“GOTCHA” — UNANTICIPATED AUDIT ISSUES AFTER QUIET DISCLOSURES By Frank Agostino and Lawrence A. Sannicandro
ANOTHER GREAT ARTICLE FROM AGOSTINO & ASSOCIATES!! – To download a great article prepared by our very close friends at the Law Firm of Agostino & Associates in Hackensack, NJ (www.agostinolaw.com), see the Agostino & Associates February Newsletter – http://files.ctctcdn.com/f7d16a55201/5f66c5a0-157c-4050-bbdd-81087e8b2275.pdf
“GOTCHA” — UNANTICIPATED AUDIT ISSUES AFTER QUIET DISCLOSURES By Frank Agostino, Esq. and Lawrence A. Sannicandro, Esq.-
Practitioners worry about audits of returns submitted as quiet disclosures for good reason. The Service has been far less draconian in submissions under a traditional Offshore Voluntary Disclosure Program or the Streamlined Program, but revenue agents have taken a hard line in disallowing otherwise deductions and credits with respect to quiet disclosures. In this regard, the Service is granted broad authority to deny legitimate deductions, credits, and income exclusions, and to recast transactions to not only prevent the avoidance of U.S. tax but to impute income to U.S. donees and legatees. Practitioners should consider these issues when advising taxpayers to submit returns as quiet disclosures, pursuant to the Streamlined Program, or under the traditional Offshore Voluntary Disclosure Program. Finally, it is important for practitioners to reevaluate whether the quiet disclosure was in fact a more cost-effective alternative than the traditional Offshore Voluntary Disclosure Program before being contacted by the Service.
Which taxpayers who are most likely to be negatively affected by each type of adjustments for taxpayers with international activities? Learn about common audit adjustments that can apply including: the disallowance of deductions and credits for U.S. citizens, resident aliens, and nonresident aliens; the disallowance of the foreign earned income exclusion for U.S. citizens and resident aliens; and the Internal Revenue Service’s ability to recharacterize as ordinary income purported gifts and bequests from a partnership or a foreign corporation under Treas. Reg. § 1.672(f)-4. Finally, learn how to transition the taxpayer from a quiet disclosure into a traditional Offshore Voluntary Disclosure Program.
FOR THE FULL ARTICLE SEE http://files.ctctcdn.com/f7d16a55201/5f66c5a0-157c-4050-bbdd-81087e8b2275.pdf
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