IRS IRS Enforced Collection Actions and its AlternativesEnforced Collection Actions
" Did I really have to declare that to the IRS??? "
-
Upload
troy-baird -
Category
Documents
-
view
25 -
download
0
description
Transcript of " Did I really have to declare that to the IRS??? "
![Page 1: " Did I really have to declare that to the IRS??? "](https://reader036.fdocuments.us/reader036/viewer/2022062407/56812d53550346895d92587d/html5/thumbnails/1.jpg)
"Did I really have to declare that to the IRS???"
How to Come Back into the US Tax System
Town Hall Evening Dr Guillaume Grisel
“Changes in the US Tax Laws: LL.M. (Cambridge), Ph.D., T.E.P.
How it impacts US Citizens Abroad” Attorney-at-law, Bonnard Lawson
![Page 2: " Did I really have to declare that to the IRS??? "](https://reader036.fdocuments.us/reader036/viewer/2022062407/56812d53550346895d92587d/html5/thumbnails/2.jpg)
Swiss-US Estate Planning in a Nutshell
Pre-Nuptial Agreements, Wills, Powers of Attorney, Etc.
For US Citizens Living in Switzerland
![Page 3: " Did I really have to declare that to the IRS??? "](https://reader036.fdocuments.us/reader036/viewer/2022062407/56812d53550346895d92587d/html5/thumbnails/3.jpg)
"Did I really have to declare that to the IRS???"
How to Come Back into the US Tax System
![Page 4: " Did I really have to declare that to the IRS??? "](https://reader036.fdocuments.us/reader036/viewer/2022062407/56812d53550346895d92587d/html5/thumbnails/4.jpg)
The available options
What the IRS wants you to do:
• "OVDP" Offshore Voluntary Disclosure Program (2009 11 12)
Or
• "Streamlined filing" New Streamlined Filing Compliance Procedures for Non-Resident U.S. Taxpayers (Sept. 2012)
What many people do…
• "Quiet" or "Silent" Disclosure
4
![Page 5: " Did I really have to declare that to the IRS??? "](https://reader036.fdocuments.us/reader036/viewer/2022062407/56812d53550346895d92587d/html5/thumbnails/5.jpg)
The available options
What the IRS wants you to do:
• "OVDP" Offshore Voluntary Disclosure Program (2009 11 12)
What many people do…
5
![Page 6: " Did I really have to declare that to the IRS??? "](https://reader036.fdocuments.us/reader036/viewer/2022062407/56812d53550346895d92587d/html5/thumbnails/6.jpg)
OVDP: What you have to pay
• 8 years income tax + interests
• Tax penalties• Accuracy-related penalties (20% of tax due)• Failure to file/pay penalties (up to 25% of tax due each)
• FBAR penalty! • 27.5% of highest value of each offshore account during the 8 last years (!!!)
Can be reduced to 12.5% or even 5% in some (rare) cases
• Your lawyer and your CPA…
![Page 7: " Did I really have to declare that to the IRS??? "](https://reader036.fdocuments.us/reader036/viewer/2022062407/56812d53550346895d92587d/html5/thumbnails/7.jpg)
OVDP: Up & down sides
Upsides• Quasi-assurance of no criminal prosecution• Predictability of tax and penalties due
Downsides• High penalties (in particular FBAR penalty)• Thorough audit by the IRS• High professional fees (CPA, lawyer)
7
![Page 8: " Did I really have to declare that to the IRS??? "](https://reader036.fdocuments.us/reader036/viewer/2022062407/56812d53550346895d92587d/html5/thumbnails/8.jpg)
The available options
What the IRS wants you to do:
• "OVDP" Offshore Voluntary Disclosure Program (2009 11 12)
Or
• "Streamlined filing" New Filing Compliance Procedures for Non-Resident U.S. Taxpayers (Sept. 2012)
8
![Page 9: " Did I really have to declare that to the IRS??? "](https://reader036.fdocuments.us/reader036/viewer/2022062407/56812d53550346895d92587d/html5/thumbnails/9.jpg)
Streamlined filing: Up & down sides
Upsides• Cheap and simple
– 3 years tax only (+ 6 years FBAR)– No penalties (only interests)– Lower professional fees
Downsides• Very restrictive eligibility conditions
– Non-resident since 1st January 2009– No return filed since 2009– Max. $1500 /year due to the IRS– Low level of compliance risk
• Lack of predictability: no assurance about criminal prosecution and penalties
• All submissions reviewed by the IRS
9
![Page 10: " Did I really have to declare that to the IRS??? "](https://reader036.fdocuments.us/reader036/viewer/2022062407/56812d53550346895d92587d/html5/thumbnails/10.jpg)
The available options
What the IRS wants you to do:
• "OVDP" Offshore Voluntary Disclosure Program (2009 11 12)
Or
• "Streamlined filing" New Filing Compliance Procedures for Non-Resident U.S. Taxpayers (Sept. 2012)
What many people do…
• "Quiet" or "Silent" Disclosure
10
![Page 11: " Did I really have to declare that to the IRS??? "](https://reader036.fdocuments.us/reader036/viewer/2022062407/56812d53550346895d92587d/html5/thumbnails/11.jpg)
« Quiet disclosure »: Up & down sides
Upsides• Relatively cheap and simple (if accepted by the IRS…)
– 6 years tax returns and FBARs– Failure to file/pay penalties but no FBAR penalty– Lower professional fees
• Generally no review by the IRS (but…)
Downsides• Not consistent with IRS rules no assurance about
criminal prosecution and FBAR penalties
11
![Page 12: " Did I really have to declare that to the IRS??? "](https://reader036.fdocuments.us/reader036/viewer/2022062407/56812d53550346895d92587d/html5/thumbnails/12.jpg)
Which way to pick?
If you are in this situation… Consider this way…
• Eligible for Streamlined filing Streamlined filing
• US resident OVDP
• Sophisticated offshore tax planning OVDP
• Very important tax due OVDP
• Risk of exchange of information OVDP
• Other « high risk » situation OVDP
• Only FBAR are missing File missing FBAR and explain
• Other cases ?
12
![Page 13: " Did I really have to declare that to the IRS??? "](https://reader036.fdocuments.us/reader036/viewer/2022062407/56812d53550346895d92587d/html5/thumbnails/13.jpg)
Swiss-US Estate Planning in a Nutshell
Pre-Nuptial Agreements, Wills, Powers of Attorney, Etc.
For US Citizens Living in Switzerland Dr. Guillaume Grisel
LL.M. (Cambridge), Ph.D., T.E.P.
Attorney-at-law, Bonnard Lawson
![Page 14: " Did I really have to declare that to the IRS??? "](https://reader036.fdocuments.us/reader036/viewer/2022062407/56812d53550346895d92587d/html5/thumbnails/14.jpg)
Estate planning: what for?
• Make sure your assets will be transferred to the people you want
• Minimize the tax burden
• Make your relatives’ life easier by simplifying the estate procedures
![Page 15: " Did I really have to declare that to the IRS??? "](https://reader036.fdocuments.us/reader036/viewer/2022062407/56812d53550346895d92587d/html5/thumbnails/15.jpg)
What will happen to my assets after my death?
1. Division of the marital property Between the surviving spouse and the estate
2. Division of the estate
Between the heirs (and the legatees)
+ Taxes and expenses …
![Page 16: " Did I really have to declare that to the IRS??? "](https://reader036.fdocuments.us/reader036/viewer/2022062407/56812d53550346895d92587d/html5/thumbnails/16.jpg)
Division of marital property
16
What will happen if no planning is done?
• Which law will apply? Swiss or US Law?
Law of the (last) common place of residence of the spouses.
Swiss law
• How is property divided under the Swiss «default» regime?
Acquests sharing (Errungenschaftsbeteiligung, participation aux acquêts)
o Assets earned during the marriage : split 50-50 «Acquests»
o Assets acquired before the marriage: not split
o Gifts / bequests received during the marriage: not split «Own assets»
![Page 17: " Did I really have to declare that to the IRS??? "](https://reader036.fdocuments.us/reader036/viewer/2022062407/56812d53550346895d92587d/html5/thumbnails/17.jpg)
Division of marital property
17
What are your alternative planning options?
By making a prenup / postnup, you can choose between:
1. Modified acquests sharing: The 50%-50% rule can be changed
2. Community property (freedom as to which assets are in or out of the community)
3. Separation of assets
4. US law if at least one spouse is US
![Page 18: " Did I really have to declare that to the IRS??? "](https://reader036.fdocuments.us/reader036/viewer/2022062407/56812d53550346895d92587d/html5/thumbnails/18.jpg)
Inheritance
What will happen if no planning is done?
• Which law will apply? Swiss or US Law?Law of the last place of residence of the deceased.
Swiss law
• How is the estate divided under the Swiss law «intestacy» rules:
1/2 1/2
Surviving spouse and children
Surviving spouseChildren
3/4
1/4
Surviving spouse and parents
Surviving spouseParents
3/4
1/4
Surviving spouse and siblings
Surviving spouseSiblings
1/3
1/3
1/3
Three children
Child 1Child 2Child 3
![Page 19: " Did I really have to declare that to the IRS??? "](https://reader036.fdocuments.us/reader036/viewer/2022062407/56812d53550346895d92587d/html5/thumbnails/19.jpg)
Inheritance
19
What are your alternative planning options?
By making a will or an inheritance agreement, you can choose to:
1. Modify the legal shares
2. Appoint new heirs Forced heirship rights must be respected
3. Appoint legatees
4. Make an inheritance agreement
5. Give a usufruct to the surviving spouse Options to « get around » the forced heirship rights
6. Subject your estate to US law
Pay attention to the conditions and consequences!
Appointment of an executor!
Trusts are recognized in Switzerland
![Page 20: " Did I really have to declare that to the IRS??? "](https://reader036.fdocuments.us/reader036/viewer/2022062407/56812d53550346895d92587d/html5/thumbnails/20.jpg)
Inheritance
Legal shares of the heirs at law:
Forced heirship rights:
1/2 1/2
Surviving spouse and children
Surviving spouseChildren
3/4
1/4
Surviving spouse and parents
Surviving spouseParents
3/4
1/4
Surviving spouse and siblings
Surviving spouseSiblings
1/3
1/3
1/3
Three children
Child 1Child 2Child 3
1/4
3/8
3/8
Surviving spouse and children
Surviving spouse
Children
Disposable share
3/8
1/8
1/2
Surviving spouse and parents
Surviving spouse
Parents
Disposable share
3/8 5/8
Surviving spouse and parents
Surviving spouse
Siblings
Disposable share
1/4
1/4
1/4
1/4
Three children
Child 1
Child 2
Child 3
Disposable share
![Page 21: " Did I really have to declare that to the IRS??? "](https://reader036.fdocuments.us/reader036/viewer/2022062407/56812d53550346895d92587d/html5/thumbnails/21.jpg)
Estate / inheritance taxes
US citizens living in Switzerland are potentially exposed to:
• US federal estate tax If estate and previous gifts exceed $ 5.25 millions
• Swiss cantonal inheritance tax The Canton in which the deceased had their last place of residenceNo inheritance tax in Schwyz
• US state estate tax? Possibly , if US domicile not lost (e.g. US law will)
• Swiss federal inheritance tax? Maybe in the (near) future …
![Page 22: " Did I really have to declare that to the IRS??? "](https://reader036.fdocuments.us/reader036/viewer/2022062407/56812d53550346895d92587d/html5/thumbnails/22.jpg)
In case of incapacity… the new Swiss rules
What will happen if no planning is done?
• Who can act on my behalf in the daily life?
1. Guardian is appointed by the Court if:
- Individual cannot safeguard his/her interests
- An urgent matter must be settled
2. Spouse or civil partner has limited powers with respect to:
- Legal acts: only if «usually necessary» to satisfy the needs - Assets: limited to «ordinary» management- Mail : only if «necessary»
• Health care
![Page 23: " Did I really have to declare that to the IRS??? "](https://reader036.fdocuments.us/reader036/viewer/2022062407/56812d53550346895d92587d/html5/thumbnails/23.jpg)
In case of incapacity… the new Swiss rules
What will happen if no planning is done?
• Who can make health-care decisions on my behalf?
In order:
1. Guardian if he/she specifically received this power
2. Spouse or civil partner if they live in the same household or if he/she provides personal assistance
3. Descendants
4. Parents if they provide personal assistance
5. Siblings
![Page 24: " Did I really have to declare that to the IRS??? "](https://reader036.fdocuments.us/reader036/viewer/2022062407/56812d53550346895d92587d/html5/thumbnails/24.jpg)
In case of incapacity… the new Swiss rules
What are your alternative planning options?
• Daily life Power of attorney in case of incapacity• Freedom to appoint the attorney you want• Freedom to define the scope of their powers in 3 possible fields
• Personal assistance• Management of the assets• Representation towards third parties
• Possibility to appoint different attorneys in different fields
• Health care Advanced medical directives• Early instructions for physicians• Appointment of a representative for health-care purposes
![Page 25: " Did I really have to declare that to the IRS??? "](https://reader036.fdocuments.us/reader036/viewer/2022062407/56812d53550346895d92587d/html5/thumbnails/25.jpg)
Thank you very much for your attention
Should you have any questions…
• Bonnard Lawson – International Law FirmMe Guillaume GRISELRue du Grand-Chêne 8CP 5463CH-1002 Lausanne
• +41(0)21/348’11’88