In September of this year, the IRS lost a case (United States v. J. Bryan Williams) in which it tried to impose the 50% penalty for willfully failing to file a Foreign Bank Account Report, TDF 90-22.1 (FBAR). This appears to be the first case that has gone to court on FBAR penalties which did not involve someone who was also being charged with drug or other serious criminal charges, other than tax charges. J. Bryan Williams had already been convicted of tax evasion, and the IRS then brought a civil law suit to collect the FBAR penalty since Williams had failed to file the FBARs. The IRS relied on the tax fraud conviction, and the fact that on his federal income tax return Mr. Williams had checked the box on Schedule B stating that he did not have an interest in a foreign financial account.

The judge rejected these contentions stating that “…the Government fails to differentiate tax evasion from failing to check the box admitting the existence of a foreign bank account.” The court also noted that “a taxpayer’s signature on a return does not itself prove his knowledge of the contents, but knowledge may be inferred from the signature along with the surround facts and circumstances.”

At trial, there were several significant facts in dispute, most significantly being when Williams first met with the Swiss authorities and when his Swiss bank accounts were frozen. There was no dispute that Williams checked the “No” box indicating that he had no foreign bank accounts and that he failed to submit the requisite TDF 90-22.1. Form by June 30, 2001 when it was due. However, these actions occurred after Williams found out that the U.S. and Swiss authorities knew about the Swiss bank accounts. On November 13, 2000, seven months before he failed to check the correct box, Williams met with the Swiss authorities about the Swiss bank accounts. At the same time, at the request of the U.S., the Swiss authorities froze the assets in the Swiss bank accounts. In response to these actions, also in 2000, Williams sought the advice of both Swiss and U.S. counsel. Williams’ subsequent disclosures throughout 2002 and 2003 corroborate his lack of intent to willfully conceal the Swiss bank accounts. The Court concluded that Williams’s testimony that he only focused on the numerical calculations on the Form 1040 and otherwise relied on his accountants to fill out the remainder of the Form is credible, and should be given more weight than the mere fact that Williams checked the “No” box on Schedule B of his Form 1040.

The case is good news for those taxpayers who have entered the voluntary disclosure program, and believe that the FBAR penalty that the IRS seeks to impose is too high.

On the other hand, it’s important to note that in the Williams case, by the due date of the FBAR Mr. Williams’ Swiss bank accounts had been frozen by the Swiss government, the IRS knew that the accounts had been frozen, and Mr. Williams knew that the IRS knew that the Swiss bank accounts had been frozen. Thus the argument went that Williams had no motivation not to file the FBAR because the IRS already knew about the accounts. It will be the unusual case where this type of factual scenario exists, and therefore the IRS will probably argue that Williams is distinguishable.

If you haven’t filed your FBARs and don’t know what to do call the international tax specialists at Sasserath & Zoraian, LLP for a consultation.

The IRS Nationwide Tax Forums are held for CPAs and other financial professionals to learn the latest from IRS leadership in the field of tax law, compliance, and ethics. Attendees may select from more than 40 seminars and workshops available and earn up to 18 continuing professional education credits. The following are the forum schedules and the cities where they are held:

Various benefits may be gained by each attendee:

Seminars – Hear the latest on key federal and state tax issues from top IRS executives and leading industry experts. Earn valuable continuing professional education (CPE) and certified financial planner (CFP) credits. Select from more than 40 valuable and relevant tax topics.

Workshop (Advance registration is required) – The Form 990, the return that many charities and other tax-exempt organizations are required to file annually, went through a significant redesign. This two-hour workshop will highlight the major areas that tax-exempt organizations should focus on when completing the Form 990. NOTE: This is a continuous hands-on-workshop, with breaks determined by the instructor. Advance registration is required and space is limited to 150 people per session.

Exhibits – Dozens of exhibitors displaying a wide selection of products and services that support the IRS e-file Program may help enhance your business operations. Exhibit hall hours: 11:15 am to 6:00 pm on Tuesday and 10:00 am to 2:00 pm on Wednesday.

Continuing Professional Education (CPE) Credits – Attendance at IRS Nationwide Tax Forum seminars qualifies for Continuing Professional Education (CPE) credits for enrolled agents, certified public accounts, and California Tax Education Council (CTEC) participants. You will need to understand and comply with your licensing agency’s CPE requirements. Attendance for the full 50 minutes of the presentation is required to receive one CPE credit.

Certified Financial Planner (CFP) Credits – The IRS is registered with the Certified Financial Planner Board of Standards, Inc. The board has the final authority on the acceptance of individual tax forum courses for continuing education credit for certified financial planners.

Case Resolution Program – Bring your toughest unresolved case (one per tax business) to the Case Resolution Room and meet one-on-one with IRS representatives by appointment only to discuss the case (POA required onsite). To expedite scheduling, bring a completed Nationwide Tax Forum Case Data Sheet with you.

Networking Opportunities – Mix and mingle, reconnect with friends and colleagues, share information and best practices, or just relax and enjoy!

IRS Oversight Board – Visit with IRS Oversight Board representatives and offer your comments on various IRS initiatives and programs.

Electronic Federal Tax Payment System (EFTPS) – Visit the EFTPS Registration Booth and see how tax professionals can make their clients’ tax payments easier, while reducing their own paperwork.

Focus Groups – Participants are randomly selected to participate in focus groups and provide candid feedback on key topics. If you’re asked to take part in a focus group session, consider it as an excellent opportunity to let your voice be heard.

More information is available at: http://www.irstaxforumsonline.com/

In administering the letter of the laws enacted by the US Congress, the IRS tasks itself to take the specifics of these laws and translate them into detailed rules, regulations and procedures simplifying them to help those that are not familiar with the inner workings of the Service to easily understand these laws and how they affect taxpayers. The Office of the Chief Counsel produces several kinds of documents and publications that provide guidance to taxpayers, firms and charitable groups. Here are some of the most common forms of guidance:

Regulation

A regulation is issued by the IRS and Treasury Department interpreting and giving directions on complying with the law. Regulations are published in the Federal Register. Generally, regulations are first published in proposed form in a Notice of Proposed Rulemaking (NPRM). After public input is fully considered through written comments and even a public hearing, a final regulation or a temporary regulation is published as a Treasury Decision (TD), again, in the Federal Register.

Revenue Ruling

A revenue ruling is an official interpretation by the IRS of the Internal Revenue Code, related statutes, tax treaties and regulations. It is the conclusion of the IRS on how the law is applied to a specific set of facts. Revenue rulings are published in the Internal Revenue Bulletin for the information of and guidance to taxpayers, IRS personnel and tax professionals. For example, a revenue ruling may hold that taxpayers can deduct certain automobile expenses.

Revenue Procedure

A revenue procedure is an official statement of a procedure that affects the rights or duties of taxpayers or other members of the public under the Internal Revenue Code, related statutes, tax treaties and regulations and that should be a matter of public knowledge. It is also published in the Internal Revenue Bulletin. While a revenue ruling generally states an IRS position, a revenue procedure provides return filing or other instructions concerning an IRS position. For example, a revenue procedure might specify how those entitled to deduct certain automobile expenses should compute them by applying a certain mileage rate in lieu of calculating actual operating expenses.

Private Letter Ruling

A private letter ruling, or PLR, is a written statement issued to a taxpayer that interprets and applies tax laws to the taxpayer’s specific set of facts. A PLR is issued to establish with certainty the federal tax consequences of a particular transaction before the transaction is consummated or before the taxpayer’s return is filed. A PLR is issued in response to a written request submitted by a taxpayer and is binding on the IRS if the taxpayer fully and accurately described the proposed transaction in the request and carries out the transaction as described. A PLR may not be relied on as precedent by other taxpayers or IRS personnel. PLRs are generally made public after all information has been removed that could identify the taxpayer to whom it was issued.

Technical Advice Memorandum

A technical advice memorandum, or TAM, is guidance furnished by the Office of Chief Counsel upon the request of an IRS director or an area director, appeals, in response to technical or procedural questions that develop during a proceeding. A request for a TAM generally stems from an examination of a taxpayer’s return, a consideration of a taxpayer’s claim for a refund or credit, or any other matter involving a specific taxpayer under the jurisdiction of the territory manager or the area director, appeals. Technical Advice Memoranda are issued only on closed transactions and provide the interpretation of proper application of tax laws, tax treaties, regulations, revenue rulings or other precedents. The advice rendered represents a final determination of the position of the IRS, but only with respect to the specific issue in the specific case in which the advice is issued. Technical Advice Memoranda are generally made public after all information has been removed that could identify the taxpayer whose circumstances triggered a specific memorandum.

Notice

A notice is a public pronouncement that may contain guidance that involves substantive interpretations of the Internal Revenue Code or other provisions of the law. For example, notices can be used to relate what regulations will say in situations where the regulations may not be published in the immediate future.

Announcement

An announcement is a public pronouncement that has only immediate or short-term value. For example, announcements can be used to summarize the law or regulations without making any substantive interpretation; to state what regulations will say when they are certain to be published in the immediate future; or to notify taxpayers of the existence of an approaching deadline.

With the end of the fiscal year fast approaching, the Internal Revenue Service has announced that cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2011 will, in general, remain unchanged, and that inflation adjustments for 2011 will be small. Highlights of the announcement are as follows:

• The elective deferral (contribution) limit for employees participating in section 401(k), 403(b), or 457(b) plans, and the federal government’s Thrift Savings Plan remains unchanged at $16,500.
• The catch-up contribution limit under those plans for those aged 50 and over remains unchanged at $5,500.
• The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are active participants in an employer-sponsored retirement plan and have modified adjusted gross incomes (AGI) between $56,000 and $66,000, unchanged from 2010. For married couples filing jointly, in which the spouse who makes the IRA contribution is an active participant in an employer-sponsored retirement plan, the income phase-out range is $90,000 to $110,000, up from $89,000 to $109,000. For an IRA contributor who is not an active participant in an employer-sponsored retirement plan and is married to someone who is an active participant, the deduction is phased out if the couple’s income is between $169,000 and $179,000, up from $167,000 and $177,000.
• The AGI phase-out range for taxpayers making contributions to a Roth IRA is $169,000 to 179,000 for married couples filing jointly, up from $167,000 to $177,000 in 2010. For singles and heads of household, the income phase-out range is $107,000 to $122,000, up from $105,000 to $120,000. For a married individual filing a separate return who is an active participant in an employer-sponsored retirement plan, the phase-out range remains $0 to $10,000.
• The AGI limit for the saver’s credit (also known as the retirement savings contributions credit) for low-and moderate-income workers is $56,500 for married couples filing jointly, up from $55,500 in 2010; $42,375 for heads of household, up from $41,625; and $28,250 for married individuals filing separately and for singles, up from $27,750.

Details on both unchanged and adjusted limitations may be found at http://www.irs.gov/newsroom/article/0,,id=229975,00.html.

The bliss that is marriage! But a happy ever after, is not something that is handed over to anyone simply because they found a partner for life. Like everything in love and life, everyone must work hard to attain something.

A change in status means a change in a whole lot of things, including spending habits and of course, a change in the way you pay and file your taxes. For marital bliss and avoidance of tax season stress here are tips from the IRS to keep a happy ever after:

1. Notify the Social Security Administration Report any name change to the Social Security Administration, so your name and Social Security Number will match when you file your next tax return. Informing the SSA of a name change is quite simple. File a Form SS-5, Application for a Social Security Card, at your local SSA office. The form is available on SSA’s website at www.socialsecurity.gov, by calling 800-772-1213 or at local offices.
2. Notify the IRS If you have a new address you should notify the IRS by sending Form 8822, Change of Address. You may download Form 8822 from IRS.gov or order it by calling 800–TAX–FORM (800–829–3676).
3. Notify the U.S. Postal Service You should also notify the U.S. Postal Service when you move so it can forward any IRS correspondence.
4. Notify Your Employer Report any name and address changes to your employer(s) to make sure you receive your Form W-2, Wage and Tax Statement, after the end of the year.
5. Check Your Withholding If both you and your spouse work, your combined income may place you in a higher tax bracket. You can use the IRS Withholding Calculator available on IRS.gov to assist you in determining the correct amount of withholding needed for your new filing status. The IRS Withholding Calculator will even provide you with a new Form W-4, Employee’s Withholding Allowance Certificate; you can print out and give to your employer so they can withhold the correct amount from your pay.

Helpful Links:

Social Security website

Form 8822, Change of Address

Form W-2, Wage and Tax Statement

W-4, Employee’s Withholding Allowance Certificate