File Fast to Avoid Tax Identity Theft

As we’ve reported before, the level of increased tax refund identity crime is rising. That is when an individual uses your name, Social Security number and birth date to file a fake tax return with

fake earnings and tax-withholding information to gather fraudulent refunds- frequently on a simple to use, pre-paid ATM card, sent to a calculated, false address.

Then, when an individual files their real tax estimate the IRS flags it because one with the same SSN has already been submitted. The agency then processes your return by hand and scrutinizes everything on it, in order to substantiate your identity and establish which return is valid. This results in an indeterminate delay as far as when you’ll receive your tax refund.

The crime is possible partly because the IRS. now processes disbursements as fast as possible, and matches up the essential validating info after the fact. Most companies, for instance, must provide earnings info to their staff on forms W-2 and 1099 by the end of January. But the employer does not need to file the same info with the government until the end of March. So when you file your tax return, the IRS doesn’t necessarily have your earnings info from your employer for comparison.

The office of the national Taxpayer Advocate, which represents the interests of tax filers, has recommended the IRS point out tactics to get rid of the lengthy delay between processing refunds and reconciling eligibility. “This sequence makes little sense,” the advocate’s report for 2009 asserted. “From a taxpayer point of view, the sequence leads to millions of cases where taxpayers accidentally make over claims that the IRS does not identify till months later on causing the taxpayer not only a taxation liability but penalties and interest fees too. From the government’s point of view, this sequence creates possibilities for crime and requires the IRS to dedicate resources to retrieving refunds that shouldn’t have been paid and that it regularly can’t recover.”

The IRS has been holding hearings on the right way to move to “real-time” tax processing so it can reconcile info on tax returns faster.

With tax refund fraud, scammers can both mock paper W-2s or other earnings statements and file the return by mail. Or, more frequently, they just make up the numbers and file electronically, because there is no need to submit tangible W-2s when filing electronically. By filing early, fraudsters exploit the time gap experienced by the IRS.

So where does this leave the taxpayer? One essential part of the crime is that the scammers hurry to file early, so the fraudulent return is the 1st one received by the IRS. That begs to the point of for filing your return earlier, instead of later on if you don’t have a sound excuse to wait. This will reduce the prospects of a successful fake filing.

If you or someone you know is facing other IRS problems, such as an audit or a levy, don’t hesitate to call JG Tax Group today. Our staff has over 120 years of combined IRS experience and can help you secure your finances.

New Study Suggests Tax Complaints are Valid

Out of the 3.9 million homes that reported a modified gross salary of $200,000 or even more in 2009, more than ten thousand homes paid nothing in taxes, according to a new study from the IRS.

How’d they do it? According to the study, nearly one-third of the high-income taxpayers used miscellaneous rebates such as non-reimbursed worker expenses. Other massive reasons for tax deductions included charitable contributions, medical expenses, and losses related to an incorporated small enterprise.

“High-income returns are way more often nontaxable on account of a mixture of reasons, none of which, on their own, would lead to non-taxability,” recounted the study.

The Buffett Rule, a proposal from President Barack Obama, could change that. The suggested rule would impose a thirty percent minimum taxation rate on those who fall into the highest income bracket, which could limit some of the refunds the affluent use to scale back their tax load.

The new study’s information from 2009 also reflects a dip in revenues from 2008, likely related to the financial disaster and recession. The total number of taxpayers who reported making earnings of more than $200,000 dropped by over eleven percent between 2009 and 2008.

Utilizing the tax code to your benefit a la Mitt Romney has been a hot topic this year, as the fairness of the U.S. Tax code remains scrutinized. Loopholes and various adjustments in the tax code have fueled a small-scale industry for tax professionals and accountants who offer guidance on the way to make your IRS tab less expensive.

Tax pros are already looking forward to 2012 taxes, when the tax burden to some U.S. taxpayers could change significantly with the expiration of numerous tax cuts and other non-permanent tax reductions.

If you or someone you know is facing IRS tax problems, do not hesitate to call the professionals at JG Tax Group to help secure your financial future.

Should Congress Increase the IRS Budget?

This past weekend’s Times cover story describing the dramatic rise in identity fraud targeting the United States Treasury is old news to tax professionals. It’s no secret that the IRS needs additional funding. Tax fraud is directly related to the IRS’s need for a bigger budget.

In her 2011 Annual Report to Congress, Taxpayer Advocate Nina Olson identified tax-related ID theft as one of the most serious problems facing taxpayers, noting that it was the premiere reason taxpayers sought her office’s help. As explained by Ms. Olson, “organized and not-so-organized criminals have sought to profit off the taxation policy by submitting bogus refund claims and often by swiping and utilizing the identity of another taxpayer. Each year, the IRS’s task in identifying these claims has come to be more challenging, with the inevitable result that some fake claims are never identified and many valid claims are erroneously held up, imposing significant burden on truthful taxpayers.” Ms. Olson added that ID thieves frequently file multiple returns using Social Security numbers (SSNs) belonging to others and, “by the time the actual taxpayers eventually file their returns may be blocked because their SSNs have previously been utilized for the same year.”

The IRS processes roughly one hundred million taxation estimates each year, the majority of which are filed in a short window, with many taxpayers depending on a quick turn-around of their refund claims. According to the Times article, the Treasury Dept.’s Inspector General for Tax Administration recently testified that while the IRS noted 940,000 fraudulent returns in 2010, thereby avoiding paying out $6.5 billion to ID thieves, it missed an extra 1.5 million fake returns, which resulted in more than $5.2 billion in fraudulent distributions.

Not surprisingly, Congress appears poised to make a response to the identity theft explosion by toughening the criminal penalties for those caught filing fake returns. The incremental deterrent effect of such enhanced penalties won’t exterminate the problem anytime soon. Meanwhile, the IRS must continue to throw scarce resources at safeguarding prevention from the increasing number of fake claims while limiting the fiscal and emotional costs and lost time suffered by the taxpayers.

On the positive side, the Times reports the IRS has already identified 2.6 million fraudulent refund claims this year, plenty of which are due to ID theft. The improved detection has been attributed to an increase in staff whose job is to target ID theft, distributing PINs to prior victims, and technological advances. Unfortunately, the IRS’s filters engineered to reveal ID theft are both under-inclusive (resulting in fake claims being paid) and over-inclusive (resulting in delays in paying valid refund claims, often to taxpayers who rely on their refunds for necessities). Given the IRS’s budget was cut by roughly $300 million last year, devoting resources to combating ID theft may take funding away from other important areas. Perhaps rather than depending on the questionable dissuasive effect of greater criminal sanctions, Congress should think about increasing the IRS’s budget, thus giving it the time and resources required to handle ID thieves without neglecting other enforcement priorities.

Perhaps you’ve failed to file taxes in the past and face IRS problems this year. If so, don’t hesitate to call the tax professionals at JG Tax Group today to resolve any issues you may be having.

Legitimizing Business and Pleasure with the IRS

It is undeniably possible to mix pleasure and business when it comes to company travel. The trick is to structure the trip so the primary point of your travel is for business reasons with one or two leisure days in the mix. If structured correctly, this plan can supply some very nice benefits leading to Uncle Sam reimbursing you for a part of the travel costs via tax savings.

You must use caution if you’re attempting to mix a work trip with leisure days so you don’t risk losing refunds. It’s important to follow IRS rules on what qualifies as a allowable cost. The basic guide for travel and entertainment is that in order for costs to be thought of as refunds, they’ve got to be ordinary and necessary for your business. ‘Ordinary’ means something that’s considered standard to your trade, perhaps taking a potential customer out to eat to chat about a business matter. ‘Necessary’ means something that’s appropriate and helpful for your company like attending a trade or business meeting having to do with to your industry.

Company travel rebates have one or two limitations; the IRS is very aware of the aptitude for misuse. In the U.S., if your trip is basically for business, the travel costs are deductible. This includes airline fare, automobile rental, taxis and even tips. Out of the pocket costs for personal days typically aren’t deductible unless you can qualify for the weekend rules covered below. The basic rule is that a trip will be considered essentially for business if your trip includes more business oriented days than personal ones.

If staying over a weekend substantially reduces the price of your business/vacation, the out of the pocket costs for Saturday and Sunday are deductible, whether or not you do nothing business oriented on those additional days.

Because it sounds better if you and your other half are both traveling for business reasons, the expenses for both of you will very likely be deductible. Nevertheless you cannot subtract any particular costs associated with your kids, for example the price of their airplane tickets. Valid business costs that you would have ran into if you traveled alone (like taxis or rental vehicles) which are shared by the members of your family are completely deductible.

Only your meals (and your spouses) are fifty percent deductible while on your business trip/vacation.

Your accommodations are one hundred percent deductible while traveling for business. Nonetheless if your family lodges with you, you can only subtract the price of the room you would pay for if traveling by yourself. Once your personal vacation takes place, your out of the pocket costs aren’t deductible (unless the weekend rule mentioned above is applicable).

In addition to the aforementioned, there are more business-related deductions the IRS will permit. For instance tips, telephone calls, web access and even laundry. Bear in mind the costs you opt to deduct must be reasonable. You do not want to go wild. The IRS can refuse deductions at their discretion, especially if they’re too exorbitant.

It’s acceptable to mix business with leisure, so if you’ve got the opportunity to take your family along on a business journey, by all means do so. Just make sure to keep accurate records or other paperwork in order to legitimatize your business affairs when necessary. Make sure that you include how many days were spent on business and the purpose for your trip. Additionally, remember that if you’re facing an IRS audit, business travel is typically one of the first places an agent will examine. Be certain to keep comprehensive records to substantiate your business costs while traveling.

If you are facing an IRS audit or incur other tax problems, do not hesitate to call the professionals at JG Tax Group. Our staff has over 120 years of combined IRS experience and will help secure your financial future.

Will IRS Reap Benefits of Facebook IPO Lawsuits?

The Facebook IPO was predicted to do so well to the point that is was actually hyped. That was then. Now lawsuits are piling up. If you lost your money, you may have a claim. But if you do, will it go into your pocket or must you split it with the IRS?

Say you purchased Facebook stock for $38, and it drops to $30, and then you get $5 back in a settlement. Do you have to report it as revenue? Like so much in the tax world, it depends.

An individual settling a claim that he lost out due to misrepresentation by a firm, bank, or broker typically has a motivation to say the loss was capital in nature and that any resulting settlement should be capital too. The IRS, on the other hand, has a motivation to treat the earnings as standard revenue.

To resolve this standoff, look towards the origin of the claim. In investment loss cases, the litigant will often claim the recovered funds are nontaxable as a recovery of basis, or represent capital gain. Usually, this invites questions into what the plaintiff has already done on his taxation assessment in regards to this investment loss.

If the complainant has already claimed a tax loss on the investment, then that tax loss must be taken into account in figuring out how the profits of any ultimate recovery will be treated. In the typical investment loss case, the plaintiff is saying the defendant’s conduct (accounting problems, mismanagement, conversion, fraud, etc.) lead straight to the loss or devaluation in price of the plaintiff’s investment. The complainant shouldn’t get favorable taxation on the recovery and a tax deduction for the investment loss.

One key issue is what causes capital treatment. A capital gain is normally outlined by reference to the gain on the sale of a capital asset. See IRS Tax Topic 409, Capital Gains and Losses. The mere settlement of a lawsuit is usually not a disposition, but within the context of recovering damages in lawsuits, the courts and IRS have often permitted capital gain treatment even though you still hold the investment.

Suppose you purchased Facebook stock for $38, it drops to $18, and you later recover $20. Depending on your circumstances, it might be treated as a recovery of your basis and therefore nontaxable regardless of if you still hold the stock.

Investment related recoveries are more common today than in the past. More firms, banks, brokers, and investment agencies fall subject to these claims now than ever before. The tax issues for the recovering taxpayers regularly revolve around standard income rules versus capital gain. The point is that the IRS profits could be huge, so plan ahead.

If you’re facing IRS tax problems, do not hesitate to call the professionals at JG Tax Group. We can help answer any tax-related questions you may have.

IRS Plans to Save Taxpayers $40 Million Dollars

The IRS is eliminating a little over 1 million square feet of rented office space by 2014 in 43 different office locations. The reduction of space comes with a monetary break of nearly 40 million dollars for taxpayers, according to the Internal Revenue Service. The reductions are mainly the product of turning larger offices into smaller offices, therefore allowing the space to be rented out elsewhere. Complaints of lofty taxpayer expenses have caused the IRS to make cuts when possible.

Of all the offices that are expected to close, none of the spaces entail interacting directly with taxpayers or offering taxpayer assistance. The Internal Revenue Service expects that the closure of these offices will have minimal effects on taxpayers due to the nature of the work that is done in them. The closure of these offices is expected to save $17.2 million in annual rental costs in 2012 and $23.5 million in 2013. Because these savings are permanent reductions in costs, the savings are expected to be seen beyond 2013 and well into future years.

In 2012, the offices closing equal a total of 715,000 square feet and 230,000 square feet in 2013. In 2011, IRS office space was reduced by a total of 105,000 square feet. The Internal Revenue Service has over 650 offices nationwide. The space-cutting initiative is part of a series of rental-saving projects that have been taking place over the past seven years. These projects have saved $70 million dollars annually to date, according to the IRS.

Although the IRS is taking steps to reduce taxpayer expenses, the professionals at JG Tax Group can help you if you are having tax problems. If you owe the IRS money and would like to resolve your financial issues, contact us today to get the help that you need.

IRS Encourages Small Businesses to Utilize Important Tax Credits

The IRS is acknowledging Small Business Week (this week) by endorsing two important tax credits and a special relief program that could provide major tax benefits this year.

The two tax credits- one for hiring veterans and one for employer-provided health care reduce taxes for small businesses when they file their 2012 federal income tax returns.

Tax Credit for Hiring Veterans

The Work Opportunity Tax Credit gives employers a chance to receive tax credit if they hire eligible unemployed veterans. For-profit employers can receive up to $9,600 per veteran and tax-exempt organizations can receive up to $6,240 per veteran. The refund is contingent upon many different factors, including how long the veteran was unemployed before being hired, how many hours they work, and their first year income. Businesses who hire veterans with service related injuries qualify for the biggest tax credits.

Employers must certify these new hires in order to get the credit. Typically, employers file a Form 8850 with the state workforce agency within 28 days after the employee is hired. However, under a special rule, employers have until June 19, 2012, to complete and file this form if a veteran was hired on or after Nov. 22, 2011, and before May 22, 2012. The 28-day rule will again apply to eligible veterans hired on or after May 22. The form can be submitted electronically or faxed.

Businesses use Form 5884 and Form 3800 to claim the tax credit. Tax exempt organizations use a different claim procedure through Form 5884-C. Details are on IRS.gov.

Tax Credit For Small Businesses that Provide Health Care

Small businesses that provide 50 percent or more of employee health insurance premiums may be eligible for the small business health care tax credit. Started two years ago, the credit is manufactured to entice small employers to begin to offer healthcare or maintain coverage they already have.

Small businesses can claim the credit from 2010 to 2013 and beginning in 2014, two additional years. Geared towards small businesses that primarily employ low-and moderate-income workers, the maximum credit, in tax-years 2010 through 2013, is 35 percent of premiums paid by small businesses and 25 percent of premiums paid by tax-exempt organizations, increasing to 50 percent and 35 percent in 2014.

Employers can claim the credit on their income tax return using Form 8941 and Form 3800. Tax-exempt organizations also use Form 8941 and then claim the credit on Form 990-T.

Recently, the Small Business Health Care Tax Credit page re-emerged on IRS.gov and is filled with info and guides created to aid small businesses in figuring out if they qualify for the credits. The page includes a step-by-step guide for figuring out eligibility, examples, FAQ’s, YouTube videos and a webinar.

If you or your small business is in trouble with the IRS, do not hesitate to call the professionals at JG Tax Group. With over 120 years combined IRS experience, we can help you secure and repair your finances and assets.

Are You Eligible For An OVDP Refund?

The IRS initially rolled out the Offshore Voluntary Disclosure Program (OVDP) in 2009. Its purpose was intended to aid individuals who were hiding offshore accounts to become compliant with their taxes. The toughest consequence for undisclosed offshore account holders if found by an IRS audit used to be 50% of the highest aggregate balance in foreign accounts along with imprisonment. The Offshore Voluntary Disclosure Program reduced that penalty to 20% and waived imprisonment. In 2009 alone, the IRS announced collections of USD 3.4 billion on account of the OVDP.

In 2011, the IRS rolled out a second Offshore Voluntary Disclosure Program. This time, the highest penalty was 25%, but included two other tiers – a 5% penalty and a 12.5% penalty if the taxpayer met certain criteria. Because these tiers weren’t offered in 2009, the IRS decided to refund penalties to those individuals who, in 2009, would have been eligible for the lower penalty structures.

“We have had clients who’ve finished the process and received their rebates. These clients were US persons but they’d not lived in the US for an exceedingly long time,” asserts Chaya Kundra, a Maryland based tax lawyer and Principal at Kundra & Associates.

While the 2009 OVDP didn’t see as much participation by Indian U.S. Citizens as the 2011 OVDP, what’s crucial here is the message the IRS is trying to send out.

“The IRS is essentially saying that its policy on tracking offshore revenue is ready. By abating the penalty, the IRS is spotting that it had been a little more rigorous than required and that it is willing to accept real circumstances. At the exact same time, the IRS is saying that it is willing to work with you if you’re willing to step forward and make disclosures on your offshore income and assets,” Kundra adds.

The penalty refunds are based primarily on precise circumstances which set the tone for IRS ‘ policy on this matter. Let us look at what these conditions are:

Conditions for five percent penalty tiers

A taxpayer may satisfy any one of these three conditions to have eligibility for the five percent penalty (that is, if you paid a 20% penalty, you may be eligible to get a 15% refund)

Condition One: The taxpayer had barely any use of the offshore account.

So as to determine this, the taxpayer must meet all four of the following conditions:

(a) didn’t open or cause the account to be opened; for instance the taxpayer inherited offshore accounts (b) have exercised minimum, rare contact with the account, for instance, to request the account balance, or update accountholder information such as a change in address, contact person, or email; (c) have, except for a withdrawal closing the account and transferring the funds to an account in the United States, not withdrawn more than $1,000 from the account in any year that the taxpayer was non-compliant; and (d) can establish that all appropriate US taxes have been paid on funds deposited to the account

Condition Two: Taxpayers who are foreign residents and who were unaware they were United States citizens

Condition Three: Taxpayer paid all taxes in foreign country

To be eligible under this condition, taxpayers must be foreign residents and must meet all three of the following conditions for all the years of their voluntary disclosure:
(a) taxpayer resides in another country; (b) taxpayer has made a good faith showing that she or he has timely went along with all tax reporting and payment requirements in the country of residency; and (c) taxpayer has $10,000 or less of US source income each year.

For these taxpayers only, the offshore penalty won’t apply to non-financial assets, such as real property, business interests, or art, acquired with funds that the taxpayer can establish that all relevant taxes have been paid, either in the U.S. or in the country of residence. This exception only applies if the tax returns filed with the foreign tax authority included the offshore-related taxable income that wasn’t reported on the US taxation assessment.

Conditions for 12.5% penalty tier

Taxpayers whose highest total account balance (including the fair valuation of assets in undisclosed offshore entities and the fair market value of any foreign assets that were either purchased with wrongly untaxed funds or produced improperly untaxed income) in every one of the years covered by the 2011 OVDI is less than $75,000 will qualify for a 12.5% offshore penalty. So if you paid a twenty percent penalty, you may be fit for a 7.5% refund.

How to claim a reimbursement:

If you took part in the 2009 OVDP and your case was closed with a Form 906 closing agreement, but you suspect that you’d be eligible for a lower penalty as per conditions above, you can make an application including all pertinent contact information (name, address, SSN, home / cellphone numbers), the name of the Revenue Agent assigned to your case, and a copy of your agreement. You can send this information to the IRS.

6 Tips From the IRS

Here are six tips from the IRS to help you prepare next year’s tax return.

1.
Start to make adjustments to withholdings sooner rather than later. Doing this will reduce the amount of taxes you end up owing. The IRS created a withholding calculator to aid employees in figuring out whether or not they should submit a W-4 to their employer.

2.
Make sure your returns are stored in a reliable, safe spot. Having easy access to your returns will help you be ready for any questions from the IRS as well as make the filing process easier on you.

3.
Double check that all of your pay stubs are correct and that employers are withholding the accurate percentages for insurance and other items. Double checking these figures will make your life easier in the long run and prevent you from running into unwanted problems.

4.
If you decide to hire a tax professional, do so early. The more time in advance you hire, the less anxiety there is for both parties. Tax professionals can be of service to you throughout the year. Always remember that just because you hire a professional, it is still your responsibility to ensure the accuracy of your tax returns.

5.
Itemize your tax deductions. Extra mortgage payments and donations can lead to valuable tax write-offs. If you don’t keep up with them, you could be missing out on money in your pocket come tax season.
6.

Use the American Opportunity Tax Credit and other tuition exemptions to your advantage. This will help you reduce your college costs and will expire at the end of 2012. If you take advantage of it now, you can still save next year.

If you are in need of additional tax help, or are in trouble with the IRS, do not hesitate to call the professionals at JG Tax Group. Our staff has over 120 years combined IRS experience and can help secure your financial future.

Facebook's 16 Billion Dollar Tax Break

Facebook Inc.’s IPO will create billions in new wealth for its founders, staff and investors. It will also save the company 16 billion dollars in federal taxes.

That’s the amount Facebook will be in a position to subtract from its tax liability for granting stock options to its owners and staff. The tax-break windfall, which should be the largest ever claimed by a firm for stock option awards, is generally known as the “stock option tax loophole.”

It’s an entirely legal tax sidestepping technique. Tax law claims that if a business issues options to staff to buy stock in the future at a pre-set price, the company gets to subtract the largest difference between what the workers paid for the shares (the strike price) and the shares ‘ market price. That difference is treated by the IRS as though it were a work expense, which is deductible from revenues.

Facebook filings reveal that that difference is expected to be about $16 billion dollars. The business intends on employing the rebates to help it avoid taxes for several years to come. It will also claim a $500 million refund for taxes paid in the last two years.

Senator Carl Levin has long sought to end the stock-option loophole and is utilizing the Facebook IPO to promote legislation that would stop it. Even as it tells potential financiers about its growing income flow, Levin declared today, “Facebook is planning simultaneously to tell Uncle Sam it has no taxable income, balancing its income with stock option tax deductions.”

“This profitable enterprise will stop paying any federal corporate income taxes, simply because it gave millions of stock options to its executives,” he revealed from the Senate floor. “It will go from a corporate citizen that paid its taxes, to one that not only pays no taxes to Uncle Sam on its profits, but gets a huge tax refund.”

Levin has a point. But defenders of the loophole responded that the firm’s nonpayment of taxes will be offset by taxes paid by the recipients when they exercise their options. Levin has a rebuttal to that claim, too, saying that Facebook as an enterprise benefits from administrative services, ranging from patent protection to trade enforcement. And, the senator claims, the fact that executives pay taxes doesn’t mean corporations should not.

Adding insult to injury, Levin stated, is that co-founder Eduardo Saverin renounced his U.S. Citizenship to get around paying taxes on his Facebook IPO. Saverin has denied that taxes are the reason he gave up his citizenship, but nonetheless he could save about $67 million in federal taxes by having done so.

JG Tax Group wants to know what you think. Facebook’s founders and investors made a $100 billion dollar corporation that now employs more than 3,500 individuals and has changed the way the world interacts. Does it merit a $16 billion corporate tax break? Or is it time to repeal the stock option loophole?

Tax Fraud Still Prevalent Despite Season Passing

Your e-mail inbox may have a message from the “IRS” – but the real IRS claims it’s fradulent.

The IRS warns that e-mail scams are circulating again now that tax filing season has passed. You might even get a telephone call or a fax, saying the IRS requires personal financial information.

IRS spokesperson Michael Devine says the e-mails often use the IRS trademark symbol in an effort to appear legitimate. But Devine states that some scam e-mails are simple to spot because they have misspellings, use incorrect grammar or peculiar phrasing. But others are reasonably sophisticated and tough to spot.

“The IRS doesn’t send unsolicited e-mail to taxpayers anddoes not ask for private and monetary information such as PIN numbers, passwords or similar personal information for fiscal accounts,” states Devine, in a press release issued Monday by the IRS. “If the IRS has a question, the initial contact a taxpayer gets will be a letter or notice that arrives via the mail.”

Devine asserts if you receive a telephone call, fax or letter in the post from someone making a claim to be from the IRS but you suspect they aren’t staffed by the IRS, contact the IRS at 1-800-829-1040 to establish whether or not it is legitimate.

If you are facing real IRS problems, please don’t hesitate to call the professionals at JG Tax Group today. Our staff has combined IRS experience of over 120 years and can help you quickly secure your financial future.

IRS Tax Relief Help: U.S. Citizens Living Abroad May Face Serious Tax Problems

The news that Facebook co-founder Eduardo Saverin relinquished his U.S. citizenship has sparked both criticism and applause nationwide. While his motives may have been tax related, it is important to understand the reasons behind them. Many U.S. taxpayers are unaware of the laws as they relate to the IRS and U.S. citizenship.

Most U.S. citizens living overseas do not realize that although they are living abroad, they are still required to file U.S. tax returns due to the fact that they are citizens of the United States. One way to avoid filing a U.S. tax return is to relinquish your United States citizenship.

Mr. Jeffrey Galante of JG Tax Group has 31 years of senior management experience with the IRS. He has represented clients worldwide who have lived abroad for several years without filing U.S.taxes because they didn’t know that it was a requirement. Oftentimes these clients visit the local U.S. Embassy and are denied the ability to obtain a visa for their new wife or children upon finding out that they are not in compliance with the IRS and must file their past U.S. tax returns in order to obtain a visa for their new family members.

In one case, Mr. Galante represented a United States citizen who was living in New Zealand for 15 years and was making a significant amount of money at a lower tax bracket. When he attempted to obtain a travel visa for his new wife to enter the United States, he was notified by the U.S. Embassy that he had to file 7 years’ worth of U.S. tax returns before he could do so. After preparing the tax returns, the overall amount owed was a whopping $650,000 plus penalties and interests. This client had neither worked in nor traveled to the United States in 15 years.

According to Mr. Galante, if a citizen is not making money within the United States and is living abroad and relinquishes their citizenship they usually do not have to file U.S. tax returns or pay U.S. taxes. If you are living abroad and find yourself in trouble with the IRS, do not hesitate to call the professionals at JG Tax Group. Our staff has over 120 years of combined IRS experience and can alleviate any IRS problems you may be experiencing.