MacG-S,
Yes, they are only chasing the fat-cats now,  but every  law on the Federal Books eventually gets enforced.  


Example,  first they (the IRS) went after Hollywood types and Wall Streeters back in the 1980's for not paying taxes,   but after that low-hanging fruit was tapped-out,  they ultimately put on a nationwide push to go after small contractors under Clinton - including carpet layers, painters, & carpenters - little guys - for 10 -15 years of back taxes...  I know at least 15 of my old independent trades-man pals that got squeezed & ultimately crushed by the ultimate enforcement of Federal IRS rules.

As the US deficits grow from 3X higher than Clinton/Bush/Cheney eras up to 9X higher deficits (mandated under current Dems/Obama spending legislation),  there will be pressure to go after lots of little fish covered by their laws.  

Just the fact that they track us by our passports coming and going, makes it really easy for them to identify us as a special class - and then find out why some people haven't reported their Mexican bank accounts and real estate.  

Enforcement of tax laws will be ratched-up as the deficits balloon.  It may take five years,  but as their own web-site promises:  they will not be understanding of people who do not voluntarily turn themselves in. 

Every Mexican real-estate transaction and every Mexican bank account leaves both a permanent paper trail and easily-followed electronic trails...  Just like UBS was forced to open their books,  (even with the full protection of the Swiss Govt)  HSBC & other banks will almost certainly be forced to open their records on US citizens for bank accounts and Fidei Comisos.   

There is no statute of limitations on IRS actions & transgressions -  and if they find even a single problem with just 1 tax return in the past 7 years, they legally can and do open-us-up to audits  back to the date of our first paycheck.   no limits....   and how many people can remember or justify deductions they took in the 1980's.

Finally, the IRS has a long history of making public examples by  harshly prosecuting little guys to warn the rest of us - assessing years and years of compound interest on fees, penalties, & fines - regardless of whether they had a policy of letting little fish slide-by earlier or not.   

Due to our passport usage, border crossings, and wire transfers,  we ex-pats really are  a special  easily-targeted (no voice),   easily-tracked,  &  easily-captured  quarry, even 10 years or more after-the-fact.   We leave huge paper and electronic footprints   

Why not follow the law,  file a few yearly forms,  and give 'em now   what they legally can demand in the future?

THE KEY PHRASE: "I know at least 15 of my old independent trades-man pals that got squeezed & ultimately crushed by the ultimate enforcement of Federal IRS rules""

 Humm playing a game with Professionals when your at best an Amateur....

 I know a few who have been caught as well . They like to gamble, a few still do, its not my style.. Just because a few win the lottery every day or so I still dont play.

 My freind Mike has been living in Audit Hell for the last 15 years or more and I always ask him when he is P&Ming . When will you learn?

Yeah,   they badgered my Dad's paving business with audits on-and-off for 12 years from 1982 - 1994, never finding anything that required any substantial payments - but generating file cabinets full of paperwork  and  years of income for his accountant and attorney,  each of whom billed a 1/4 hr $$$ for even a 5 minute phone call.   Trouble is, once the IRS gets ahold,  they don't want to let go - assuming that even though they found nothing the first time,  they couldn't be wrong - and keep hounding until they find some small bone (of contention).  Since 5 IRS auditors typically calculate 5 different tax amounts for the same business return, they can always find something they don't like, even if it doesn't amount to much - best to stay off their radar.


Good luck to Mike!

My buddy Mike will no doubt never learn.... sad to say.

Reminder - Time to revisit this post, as your 3520A tax forms are due to be filed by March 15, 2010. They are filed independent of your regular federal taxes, and to a different address.

If you have not filed these "foreign trust" tax documents in the past, you'll need to start by filing both forms 3520 and 3520A.

Many of us have corporations and there are forms to file there also

IRC Section 6038(a) requires information reporting with respect to certain foreign corporations (Form 5471) and describes the information required to be reported on this form.   IRC Section 6038(b)(1) provides for a monetary penalty of $10,000 for each Form 5471 that is filed after the due date of the income tax return (including extensions) or does not include the complete and accurate information described in Section 6038(a).

 

Taxpayers are encouraged to submit delinquent Forms 5471 for past income tax periods prior to January 1, 2009.  For those taxpayers who are required to electronically file their income tax return under Treasury Decision 9363, they are also required to e-file any amended returns for tax years 2006 and 2007.   Similarly, these taxpayers may voluntarily e-file an amended return for the tax year 2005.  Please see our guidance on e-filing amended returns under Amended and Superseding Returns.  Please note that guidance is provided by tax year.

Taxpayers who are experiencing difficulties with e-filing their amended returns and/or forms may request a waiver from the requirement to electronically file.  These taxpayers should follow the procedures as outlined in Notice 2005-88.  It is important for these taxpayers to provide a thorough explanation of the constraints that prevent them from electronically filing their amended returns.  This will allow the Service to give proper consideration to their request.

For those taxpayers who are submitting amended/delinquent Forms 5471 and wish to submit a Reasonable Cause statement with their filings, the Service recommends the following procedures.

 

I was told by H&R Block that I did not need to worry about this since the corporation had not made any money, now I am not so sure?

My lawyer recived an  envelope from the IRS today from the volantary program. It has a form letter with 9 questions one is they want bank statments. Most of the other questions say if this pertains to you. My lawyer said it is normal and they are probley sending this to everyone.

Has anyone else recived anything. 

When you say the voluntary program, are you referring to the "foreign trust" program, ie 3520, 3520A?   Or the previous reporting of aggregrate bank balances.

Are they requesting every years statements or just specific years?

I have not received anything yet.

Here's a new twist on this theme: I rec'd a note from the IRS today regarding my form 3520-A, tax period Dec 31, 2008. The letter says "In order to process your Form 3520-A, page 2 part II and/or part III, whichever applies, must have a dollar entry. Please provide this information."

Page 2 includes only part II, Foreign Trust Income Statement, and part III, Foreign Trust Balance Sheet, neither of which apply to our Fideicomiso foreign trusts. I (probably along with everyone else with a Fideicomiso that filed the 3520-A) left those parts blank. Now the IRS is telling me to provide the information within 30 days of the letter (the 30 days had already passed before I picked up the letter at the Progreso Post Office), or they will continue to process my information return and consider it to be in non-compliance with IRC section 6048(b), whatever that is.

They do provide an 800 number in case I have any questions, which I guess I'll give a try one of these days. It's just hard to think of any questions I might have aside from "why do I have to fill out this form in the first place, since it does not apply to our situation. "

And Alice thought that Wonderland was nonsensical and basically bonkers!