Hot Topics in the Federal Tax Controversy: The Latest Developments in Audits, Investigations, and Tax Litigation

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Matthew D. LeeMatthew D. Lee is a former U.S. Department of Justice trial attorney who concentrates his practice on all aspects of white collar criminal defense and federal tax controversies. He has extensive experience in advising clients on issues regarding foreign bank account reporting (FBAR) obligations, the Foreign Account Tax Compliance Act (FATCA), and the Internal Revenue Service’s 2009 Offshore Voluntary Disclosure Program, 2011 Offshore Voluntary Disclosure Initiative, and 2012 Offshore Voluntary Disclosure Program. He has represented hundreds of U.S. taxpayers with undisclosed foreign bank accounts. Mr. Lee has published numerous articles regarding the IRS voluntary disclosure programs and FBAR and FATCA reporting obligations and speaks frequently on these topics. He is the author of a forthcoming treatise on FATCA to be published by the Practising Law Institute.He has also represented clients in all stages of proceedings before the Internal Revenue Service, including audits, appeals, and collections, and Tax Court and district court litigation. Mr. Lee also has experience in conducting corporate internal investigations and advising clients as to corporate compliance issues involving the Bank Secrecy Act, the USA Patriot Act, FATCA, and anti-money laundering laws and regulations. Mr. Lee has represented both corporations and individuals in criminal investigations involving tax, money laundering, health care, securities, public corruption, and fraud offenses, and has significant experience in handling all stages of federal litigation including trials and appeals. Mr. Lee publishes a blog devoted to addressing the latest developments in the tax controversy field at www.taxcontroversywatch.com.

Matthew D. Lee Partner Blank Rome LLP215.569.5352Lee-M@BlankRome.com

Learning Objectives• Upon completion of this webinar you will be able to:• Define foreign asset & FBAR reporting requirements.• Identify who is required to file an FBAR.• Determine FBAR filing exemptions.• Identify FBAR penalties for non-compliance.• Define the Foreign Account Tax Compliance Act FATCA and the Obligations of Foreign

Financial Institutions and of U.S. Taxpayers to Report Foreign Assets.• Identify who is required to file Form 8938 and the rules for Form 8938.• Determine reporting thresholds for domestic taxpayers and taxpayers living abroad.• Apply special rules for trusts and estates.• List penalties for non-filing of Form 8938.• Differentiate options for U.S. taxpayers with undisclosed foreign bank accounts.• Specify the risks of “Quiet Disclosure”.

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Setting the Stage:The Tax Gap

Background: The Tax Gap

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Components of the Tax Gap

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Current IRS Enforcement Priorities

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IRS Audit Rates

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IRS-Criminal Investigation Priorities

• International tax fraud• Identity theft fraud•Return preparer fraud•Employment Tax

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IRS Budget Woes• Since FY2010, IRS has absorbed funding cuts of $1 billion (nearly 8 percent); caused loss of

$8 billion of revenue over the same period• Loss of nearly 10,000 employees (9 percent of workforce)• Sequestration caused an additional $618 million last year (including furlough days)• FY2013 request: $12.9 billion (increase of 8.8%)• FY2013 appropriation: $11.3 billion • Enforcement priorities in FY2013 budget request:

– Prevention of fraud and identity theft– Addressing offshore tax evasion– Using new information reporting requirements to reduce underreporting– Strengthening exam and collection activities– Expanding enforcement efforts among corporate and high-wealth taxpayers– Strengthening return preparer compliance (“core to the IRS tax gap strategy”)

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IRS-Criminal Investigation staffing

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International Tax Compliance• Intense focus on curtailing offshore tax avoidance using “carrot and

stick” approach– U.S. Tax Gap: $450 billion– U.S. Senate PSI Report (2/26/14): Offshore tax schemes cause $150 billion in lost tax

revenue

• The “carrot”– Current Offshore Voluntary Disclosure Program (OVDP) which follows highly successful

2009 and 2011 amnesty programs• Provides participating taxpayers with amnesty from criminal prosecution by filing of amended tax

returns and payment of taxes, interest, and penalties• 43,000 voluntary disclosures since 2009 (versus 100 annually under traditional voluntary disclosure

program)• Over $6 billion in additional revenue collected to date

– Newly announced Streamlined Filing Compliance Procedures (June 2014)

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International Tax Compliance (continued)

• The “stick”– Collaboration with Justice Department in filing unprecedented number of

criminal prosecutions of U.S. taxpayers with offshore accounts and their non-U.S. “enablers”

– Increased audit activity (both income and FBAR exams)– Ongoing criminal investigations of banks in Switzerland, Israel, India, and

the Caribbean – United States-Switzerland global “deal” announced in August 2013; 106

Swiss banks enrolled in program

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Enforcement Efforts to Date

• UBS Deferred Prosecution Agreement (Feb. 2009)• Approximately 150 investigations of offshore account holders since

2009– Over 60 account holders have been criminally charged– 55 guilty pleas have been entered– 5 convictions after trial

• A number of facilitators who helped clients hide assets offshore have been indicted, including 30 banking professionals

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Credit Suisse Guilty PleaMay 19, 2014

• Second largest Swiss financial institution (after UBS AG)• Credit Suisse and its subsidiaries engaged in an extensive

and wide-ranging conspiracy to help U.S. taxpayers evade taxes. The conspiracy spanned decades.

• Credit Suisse will pay a total of $2.6 billion in fines.• Credit Suisse agrees to provide information to help IRS/DOJ

make a treaty request for information.

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Wegelin & Co. Guilty PleaJanuary 3, 2013

• Oldest Swiss financial institution• Wegelin & Co. indicted• Subsequently closed down• $74 million penalty• 5% of the bank’s accounts were U.S. account holders • $1.2 billion in U.S. assets• Non-U.S. accounts were sold to Raiffeisen• John Doe summons issued to bank

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Prosecution of Facilitators in 2014

• Credit Suisse Bankers– Andreas Bachmann– Josef Dörig

• Mizrahi Israeli Bank– Shokrollah Baravarian (CDCA)

• Leumi Bank– Employees and Bank identified as co-conspirators

• Three Caribbean bankers (EDVA)

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Prosecution of clients

• Robert C. Sathre pleaded guilty to tax evasion. He hid assets in a Caribbean bank account to avoid 1995 and 1996 tax assessments. He was sentenced to 36 months.

• Dr. Patricia Hough was convicted at trial for failing to report business proceeds from a Caribbean medical school. She was sentenced to 24 months. Her husband fled before indictment and remains a fugitive.

• John Cote was convicted at trial for tax evasion. Cote used Caribbean and Swedish bank accounts to hide assets. He was sentenced to 46 months.

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Swiss Bank Voluntary Disclosure Program• Bloomberg reports that over 100 Swiss banks entered program

as Category II, meaning bank has “reason to believe” it violated U.S. tax laws.

• Swiss banks will receive non-prosecution agreement in exchange for certain information and payment of penalty.

• Category 2 Swiss banks can minimize the penalty imposed if they can show that their clients have filed FBARs (or entered OVDP).

• Program requires production of Leavers List.

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Leavers List

• Account holders’ names not produced• Information – by account – concerning the transfer of funds into

and out of the account on a monthly basis, including – Amounts– Date of transfers– Financial Institution that received transfers– Host country of financial institution

• Essentially everything necessary to make a treaty request to identify the account holder

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John Doe Summons

• Recent publicized John Doe Summons– Wegelin & Co.– FirstCaribbean International Bank (FCIB), a Barbados-based

bank with branches across the Caribbean• Requires banks to produce records for account holders

– Civil and Criminal statute of limitations are tolled for account holders if the case is not resolved after six months

– Civil tolling is in addition to any other tolling provisions

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GAO: Increasing Rates of Foreign Bank Account Reporting

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However, Taxpayer Advocate Disagrees

• U.S. Taxpayer Advocate 2013 Report to Congress– 7.6 million U.S. citizens reside abroad and many more U.S.

residents have FBAR filing obligations– IRS received only 807,040 FBAR submissions in 2012– signals “significant information reporting noncompliance”

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Foreign Account Tax Compliance Act (FATCA)

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Foreign Account Tax Compliance Act (FATCA)

• “The Foreign Account Tax Compliance Act (FATCA) is an important development in U.S. efforts to improve tax compliance involving foreign financial assets and offshore accounts.” (www.IRS.gov)

• “FATCA was enacted in 2010 by Congress to target non-compliance by U.S. taxpayers using foreign accounts. FATCA requires foreign financial institutions (FFIs) to report to the IRS information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest.” (www.treasury.gov)

• Effective as of July 1, 2014

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Two Primary FATCA Requirements

• Foreign financial institutions are annually required to report directly to the U.S. government information about financial accounts held by U.S. taxpayers, or held by foreign entities in which U.S. taxpayers hold a substantial ownership interest.

• U.S. taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS annually on an information return.

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FATCA Policy in Context of U.S. Tax Laws

• U.S. taxpayers’ investments have become increasingly global in scope• Recognition that foreign financial institutions (FFIs) are in best position

to identify and report with respect to their U.S. account holders• Absent reporting by FFIs, some U.S. taxpayers may attempt to evade

U.S. tax by hiding money in offshore accounts• “To prevent this abuse of the U.S. voluntary tax compliance system

and address the use of offshore accounts to facilitate tax evasion, it is essential in today’s global investment climate that reporting be available with respect to both the onshore and offshore accounts of U.S. taxpayers.” (Preamble to Final Regulations)

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What Does FATCA Require of FFIs?

• FATCA requires Foreign Financial Institutions (FFIs) to report to the IRS information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. In order to avoid withholding under FATCA, a participating FFI will have to enter into an agreement with the IRS to:– Identify U.S. accounts,– Report certain information to the IRS regarding U.S. accounts, and – Withhold a 30 percent tax on certain U.S.-connected payments to

non-participating FFIs and account holders who are unwilling to provide the required information.

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International Coordination and Model Intergovernmental Agreements

• Treasury is collaborating with foreign governments to develop two alternative model intergovernmental agreements that facilitate the effective and efficient implementation of FATCA.

• Model 1 IGA: FFIs in jurisdictions that have signed Model 1 IGAs report the information about U.S. accounts required by FACTA to their respective governments who then exchange this information with the IRS.

• Model 2 IGA: A partner jurisdiction signing an agreement based on the Model 2 IGA agrees to direct its FFIs to register with the IRS and report the information about U.S. accounts required by FATCA directly to the IRS.

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International Coordination (continued)

• To date, Bermuda, Canada, Cayman Islands, Chile, Costa Rica, Denmark, Finland, France, Germany, Guernsey, Honduras, Hungary, Ireland, Isle of Man, Italy, Japan, Jersey, Luxembourg, Malta, Mauritius, Mexico, the Netherlands, Norway, Spain, Switzerland, and United Kingdom have signed or initialed model agreements.

• Treasury is engaged with more than 50 other countries and jurisdictions to curtail offshore tax evasion, and more signed agreements are expected to follow in the near future.

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FATCA/Form 8938

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FATCA Foreign Asset Reporting Requirements

• IRC 6038D: new Internal Revenue Code provision enacted as part of FATCA

• Requires reporting of specified foreign financial assets if aggregate value exceeds certain thresholds

• Applies to tax years beginning after March 18, 2010• Requires that new information return be attached to a taxpayer’s

U.S. income tax return: Form 8938, “Statement of Foreign Financial Assets”

• Only applies to individual taxpayers, for now

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Who Is Required to File Form 8938?

You must file Form 8938 if:1. You are a “specified individual.”

AND2. You have an interest in “specified foreign

financial assets” required to be reported. AND

3. The aggregate value of your specified foreign financial assets is more than the reporting threshold

that applies to you.

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What is a “Specified Foreign Financial Asset”?

A specified foreign financial asset (SFFA) is:• Any financial account maintained by a foreign financial

institution– Foreign bank accounts– Foreign mutual funds– Foreign hedge funds– Foreign private equity funds– Certain foreign insurance products

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What is a SFFA? (continued)

• Other foreign financial assets held for investment that are not in an account maintained by a U.S. or foreign financial institution, namely:– Stock or securities issued by someone other than a U.S. person– Any interest in a foreign entity– Any financial instrument or contract that has as an issuer or

counterparty that is other than a U.S. person– Foreign pensions and deferred compensation plans– Foreign trusts and estates (if “specified individual” is aware of

its existence)

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Reporting Thresholds for Domestic Taxpayers• Unmarried taxpayers living in the U.S.: The total value of specified foreign

financial assets is more than $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year.

• Married taxpayers filing a joint income tax return and living in the U.S.: The total value of specified foreign financial assets is more than $100,000 on the last day of the tax year or more than $150,000 at any time during the tax year.

• Married taxpayers filing separate income tax returns and living in the U.S.: The total value of specified foreign financial assets is more than $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year.

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Reporting Thresholds for Taxpayers Living Abroad

• You are a taxpayer living abroad if:– You are a U.S. citizen whose tax home is in a foreign country and you are either a bona

fide resident of a foreign country or countries for an uninterrupted period that includes the entire tax year, or

– You are a U.S. citizen or resident, who during a period of 12 consecutive months ending in the tax year is physically present in a foreign country or countries at least 330 days.

• A taxpayer living abroad must file if:– You are filing a return other than a joint return and the total value of your specified

foreign assets is more than $200,000 on the last day of the tax year or more than $300,000 at any time during the year; or

– You are filing a joint return and the value of your specified foreign asset is more than $400,000 on the last day of the tax year or more than $600,000 at any time during the year.

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Form 8938 – Part I

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Form 8938 – Part II

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Form 8938 – Part II (continued)

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Form 8938 Requires Disclosure of Tax Items Attributable to SFFAs

• Part III of Form 8938 requires that filers must summarize tax items attributable to SFFAs

• Individuals must identify specific tax items (interest, dividends, gains/losses, deductions, credits, etc.) that correspond to SFFAs

• Individuals must also list the form, schedule, and line upon which these tax items are reported

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Form 8938 – Part III

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No Duplicative Reporting Required

• If you are required to file a Form 8938 and you have a specified foreign financial asset reported on Form 3520, Form 3520-A, Form 5471, Form 8621, Form 8865, or Form 8891, you do not need to report the asset on Form 8938. However, you must identify on Part IV of your Form 8938 which and how many of these form(s) report the specified foreign financial assets.

• Even if a specified foreign financial asset is reported on a form listed above, you must still include the value of the asset in determining whether the aggregate value of your specified foreign financial assets is more than the reporting threshold that applies to you.

• NOTE: FBAR (FinCEN Form 114) must still be filed

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No Duplicative Reporting Required(continued)

• Form 3520 – Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts

• Form 3520-A – Annual Information Return of Foreign Trust With a U.S. Owner

• Form 5471 – Information Return of U.S. Persons With Respect to Certain Foreign Corporations

• Form 8621 – Information Return by a Shareholder of a PFIC or Qualified Electing Fund

• Form 8865 – Return of U.S. Persons With Respect to Certain Foreign Partnerships

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Form 8938 – Part IV

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Guidance for Valuing SFFAs• The regulations provide that the appropriate value of specified foreign financial assets for

purposes of Form 8938 reporting is each such asset’s highest fair market value during the year, and must be reported in U.S. dollars. If the asset is denominated in foreign currency, the maximum value is first determined in the foreign currency and is then converted to U.S. dollars at the taxable year-end spot rate for converting that currency. Specific guidelines are provided for which exchange rate should be used.

• For financial accounts, a reasonable estimate of the maximum value is allowed. Periodic account statements provided at least annually may be relied on to determine the maximum value, provided that the taxpayer does not have reason to know that the statement does not reflect the maximum value. For other financial assets, the fair market value on the last day of the taxable year can be used, unless the taxpayer knows that this is not a reasonable estimate (for example, if the taxpayer knows that the asset value declined during the year).

• Joint owners of a SFFA generally each include the full value of the asset for determining whether threshold is met (except for married taxpayers filing jointly)

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Penalties for Non-Filing of Form 8938

• Failure to file Form 8938 may result in a $10,000 civil penalty as well as an additional $10,000 continuation penalty for each 30 day period after the taxpayer is notified by the IRS of the failure to file (not to exceed $50,000)

• Exception if failure to file is due to reasonable cause and not due to willful neglect

• The fact that a foreign jurisdiction would impose a civil or criminal penalty for disclosing the required information is NOT reasonable cause

• Criminal penalties may also apply• Failure to file Form 8938 or certain assets on Form 8938 may keep the

statute of limitations open for ALL items on a return until 3 years after Form 8938 is filed.

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Section 6038D filing by domestic entities• Proposed Regulations issued on December 14, 2011• 3 requirements:

– U.S. entity must have an interest in a specified foreign financial asset with an aggregate value exceeding $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year;

– U.S. entity is “closely held” by one U.S. individual taxpayer; and• “Closely held” means 80% of the vote or value of the stock, capital interests or profits

interests is held by one U.S. individual taxpayer;– Either:

• At least 50% of the U.S. entity’s gross income for the tax year is passive income or 50% of the U.S. entity’s assets at any time during the tax year produce or are held for the production of passive income; or

• 10% passive income or assets plus the U.S. entity is formed or availed of by a specified individual with a principal purpose to avoid reporting under Section 6038D.

• Notice 2013-10: Filing by domestic entities deferred until 2014

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Foreign Bank Account Reporting

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Foreign Bank Accounting Reporting

• Required as part of Bank Secrecy Act since 1970s• U.S. taxpayers with foreign accounts have two obligations

– Answer question “yes” on Form 1040, Schedule B, Part III (due April 15 or due date of extended return) or other applicable tax return

– Electronically File FinCEN 114, Report of Foreign Bank and Financial Accounts (“FBAR”) (due June 30)

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Foreign Bank Account Reporting Form 1040, Schedule B

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Foreign Bank Account ReportingForms 1120 and 1120-S

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Foreign Bank Account ReportingForm 1065

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Foreign Bank Account ReportingForm 706

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Foreign Bank Account ReportingForm 990 (Not yet updated to reflect FinCEN 114 as of this presentation)

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FinCEN 114 (FBAR)

• New form and instructions issued July 2013• Required to be filed annually by June 30• All forms are required to be filed electronically• No extensions of deadline are available• If filing on behalf of client, obtain a FinCEN authorization form

(Form 114a)• Form TD F 90-22.1 is now obsolete.

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FinCEN 114 (FBAR) (continued)

•Must register with BSA to access online filing system.

•To register, go to: http://bsaefiling.fincen.treas.gov/Enroll.html

•FinCEN 114 is almost identical to TD F 90-22.1

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FinCEN 114

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FinCEN 114

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FinCEN 114

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FinCEN 114

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FBAR Filing Requirements

The FBAR must be filed if all of the following requirements are satisfied:– The filer is a U.S. Person;– The U.S. Person has a financial account;– The financial account is in a foreign country;– The U.S. Person has a financial interest in, or signature or other authority

over, the financial account; and– The aggregate account balance of all such foreign accounts exceed

$10,000 (in U.S. dollars) at any time during the calendar year.

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FBAR Penalties for Non-Compliance

• Criminal penalties for willful violations:– Up to 5 years imprisonment and $250,000 fine

• Civil penalties– Non-willful violation: Up to $10,000 for each violation– Willful violation: Greater of $100,000 or 50 percent of the balance in the

account at the time of the violation• Both civil and criminal penalties can be imposed together.

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FBAR Litigation: United States v. Zwerner

• First litigated suit against a U.S. citizen for penalty(also first suit brought against a non-felon).

• Zwerner had foreign account for many years.• Charged with failing to report account each year for four years• Balance of account was about $1,400,000.• 86 years old when DOJ filed suit.• Government sought 200% of account balance plus additional penalties.• Jury found three violations (150%)• Unpaid taxes were negligible ($25,000 ≈ 3.4%). • Settled for $1,800,000.

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Circular 230 and FBAR Reporting

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Circular 230 Obligations

• OPR has published “Professional Responsibility and the Report of Foreign Bank and Financial Accounts” (revised June 2013) on IRS website

• Key points:– “Practitioners who prepare an individual’s Form 1040 have a duty under Circular 230

to inquire of their clients with sufficient detail to prepare proper and correct responses to the foreign bank account questions on Schedule B.” See Circular 230 sec. 10.22

– “[G]ood faith reliance contemplates that a practitioner will make reasonable inquiries when a client provides information that implies possible participation in overseas transactions/accounts subject to FBAR requirements.”

– Preparer has no obligation to prepare FBAR for taxpayer, but “does have an affirmative obligation to advise the client of the need to file the FBAR form and the consequences of failing to do so.”

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Circular 230 Obligations and FBAR Reporting

• Best practices for return preparers:– Engagement letters should advise of FBAR filing obligation and

address whether the preparer will prepare FBARs– Questionnaire/organizer should request information about foreign

bank accounts and assets, and preparer should follow up to ensure client responds in writing

– Document any oral conversations with taxpayer in writing

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Other IRS Enforcement Priorities

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Questionable Return Preparer Fraud

• IRS and DOJ engaged in aggressive campaign to combat return preparer fraud

• IRS getting better at using data mining to detect QRP schemes• Civil penalties of $5,000 per return• IRS can obtain injunctions against non-legacy preparers• IRS Office of Professional Responsibility can ‘disbar’ legacy

preparers• Criminal prosecution is also likely

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Typical fraudulent practices

• Preparing phony tax-return forms with fabricated businesses and income (e.g., EITC Fraud) – The IRS estimates that 21 to 25 percent of EITC payments were issued

improperly in Fiscal Year 2012. The dollar value of these improper payments was estimated to be between $11.6 billion and $13.6 billion.

• Claiming false and inflated deductions • Claiming false filing status and dependents• Schemes du jour

– Telephone Excise Tax in Tax Year 2006– First Time Homebuyer Credit in Tax Year 2008

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Stolen Identity Tax Refund Fraud

• Refers to use of stolen or otherwise wrongfully acquired personal identification information to file a fraudulent claim with the IRS for a tax refund.

• Occurs when a social security number, or list of numbers, is stolen or bought; a false tax return showing a refund due is filed electronically, usually at the beginning of filing season before the legitimate taxpayer has filed for the year; and the refund is loaded to a prepaid card, sent to a bank account or mailed to an address accessible by those involved in the scheme.

• From 2008 to 2012, IRS identified more than 550,000 victims• During FY2013, the Justice Department filed criminal charges in more

than 580 cases against more than 880 defendants

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Why do refunds schemes work?

• IRS uses high dollar “filters” and will pay other refund claims• Low level clerks review returns initially• IRS slow at recognizing schemes and wants to make system

accessible to all taxpayers– Beginning in January 2015, it will impose a limit of three electronic

direct deposits of tax refunds into a single financial account or prepaid debit card

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Employment Tax Fraud

• Criminalizes IRC 6672 penalty• All the government needs to show is that payments were

voluntarily and intentionally made to creditors other than the United States with knowledge that the withheld funds were due to the United States

• There is no separate requirement that the government prove that the payments were without justification

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Employment Tax Fraud scenarios

• Paying personal expenditures in lieu of payroll taxes• Long term operation of unprofitable business without making

payroll tax payments• “Pyramiding” business entities• Cash payroll

– Motive often times to avoiding other liabilities (e.g., workers compensation)

– Frequently detected by other illegal activities

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Gift tax return compliance initiative

• IRS estimates that between 60% and 90% of taxpayers that transfer real property to family members for little or no consideration fail to file gift tax returns

• 15 states have voluntarily provided data to IRS on real property transfers among family members

• In December 2011, federal court authorized “John Doe” summons to California Board of Equalization for real property transfer data

• Dickerson v. Commissioner (U.S. Tax Court March 8, 2012)– Gift made in 1999

• Redstone v. Commissioner (U.S. Tax Court April 12, 2013)– Gift to children made in 1972

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Form 1099-K/Small Business Initiative

• Tax gap attributable to small businesses: $140 billion• Since fall 2012, IRS has sent out 20,000 letters to small

businesses notifying them of “possible income under-reporting”• Focus is on identifying businesses that receive “an unusually high

portion” of sales through credit card transactions, suggesting that cash transactions are being underreported

• Businesses as asked to respond with an explanation within 30 days

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FY2012 IRS Collection Activities

• Federal tax liens filed: 707,768 (1.04 million in FY2011)• Notices of levy served: 2.9 million (3.7 million in FY2011)• Seizures: 733 (776 in FY2011)

• OIC’s received: 64,000 (59,000 in FY2011)• OIC’s accepted: 24,000 (20,000 in FY2011)

• Civil penalties assessed: $27 billion• Civil penalties abated: $11.2 billion

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Statute of Limitations

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Civil Statute for Audit

•Generally, 3 years•Extended until Form

8938 filed•Substantial

Understatement (3 additional years)

•Badge of Fraud (indefinite)

Criminal Statute•Generally, 6 years•Delayed up to 6

months due to IRS foreign record requests

•Tolled when taxpayer is overseas

Review Questions for Self Study CPE:

Now’s the time to answer the review questions 4-6.Click here:http://www.proprofs.com/quiz-school/story.php?title=ODEwMTYx5CQ0*Once all questions are complete please submit and close quiz window.

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Questions?

Matthew D. LeeBlank Rome LLP

One Logan SquarePhiladelphia, PA 19103Lee-M@BlankRome.com

www.taxcontroversywatch.com

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