Report Those Foreign Accounts Lest Uncle Sam Take the Dough!
Make sure you file the appropriate documents by June 30, if you have one or more foreign financial accounts – lest the Revenooers catch up with you, impose astronomical fines, and maybe even throw you in the slammer!
And the fines, believe it or not, could possibly exceed the value of the account(s)!
So recently found out taxpayer Zwerner – based on a Florida jury’s recent conclusion. Seems Zwerner willfully failed to file the required foreign financial account reports for 2004 through 2006, regarding his Swiss bank account. The judge will eventually assert the appropriate penalty – which could be as high as 150% of the account balance!
Willful failure to file these reports, you see, can eventuate in imposition of a penalty of up to the greater of $100,000 or 50% of the account balance for each year of the filing failure.
The Constitution prohibits the imposition of “excessive fines,” and Zwerner plans to appeal any onerous decision on this basis. He thinks the maximum penalty of 150% (3 years x 50% per year) is a bit hefty. We’ll see how far he gets. Bottom line for now, however, is that folks shouldn’t play games with foreign accounts – the government is all over this issue and has been in recent years.
And speaking of Constitutional challenges, let’s hear it for Z Street, Inc. which is pretty hyper over IRS actions relative to its application for tax exempt status under Internal Revenue Code Section 501(c)(3).
Seems Z Street was incorporated as a non-profit, for the purpose of “educating the public about Zionism; about the facts relating to the Middle East and to the existence of Israel as a Jewish state; and about Israel’s right to refuse to negotiate with, make concessions to, or appease terrorists.” And immediately upon formation, Z Street filed the appropriate application with the Revenooers, seeking tax-exempt status.
After the usual government foot-dragging, with no apparent progress by IRS, the corporation’s representative contacted the government, and was told that Revenooer concerns centered on the organization’s “advocacy” activities which are impermissible under the IRC, and further that IRS has special concerns about applications from organizations whose activities relate to Israel and whose positions with regard to Israel contradict the current policies of the U.S. government.
Heard anything like that on the news, lately? Indeed, another Lois Lerner moment.
So, along went Z Street to Court, prompting an IRS motion to dismiss the action to no avail. The Court found that IRS’ various arguments in favor of dismissal of the litigation held no water.
CONSULT YOUR TAX ADVISOR – This article contains general information about various tax matters. You should consult your CPA regarding the implications to your particular situation.
Jeff Quinn, the author of this article, is a stockholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno. He can be reached at 831-7288, welcomes comments at firstname.lastname@example.org, and invites readers to consider his other commentary at http://blog.nolo.com/taxes.