), 8621 (Return of Passive Foreign Investment Company, and others too numerous to mention. Most of these are listed in the 52 FAQ on the program which can be reviewed at the link listed above or at the IRS website at http://www.irs.gov/newsroom/article/0,, ... 12,00.html

? The IRS has stated that those who fail to participate and later attempt to amend returns to report unreported foreign income that involve the listed forms which were not timely filed will be assessed the penalty that is associated with such a late filed form -which can be $10,000 or more per year depending on the form.

? The IRS has now also stated that taxpayers who in the past years have attempted to catch up and file past due returns that involve offshore income and the forms listed in the 52 questions should also enter the voluntary disclosure program to limit their penalties, or risk the even greater penalties the IRS can impose for late filing those forms, which are stated in the instructions to such forms. The IRS has indicated they plan to go back and locate those people who have attempted “private disclosure” and assess those penalties. How many years back they will look has not been disclosed by the IRS.


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Why Did You Receive This Notice?




Since time is of the essence, we have sent this notification to everyone on our general email list. If you are not a client or an interested US taxpayer who currently lives abroad or lived abroad in past years, or had offshore business, bank, trust, investment or property interests, do not bother with this notice because it should not concern you. This is only intended for expatriates or those who have lived abroad now or in the past and for those US taxpayers that have owned interests in a foreign corporation, foreign trust, Mexican fideicomiso, offshore bank or any investment account located outside the USA or if they participated in a partnership, investment company or LLC not incorporated in the USA.. If you are not sure whether you are someone who should participate in the Offshore Voluntary Program you should read all about it at this following website link: http://www.irs.gov/newsroom/article/0,, ... 12,00.html




Don D. Nelson, Attorney, C.P.A.
Dana Point, California, USA
Phone 949-481-4094
Fax 949-218-6483
Email: dondnelson@yahoo.com
Website: http://www.taxmeless.com



Copyright Don D. Nelson, Attorney, CPA 2009. All rights reserved. http://ww.TaxMeLess.com donnelsonattycpa@yahoo.com

Good Update. Thanks!!!



Did you see in any of that whether it covers the requirements to also file Form TDF 90-22.1 with the Treasury Department???



Form TDF 90-22.1 is not part of your IRS filings or annual tax payments, it is a separate filing required annually directly to the US Dept of Treasury in Detroit, Michigan, due by June 30, 2009 for all US citizens who in 2008 held any interest or legal control / signature authority over a foreign bank account(s), foreign trust(s), or foreign financial (investment) account(s)

- apparently including fidei comisos (? - because Fidei Comisos are legally considered Trusts).



Exceptions

You don't need to file Form TDF 90-22.1 if any of the following is true:

1. The combined value of the accounts was $10,000 or less during the whole year.



2. The accounts were with a U.S. military banking facility operated by a U.S. financial institution.



3. You were an officer or employee of a bank, the account was in your employer's name, and you didn't have a personal financial interest in the account.



4. You were an officer or employee of a U.S. corporation with securities listed on national securities exchanges, or with assets of more than $1 million and 500 or more shareholders of record; the account was in your employer's name; you didn't have a personal financial interest in the account; and the corporation's chief financial officer has given you written notice that the corporation has filed a current report that includes the account.



Note: See the instructions to Form TDF 90-22.1 for more information



If any of you need a pdf copy (including instructions):

http://www.irs.gov/pub/irs-pdf/f90221.pdf

(recently moved to the IRS website)



File by mailing this report to the:

Department of the Treasury

Post Office Box 32621

Detroit, MI 48232-0621



or by hand-carrying it to any local office of the Internal Revenue Service for forwarding to

the Department of the Treasury, Detroit, MI.





This one slipped though my nets, since I accidentally sent it in with my 1040 filing last April. ...

I need to send it in soon.... *sigh*



God Bless the Patriot Act.... and Homeland Security Department...

So if I have a Mexican corporation but that corporation doesn't have a financial interest in any foreign bank account and I personally also don't have any financial interest in a foreign bank account, do I still need to file this form? Although we own a home here, we have only spent money on it, never made any.

Noncon,

If your corporation / Trust / Real Estate Fidei Comiso or you personally etc had accounts (apparently or assets) worth more than $10K in 2008, then yes... you are required by US law to file.



It sure seems that since Fidei Comisos are legally categorized as trusts, then the assets of the Fidei Comiso (the house, land, etc) should be reported to the US Dept of Treasury as "Other" on the form - described as a "Real Estate Trust" (?) - listing the total value of the Trust's assets/value in 2008.



I've heard this opinion from several accountants, but I don't know if the IRS Tax Courts have considered or have given a final ruling on this... (or if it has even been challenged)... As a Real Estate Trust, I can't see how Fidei Comiso's (legal Foreign Trusts) would be exempt in any case, but I only read the laws & regs, and haven't been paid to interpret them...



BTW:

You don't pay the Dept of Treasury anything on this filing - it's just Treasury (Think Bureau of Alcohol, Tobacco, and Firearms) - (and the raid on Waco?) and Homeland Security building their databases on US citizens....



One public justification they've described is to track potential Drug/Narco activities and all their mountains of cash... Bush et al talked frequently on this subject under the banner of stopping terrorism.



Yet another professional view is that Obama and others will almost certainly someday go after (tax) US Citizen's assets: especially off-shore and international assets & accounts... in their efforts to pay for the ballooning deficits and falling currency values...



The boys in the US Federal Govt. (Obama et al) seem convinced that if you have international assets,

you must be affluent / rich... - Clearly, Obama has said time and again:

The Rich must pay much higher taxes and higher %'s than the rest of us.



And all of us who have a bit of property and live here in Yucatán, appear rich ...

You must be rich, if you can afford property in México.



Hearkens back to Roosevelt's 1934 Executive Order requiring all personal income over $25,000 per year be taxed at 100%. Why? Roosevelt was born rich to one of the richest families in America - along with Eleanor - and they didn't have the much new income - just old money, (so, he and his friends & family wouldn't have to pay much - since they never really created much nor worked much), and like Obama, he figured that if you were making a lot of money, you didn't deserve that much of it, and that the (Socialist) Govt. knew better how to spend it.



When the Supreme Court balked and parts of Congress howled, FDR relented, and together,

they reduced the tax to ... 90%.



Genius! ? Brilliant! ??



(Yet another reason that the economy did not recover during the Great Depression - recovering only when Harry Truman finally reduced Saint FDR's socialist programs after WW2 and the US economy took advantage of the world's war-wreaked economies. - Would you take large risks & work hard if the Feds were taking 90% of your income?)



We lived with the 91% tax on the top earners until JFK finally cut the top rate to around 40% proposed in '62, and finally enacted in 1964. So, JFK was actually a Supply-Side economic supporter long before Reagan and Laffer:

http://www.youtube.com/watch?v=aEdXrfIMdiU for a clip of JFK

and from WSJ rticles: http://www.msjc.edu/econ/jfk022502.htm





The Present Reality?:

For now, they (the Feds: Treasury / BATF /Homeland Security) are gathering contact information, account info, asset info, and linking it to your SSN etc - so, in the future they can come back and find us to collect any new taxes that Congress or the IRS cooks up - even if we've moved to México.



If you don't file with the IRS (and pay appropriate taxes) now, and you don't file with the US Dept of Treasury now, the US Govt. has made it clear that it is forcing the Mexican Government to ramp-up it's (forced) information sharing on US Citizens. Obama et al have made it clear that México must share its Govt. info and bank account info, etc, on American Citizens. or Obama will cut off the $billions in aid for the Drug War. It truly is only a matter of time till they have full official records of all US citizen's assets, accounts, and real estate in México. If we don't report now, when they get the information from the Méxican Govt, they can hang us later for not following the rules, along with additional penalties and interest for the intervening time...



Now, does Kay's accountant's notice on the IRS Amnesty program make sense...?

They are offering temporary amnesty now, to get honest folks to start complying with the law - with the explicit aim of using the new asset & account information to increase tax collection on (supposedly rich) Americans living abroad. The Govt. only offers amnesty, when they are convinced that people are currently breaking the law and are guilty (without charges or a trial).

(Hint: this is not hypothetical Conspiracy Theory thinking, or they wouldn't be pushing the short-fused amnesty.)



Makes an FM-2 with the path to Méxican Citizenship look more appealing?

I apologize for the repeated edits on the last post. I wrote and re-wrote it about 10 times,

fleshing-out the context of how important Kaye's original post is, if you have accounts, trusts, assets, or property here in México.







I threw in the historical references to the 4 decades of 90% income taxes on top earners, to demonstrate how serious the Feds, BATF, Treasury, and IRS are and have been about taxing people who do not have much of a voice, particularly when they have been baiting the Press and the Public into mob-like thinking. I believe that the common American thinking is becoming: Democracy rules - and the will of the majority should be enforced.



And just like the majority forced through 90% income taxes on top earners for 4 decades, Obama is building support for heavy taxation of the Rich, and he and people in his administration are quietly saying that:



Any American who owns property in foreign countries or has accounts in foreign countries, must be rich...



and can be and should be assessed higher taxes,

because "the majority" has no idea nor cares little about us.



We here in the Yucatán are a minority with little voice and even less leverage in Washington.



If they choose to start taxing US citizen's international assets in special ways, (as my friends inside the Beltway are assuring me), then Americans in México who do not accept the offered amnesty now, and Americans who do not report their assets/accounts/real estate to the Dept of Treasury for future taxation, are both liable for future prosecution + stiff fines + interest.



Related Sidelight:

In their efforts to rush all of us into group-think ("majority rules"): Obama has even taken the new step of requiring that public K-12 schools receiving Federal aid (basically all public schools, thanks to the School Lunch Program),

must have our kids watch a special speech by Obama on TVs in schools all across America this next Tuesday. He'll have a bully-pulpit to promote his agenda directly to kids, during school time, under the tacit approval that the authorities & schools support whatever he says.



Kids are supposed to believe and agree with everything authorities tell them in school, aren't they?



Obama's first written instructions to schools last week advised all teachers, following his mandatory broadcast,

to have every one of their students write personal essays on "How can I support My President." ...

not: "How Can I support My Country?"



A direct instruction to tell all young people, you should/must think and write of how you can support Obama.



...no opportunities here for indoctrination or political inculcation here by Obama or other future leaders...??



Fortunately, we still live in a Republic that still sometimes protects the rights of the minority, regardless of what "60% of Americans" think or believe ...



- even if that minority are just simple folks who chose to live-in or visit México. (I hope.)

Okay...here is what I did...I filed the fideicomiso. I, of course, have no income from it. The filing asks for all expenditures as well as income...which is good, because anything that I put into the house, will later be deducted, in the US, from any capital gains...which they will know about if I sell. Now...the Mexican capital gains taxes you might pay if you sold, are deductible from, and should offset some US capital gains. That is my understanding. I report all improvements I do to the house every year, for that reason.

I have just sent off a letter to my tax person in Oklahoma to see if I too need to file this letter as I was late filing this Foreign trust thing the very first time. I had a really lousy CPA, at the time, and I am actually the one who found out about this filing on my own, after doing some research.



Do NOT assume that your tax person knows about this filing, no matter how smart they might be. My new tax person, a very capable man, had never had anyone who owned foreign property, so he was unfamiliar with it. He immediately went about researching and obtaining this information.



When I first filed, with the first CPA, the IRS was so screwed up that they issued me two different tax ID's for the same trust...go figure! We won't even talk about all the other crap they have put me through over the years!! Even though I was late and sent a letter of explanation of all the screw ups by my incompetent CPA, I have yet to receive any response, telling me I owe any penalty for the late initial filing...nothing from them. Is the other shoe waiting to drop a year from now when they finally catch up on their paperwork??? Who knows?? The penalties on all these things could be horrendous!! Is is worth the gamble and not report you own property here? Who knows...but, speaking as a person who actually lost their home to the IRS, I KNOW what they can do to you and I, for one, don't like the odds!!



The CPA organization has appealed to the IRS...and I assume it is still being appealed. They are trying to get fideicomisos exempt from these mind-boggling and confusing requirements, arguing that small folk don't have access to sophisticated lawyers and accountants (like the corporations do) to help them maneuver these very complicated filings, etc. They keep telling the gov't that we should not be held to the same stringent reportings/requirements as huge corporations. I fear their cries will continue to fall on deaf ears as the gov't expands its search into finding new and intrusive ways to help itself to our hard earned money.

Dang' girl, we're beatin' the same drum...





I interpret what you wrote includes that: your current CPA & a national association of CPA's agrees that US Federal law & regulations require us to report our Foreign Bank accounts, Foreign trusts (including Fidei Comisos), real estate, and anything/asset worth more than $10,000 USD directly to the Dept of Treasury in Detroit, Michigan? Si?



duhm cuntree bohys and city-slicker accountants agree? ... magin' that...

time to pull the cork frum th' jug... 'n go root fur the Tri...

DO TELL! I hope someone is listening....like I said...they can put you in a vise and get blood...I have first hand knowledge of that!!!

Here is an interesting article on some tax forms as they relate to foreign property ownership, specifically forms 3520/3520A -

http://fideicomiso.wordpress.com/2009/0 ... tting-out/



My accountant was not aware of these forms either, and my research found out about them. In talking with a local real estate attorney, his understanding is that the IRS uses the 3520/3520A yearly reporting to track foreign property ownership, and it's eventual sale, to be sure it receives capital gains tax on these properties. He said that the IRS has become very aware of the number of Americans owning foreign property, not reporting it, and not declaring gains as income when they sell. The penalty for not declaring the capital gains is 35% of the value of the sold property - ouch!

One legal way, currently, to avoid capital gains on your foreign property when you sell, is to live in, and declare, the property as your primary residence for 2 years (2 of the last 5) before you sell the property.

T&M's referenced website unfortunately, (like Kaye's former CPA), was not aware nor reporting the additional requirement for separate filing of Form TDF 90-22.1 with the Dept of Treasury.





Hmmm... maybe free advice is occasionally worth something?

I had no idea that a simple question on a tax issue would result in such lengthy and ideological responses.



Oh my.