katiej_1958[at]yahoo.com (Katie Jaques) wrote:

- quote -

Thanks to everyone for your responses, both here and via e-mail.

SIL and I called the revenue agent (name and phone number on
the notification letter) and found her very receptive and
willing to share information. The IRS's subpoena of records
from Master Charge and VISA turned up a MC account issued by
a bank in Switzerland under my SIL's name. The charge
detail includes a number of transactions in San Diego
County, where we live, including a car rental and two
hotels. Mysteriously, the file also includes my DD's name
and her SSN as a user of the card.

We explained that they have never had such a card (in fact,
neither of them has ever had a MasterCard account with any
bank, only VISAs). The agent agreed that this might well be
a case of misidentification. She said she would go back to
the national office that is handling these cases and get
them to issue summonses to the vendors, especially those to
whom the customer would usually have to provide some
identification, such as the car rental. Using that
information the IRS will attempt to determine whether they
have identified the wrong parties. DD and SIL will receive
copies of all of the documentation of this process, and if
it is determined that they are not the holders of the card
in question, they will receive notification that their case
has been closed. The agent suggested that if we have not
received notification within about 90 days, that we contact
her. She may work the case, or she may have to pass it on
to someone else, but if the latter, she will know who has
it.

I am certainly glad we made that phone call and did not go
through the hassle of providing the information the IRS
requested in the contact letter. If you have a situation
where you are pretty sure it is a misidentification, I
certainly recommend the phone call route.

So I'll keep you posted!

Katie in San Diego

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Since SIL is in the navy, is it possible that he cashed a
check or exchanged currency at an overseas facility that was
later investigated for money laundering? While not common,
that is a situation that I have seen before.

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In addition to the issues mentioned by others in responding
to the IRS inquiry, they should also probably pull their
CREDIT REPORTS and see if there's anything strange on there.
There could be an identity theft situation or the improper
merging of or confusion over two histories of same-named
people.

Being military, it's possible that he got caught up into
this due to legitimate use of a U.S. based card at foreign
ports (while on liberty), and thus the IRS's "John Doe"
summones were overly broad (and thus invalid on their faces)
when they sought all foreign transactions when they meant
only to seek those transactions of foreign based cards by
U.S. citizens.

Remember that should the IRS pursue this further, they have
the sole burden of proof. However, pursuing active duty
military for spending abroad, especially during a time of
war, will make the IRS even less well liked in the press.

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Harlan Lunsford <lunstax[at]bellsouth.net> wrote:

- quote -

Oops!! Never thought of that, but of course you're right.
At least a few good folks didn't delete it, though, thank
goodness!

- quote -

Yes, I figure he is the target. There is no money in his
immediate family, but he is a distant cousin to a very
famous Broadway and movie star of the 1960's, with the same
last name, whose performing career has recently taken off
again at the age of 70. I figure that might have something
to do with it.

- quote -

SIL is here now but on port-and-starboard watch preparing
for a WestPac cruise, leaving sometime before the end of
this month if rumors are true. He is home about 12 hours
out of 48, and asleep most of that time <G> .

- quote -

I think they are talking about the arrangements some of the
big banks were selling to high-income taxpayers in the late
1990's that allowed them to hide income overseas. Nothing
that any of MY family could benefit from!

Katie

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kamlet[at]panix.com (Arthur Kamlet) wrote:
- quote -

These kids don't have a dime in savings or investment.
Paycheck to paycheck, that's it. Living on the edge, at
least until Grandma kicks off <G> .

Katie

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"MTW" <mtwingcpa[at]yahoo.com> wrote:
- quote -

A good thought, Mike. If we don't get an answer from the
agent when we call her, we might just do that.

Katie

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Paul <taxman[at]negia.net> wrote:
- quote -

YM "past". HTH

Seth

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Katie Jaques wrote:

- quote -

It gets curioser and curioser, doesn't it? (AS an aside,
your subject looked like one I might find on a junk email,
so I automatically reached for the delete key! lol)

From 1999 you say? And they only filed jointly since 2001?
And the letter had his social security number first?
Hmmmm....... Sounds like they zeroed in on him, don't you
think? Of course they're sending duplicate letters to both
spice these days.

Naturally you should represent them and without daughter
going with you, just as we do with any paying client. But
SIL, where is he now? At sea? he'll need to sign the POA.
Of course that is easily accomplished these days of fax
machines, even aboard a ship.

When you find out what "offshore payment cards" or "offshore
financial arrangements" are, please let us know.

Cheer$,
Harlan Lunsford, EA n LA
(over here in this LA, we still have a lot of farriers.)

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katiej_1958[at]yahoo.com (Katie Jaques) writes:

- quote -

Wouldn't the obvious guess here be identity theft? Of
course, the phrasing of the request does raise some
interesting question for someone who does have an offshore
credit card (they aren't prima facie illegal, are they?). Is
there any reporting requirement for such a card in the first
place? It isn't like having actual funds in a foreign
account. Are there really any activities on a credit card
(offshore or otherwise) that give rise to tax? Or is it more
that there might be payments that the IRS would like to use
to infer income greater than reported? I realize that other
"offshore financial arrangements" is a catchall for a
variety of activities that might directly give rise to tax
liability, but since they mention the card first...

It would be bothersome (in general) if the IRS is going
after anyone who has a way of making payments that is not
easily accessible for comparison to income, especially since
they seem to imply that that in and of itself is bad. But
maybe it would be worse in this particular case if they
aren't, since that would seem to suggest that they had some
other reason for looking to begin with.

Good luck, and let us know how it turns out...

Dan Lanciani
ddl[at]danlan.*com

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Katie Jaques <katiej_1958[at]yahoo.com> wrote:

- quote -

The obvious thing is to ask for copies of whatever
information they have that asserts any ownership of foreign
accounts.

It is entirely possible that a data entry error occurred, or
that someone hijacked their SSN.

Also if they owned mutual funds or had an interest in a
partnership which invested in any foreign holdings, that
could be where this came from.

__
Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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Katie Jaques wrote:

- quote -

This looks like it may involve some form of identity theft.
Try contacting the problem resolution officer. Do they want
them to prove a negative?

--
Frederick E. Jorden http://Tax-Accounting-Payroll.com
7825 Midlothian Tpk - 207 Richmond, VA 23235-5247
EMAIL knowtax[at]bigfoot.com
(804) 320-6210 FAX (804) 320-6211

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Katie Jaques <katiej_1958[at]yahoo.com> wrote:

- quote -

Fortunately, I haven't had to deal with this problem. But,
perhaps you should consider (among other things) a Freedom
of Information Act request for disclosure of the information
that "...has identified them..."

MTW

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"Katie Jaques" <katiej_1958[at]yahoo.com> wrote

- quote -

If it were me or one of my clients I'd write a letter in
response, stating that no "offshore" accounts exist, now
or in the future. Give what ever other infomation you
feel is necessary to help resolve the issue (or at least
put the ball in their court) and see what happens.

- quote -

Apparently this is just kicking off this year.

--
Paul A. Thomas, CPA
taxman at negia.net

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To all my friends on m.t.m. ...

My daughter (DD) and son-in-law (SIL) have received letters
from the IRS office in San Bernardino stating that the IRS
has identified them as a holder of an offshore payment
card(s) or a participant in offshore financial arrangements.
The letter offers them "one final opportunity" to minimize
penalties by 'fessing up and filing amended returns and
paying the additional tax arising from any unreported
offshore (or other) activity for tax years beginning after
December 31, 1998.

SIL is a Navy enlisted man, a nuclear technician stationed
aboard a nuclear carrier. DD is a self-employed farrier
(horseshoer to the uninitiated <G> ). DD and SIL were
married June 30, 2001 and filed joint returns for 2001,
2002, and 2003. Both were single and filed their own
returns for 1999 and 2000.

Neither DD nor SIL has, or ever has had, as far as either of
them knows, any credit card or other financial arrangement
issued by an offshore entity. We are all totally mystified
as to how they could have come up on the IRS's radar screen.

There is a name and a telephone contact number which my
daughter and I plan to call when she gets a chance to get
over here and do it, to see if we can find out anything
about what the IRS is looking for. The letter requires DD
and SIL to provide copies of all of their returns filed for
years 1999-2003 (I thought the federal statute was gone on
1999, and on 2000 if it wasn't extended - are they assuming
25% unreported gross income?), and descriptions of all
"offshore payment cards and foreign and domestic accounts of
any kind." That's not terribly burdensome since I don't
think they have more than a couple of credit cards now, and
DD never had a card in her name until after her marriage.
But it also requires "complete and accurate amended returns
for all tax years...which are supported by an explanation of
previously unreported income or incorrectly claimed
deductions or credits, or other erroneous item (whether or
not related to offshore payment cards or offshore financial
arrangements)."

The answers to most of these questions are "none" and "not
applicable." But without knowing what information the IRS
thinks it has, it's hard to figure out how to prove the
negative, KWIM?

Have any of your clients received this letter? How did you
handle it, or how do you plan to handle it? Have you had
any experience with it yet?

Katie in San Diego

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