Andreozzi Bluestein Attorneys Speak on Federal and State Compliance Issues

Buffalo Law Journal’s Michael Petro interviewed Andreozzi Bluestein’s Senior Associate Michael Tedesco and Associate Heather Schmidt on federal and state compliance issues for his Tax Law Special Report.

Petro’s federal article discusses recent trends in foreign bank reporting issues for both U.S. citizens and international banks. The IRS began allowing taxpayers to come forward with respect to their foreign accounts through an Offshore Voluntary Disclosure Initiative in 2009. However, they received wide criticism that the program did not properly take into account each taxpayer’s specific facts and circumstances – i.e. a taxpayer hiding money offshore received the same treatment under the program as a Canadian citizen who was unaware of his dual US citizenship, let alone the host of reporting requirements that came with it.   In an attempt to increase voluntary disclosure by recognizing and accounting for various facts and circumstances, the IRS expanded its voluntary disclosure options to allow for submissions under the (1) Offshore Voluntary Disclosure Program; (2) Resident Streamlined Disclosure Program; (3) Non-Resident Streamlined Disclosure Program; or (4) Opt-out submissions under the Internal Revenue Manual. With FATCA provisions in effect, these voluntary disclosure programs are very attractive to taxpayers, as foreign banks are routinely cooperating with the IRS to provide names of their US clients.

As further incentive to come forward to resolve federal tax issues, Petro’s article discusses a recently enacted law that allows the State Department to revoke or refuse to renew passports for taxpayers who owe $50,000 or more in outstanding federal taxes. It is unclear whether that threshold includes penalties and interest, or even a Title 26 miscellaneous penalty paid under the Offshore Voluntary Disclosure Program. With apparent ambiguities in determination and enforcement procedures, practitioners and taxpayers alike are anxiously waiting to see how the IRS and the State Department will coordinate this new law.

The full text of Michael Petro’s article, “IRS Ramping Up Foreign Tax Demands” (Dec. 21, 2015), can be found here:

http://www.bizjournals.com/buffalo/blog/buffalo-law-journal/2015/12/irs-ramping-up-foreign-tax-demands.html

A week later, Petro published another article, this time on New York State enforcement initiatives. With regulations in effect as of September 25, 2012, NYS can order the DMV to revoke driver’s licenses for taxpayers with $10,000 or more in delinquent State tax debt. Recently, there have been proposals to lower that threshold to $5,000.

However, there are concerns among practitioners that the procedures surrounding the revocation are constitutionally inadequate. Petro writes:

“In comments about the state’s 2015-16 budget, the New York State Bar Association expressed concern with these provisions. It writes that this ‘could have the unintended consequence of imposing unnecessary and unjustified hardships on some taxpayers, without adequate appeal rights to ensure that these highly punitive consequences do not create severe financial hardships, or result in the Department of Taxation and Finance collecting tax that it would otherwise not have been able to collect under the current collections provisions.’”

The full text of Michael Petro’s article, “NYS Takes Aggressive Measures to Get Taxes Owed” (Dec. 28, 2015), can be found here:

http://www.bizjournals.com/buffalo/blog/buffalo-law-journal/2015/12/nys-takes-aggressive-measures-to-get-taxes-owed.html

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