When it comes to disclosing your offshore bank accounts to the IRS, waiting is a bad idea. In June 2014, changes to the IRS's Offshore Voluntary Disclosure Program raised the penalty for having offshore assets that the IRS discovers without your voluntary disclosure.
The IRS takes its filing deadlines seriously, but the agency does not make it easy to remember the finer points of each due date. April 15, for example, is the deadline for filing income tax returns. By deadline, the IRS means that the return must be mailed by 11:59 p.m. on that date. Of course, you can always request an extension, but April 15 is the date everyone associates with filing income tax returns.
Income tax season is in full swing, and, as happens every year, some taxpayers will be audited or otherwise drawn into controversy with the IRS. In some cases, disputes can result from inadvertent mistake or intentional obfuscation on the part of the taxpayer. In others, it may be the result of error on the part of the IRS. Regardless of the cause, every taxpayer is entitled to certain protections, called the Taxpayer Bill of Rights.
No one likes to discover they owe taxes after preparing their annual income tax returns. That unexpected obligation may interfere with a person’s monthly budget. Depending on the situation, a taxpayer may even be unable to pay the entire amount.
Litigation is never the only answer to a legal problem, and that includes tax disputes. The IRS has just announced a new option for dispute resolution that could reduce the number of cases that go to court: post-appeals mediation. For taxpayers and the government alike, not going to court can save both time and money.
There's a very good chance that you haven't heard of Raoul Weil, but the tax evasion case that he was wrapped up in likely had a major impact on every U.S. citizen who keeps money overseas. Weil was a former executive at UBS -- a financial giant in Switzerland -- and he stood accused of propagating a conspiracy when he aided and abetted U.S. citizens who wanted to keep their money overseas and out of the reach of the Internal Revenue Service.
It must happen, but it is hard to imagine that an online merchant would not want to do business in California. With more than 38 million people, the state offers immense opportunity to sellers of the entire spectrum of goods and services. The opportunity does not come without obligation, though. Each Internet seller not only needs a seller's permit, it must also collect sales and use taxes for items delivered to California addresses (unless the goods are tax-exempt).
Life would be much simpler if we could just say that online sellers need to understand sales taxes and consumers need to understand use taxes. In some ways, it's true. As we explained in our last post, though, consumers really have to be aware of the laws about both. Why? Because if the seller does not collect sales tax (on a taxable purchase), the consumer must pay a use tax. However, California also refers to a tax collected by out-of-state sellers as a use tax, not a sales tax. It's tricky.
When we think of shopping online, we generally think of ourselves as consumers. We lay back on the couch or get comfortable in our ergonomic desk chair and wander through website after website. If we need something, we are confident we will find it; the Internet is our oyster.