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Orange County Tax Law Blog

How to correct a past FBAR mistake

You need to file a Report of Foreign Bank and Financial Accounts (FinCEN Firm 114) each year that you have offshore accounts with cumulative balances that cross the $10,000 threshold. If you are a U.S. person and fail to make the disclosure, the civil penalties are stiff.

For a non-willful failure to file a FBAR, the civil penalty is up to $10,000 and can be applied each year you miss the required disclosure. When willful, the penalties skyrocket and can reach 50 percent of the value of unreported accounts up to $100,000.

Wildfire-related tax relief and casualty losses

At the height of wildfire season, the biggest fire to hit Orange County in more than a decade destroyed 25 structures and damaged 48. The Canyon 2 fire, which got its name because just last month another fire had burned to the east, caused evacuations of several elementary schools and closed eastbound 91. By the end of the week, it has almost been fully contained.

This week, the IRS announced tax relief for wildfire victims in northern California. The tax filing deadline for individuals and businesses will be moved to January 31, 2018. While counties listed were Butte, Lake, Mendocino, Napa, Nevada, Sonoma and Yuba, firefighters and relief workers called in from other parts in the state were also eligible.

IRS hires Equifax to detect fraud: Not an Onion headline

By now, everyone has probably heard about the security breach at Equifax that likely exposed the personal information of more than 145 million Americans. Who stole the information and what they plan to do with it remains unknown. 

Last week, the IRS faced questions as Politico reported it had recently finalized a contract agreeing to pay Equifax $7.25 million to help it detect fraud. The contact was a “sole source order” meaning it was not open for bids from multiple providers. It issued on the last day of the fiscal year – September 30.

Back-to-school and the related tax issues

As children and families adjust to their back-to-school routines, the IRS had a reminder about school-related tax benefits. These can help college students, graduates and families saving for future higher education costs.

As the price of higher education continues to outpace overall inflation, average in-state costs can easily be over $30,000. It is crucial to understand the credits – American Opportunity Tax Credit (AOTC), Lifetime Learning Credit (LLC), deductions and role of 529 plans.

Offshore account information sharing becomes a new norm

One of the precursors for sharing information requires systems to speak to each other. Similar data must be gathered and then entered into automatic annual exchanges.

The OECD and G20 approved Common Reporting Standards (CRS) back in 2014. Information on offshore financial accounts will be shared with taxing authorities in the account holder’s country of residence. Currently, 102 jurisdictions have signed a public commitment to implement the CRS.

Partnership audit changes take effect next year

Changes in the way partnerships are audited have been in the works for several years. Congress passed legislation in 2015 that goes into effect next year.

In this post, we'll use a Q & A format to update you on key things to know about the changes.

Legitimate business or just a hobby? How the IRS tells them apart

Hobbies are an important part of our lives. They offer stress relief, the opportunity to develop new skills, the ability to escape from the rigors of our everyday lives, and are an important part of allowing us to remain vital and active into our twilight years.

In some cases, a hobby can become something more. It might be possible for a hobby to transition into a legitimate business, either full-time or as a side job.

Digital currency exemption to be considered

The indication is that the IRS is going after digital currency after a summons of Coinbase for information on member accounts. This is as Bitcoin has continued to climb in value and other digital assets like Ethereum and LiteCoin are becoming more commonly accepted methods of payment.

As these digital forms of currency continue to multiply, the IRS response has been slow. And the Service's policy has caused numerous headaches, by treating the digital assets as property rather than currency.

IRS Warning: Beware fake hurricane-related charity scams

With Hurricane Harvey having left behind record-setting devastation - and Hurricane Irma having done the same across the Southern U.S. - Americans are donating money and supplies to charitable organizations like never before. Millions has been raised for and on behalf of such organizations as The American Red Cross, The United Way, The Center for Disaster Philanthropy and more.

Unfortunately, for as many legitimate charities there are raising money for the countless victims who were displaced by the disaster, there are scammers and criminals taking advantage of the tragedy.

Tax implications of divorce or legal separation

Something that many people may not understand is that there are tax consequences of different payments associated with divorce or legal separation.

The IRS wants to alert taxpayers to the different impact of various payments often seen between divorced or divorcing spouses. They issued a tax tip alert earlier this month to delineate which of them are deductible or should be included as income.