California's Voluntary Compliance Initiative 2 - For Non Reported Foreign Income

California's Voluntary Compliance Initiative 2 will run from August 1, 2011 through October 31, 2011. It provides (for those who file amended returns and participate) for reduced penalties and can avoid criminal action by California for those who have participated in abusive tax avoidance transactions or offshore financial arrangements.

What is an offshore financial arrangement? 

An offshore financial arrangement (OFA) is any transaction designed to avoid or evade California income or  franchise tax through the use of: (a) offshore payment cards, including credit, debit, or charge cards issued  by banks in foreign jurisdictions, or (b) foreign banks, financial institutions, corporations, partnerships, trusts, or other entity.  This would include interest, dividends, capital gains, rental income, etc. that were not reported on your California tax return solely because those items were located or occurred in a offshore countries.



What is an abusive tax avoidance transaction?
Abusive tax avoidance transaction (ATAT) means a:  
• Tax shelter as defined under Internal Revenue Code (IRC) Section 6662(d)(2)(C)
• Reportable transaction as defined under IRC Section 6707A(c)(1) that is not adequately disclosed in
accordance with IRC Section 6664(d)(2)(A),
• Listed transaction as defined under IRC Section 6707A(c)(2),
• Gross misstatement within the meaning of IRC Section 6404(g)(2)(D), or
• Transaction to which the noneconomic substance transaction (NEST) penalty applies under Revenue and
Taxation Code (RTC) Section 19774.

Read More Here.  Let us help you amend your current and past returns and enter the program while there is still time to take advantage of its benefits.  

IRS Voluntary Offshore Disclosure Program Ends 8/31/11- After That Date Things will get really Bad!

The IRS 2011 Voluntary Offshore Disclosure Program ends on 8/31/11. Any entry into the program must be made by that date.  If you have not been filing your tax return, reporting your Mexican Bank Accounts and Financial Accounts, reporting your Mexican Corporation, Partnership or Fideicomiso this may be the last chance to eliminate or reduce potentially huge penalties, and avoid criminal prosecution.

The IRS has stated any taxpayer who does not come forward by the date, and who is later discovered or attempts to make up for past forms which have not been filed will be subject to the maximum possible penalties and possible criminal prosecution.

The IRS knows that in 2008 only about 100,000 US tax returns were filed by Gringos living in Mexico, but there are over One Million US Citizens living in Mexico.  With these statistics in mind,  there is little doubt that Mexico will become a big target for the IRS in the very near future.  The statue of limitations never runs out on future IRS action if you have not filed a return for any particular year or if you fail to file certain foreign information returns such as those for Mexican Corporations, Fideicomisos, Mexican Financial accounts, etc.

In serious situations such as this, Attorney-client privilege which we can offer our clients is often indispensable.

Read more at our website at www.TaxMeLess.com