The war against terror after 9/11 has had an unanticipated impact on U.S. taxpayers
San Francisco, CA (PRWEB) September 9, 2008
Post 9/11, jurisdictions are providing the IRS with any requested information in an effort to track terrorists financial transactions. Because of the Patriot Act, US financial institutions have greater reporting obligations. This affects any U.S. resident with property, other financial assets or a business outside of the U.S.
"The war against terror after 9/11 has had an unanticipated impact on U.S. taxpayers", according to Elizabeth Shwiff. Shwiff is a Certified Public Accountant (CPA) and principal at Shwiff, Levy & Polo, LLP, which specializes in small business tax consulting and return preparation.
According to Shwiff, "Any U.S. resident is required to disclose all international holdings including bank accounts, real estate, stock ownership and any other financial investment. This law has been on the books for many years but was really ignored by the IRS and taxpayers until after 9/11. In an effort to find money launderers and terrorists, this law is now being enforced."
"This change is important to U.S. residents because they are taxed on their worldwide income, regardless of where they currently reside," continues Shwiff. The IRS defines a U.S. resident as anyone who has spent 183 days or more in a calendar year in the U.S.
Failing to disclose international assets may result in penalties ranging from $10,000 to $100,000 and more according to Shwiff. Many residents with ties to other countries are not aware of the IRS reporting requirements. As an example, Shwiff cites a client who has lived in California for more than 20 years and never disclosed investment property in South America on their tax returns.
The Patriot Act created after 9/11, required US banks to change their internal procedures including implementing a thorough anti-money laundering program. This includes:
•Monitoring transactions and accounts to determine if there is potential money laundering activity
•Checking account holders against terrorist and criminal watch lists published by government agencies and
•Filing reports about suspicious activity with the government.
"Many types of institutions, such as insurance companies, brokerage firms, jewelry stores, auto dealers and more are required to comply with these new laws. Because of the volume of transactions, many larger companies use software specifically developed to identify transactions that match certain criteria. These transactions are automatically sent to law enforcement agencies. These agencies have compatible software and are able to manipulate the data to look for patterns and specific information such as cross border transactions, says Shwiff.
"The practical implication of this is that if you are in the US and wiring $5000 each month to a relative in another country, you may fit the profile of someone who is "structuring" money which is a criminal act. It would be better for you to send one transfer of $60,000." Shwiff continues.
Many people who own international assets such as interest bearing bank accounts, a second home, or other property don't realize the tax impact these holdings may have on their U.S. taxes.
If you are a US resident and planning on living abroad, Shwiff recommends consulting a tax professional in both countries. She also recommends foreign residents and H1b andL1 visa holders consult with a tax professional. "Since 9/11, the laws in all countries keep changing. That's why we work closely with accountants and lawyers in Great Britain, Italy, Russia, as well as other countries, for the benefit of our mutual clients", says Shwiff.
For further information about international tax issues and the implications of other cross border transactions, contact Elizabeth Shwiff at 415-291-8600.
Shwiff, Levy & Polo, LLP was founded in 1989 and ranked as one of the top 100 Fastest Growing Companies in the Bay Area in 2007. As CPAs and Management Consultants. The firm is distinctive in that they work with their clients to understand their business in order to better assist them in managing their financial activities and welcome questions from clients. The firm is a QuickBooks Professional Advisor and can assist clients in setting up their recordkeeping.