Who Says There Is No Such Thing as a Second Chance?

It has now been several years since the Swiss banking giant UBS found itself in trouble for impeding the IRS and conspiring to defraud the United States. The outcome was a negotiated settlement between the U.S. government and UBS that called for the disclosure of the names of U.S. taxpayers holding money overseas. This result was significant due to the commonly overlooked/ignored filing requirements of U.S. persons that have overseas financial interests.

Any U.S. person who has a financial interest in, or signature authority (or other authority) over, any foreign financial account may have to file a Report of Foreign Bank and Financial Account Form TD.90-22.1 (commonly referred to as an FBAR). The requirement is triggered if the aggregate value of these accounts exceeds $10,000 at any time during a calendar year. Failing to file an FBAR can result in civil and/or criminal penalties. If the failure to file is deemed “willful,” a penalty equal to the greater of $100,000 or 50 percent of the account balance can be imposed for each failure to file. This means that if someone willfully fails to file the form for three years in a row, the penalties can equal an aggregate of 150 percent of the account balances, wiping out the entire account.

Capitalizing on the publicity of an end to Swiss bank secrecy and the severity of the penalties, the IRS offered an amnesty-like voluntary disclosure option for taxpayers to come clean. 

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The Social Security Tax Cut And A More Direct Route To Job Growth

The first pay day of 2011 is fast approaching and just about everyone is going to see an increase in the amount of their take home pay.  The amount of the change depends on how much money a person makes, but there will be a change that stems from the December passage of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the “Act).

With the passage of the Act, the Republicans claimed victory by extending most of the “Bush Tax Cuts” for another two years.  This move was necessary to avoid an increase in the amount of tax most employees would pay each week.  To achieve a reduction in the amount paid the legislation includes a temporary two-percentage-point reduction in the employee’s share of Social Security Tax.  This reduction replaces the now expired Making Work Pay tax credit, but is slightly more expansive and will put a little more money in the pockets of the taxpaying public.

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