Definitions — Here, there, everywhere

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Source: By J.-N. L. (own re-drawing) [FAL], via Wikimedia Commons

Source: By J.-N. L. (own re-drawing) [FAL], via Wikimedia Commons

Like the ubiquitous Kilroy of World War II fame, tax law seems to be everywhere. Here are two examples of tax rules popping up where you might not expect them.

1. Passports

The Fixing America’s Surface Transportation Act (FAST) of 2015 ties travel to taxes by allowing the IRS to notify the State Department of Americans who have a “seriously delinquent” tax debt. Generally, the IRS has to assess the amount of tax that is delinquent, and file a notice of lien or make a levy. Once notified, the State Department can deny or revoke a passport.

What’s the dollar definition of a “seriously delinquent” tax debt?

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2. All-cash real estate purchases

The Financial Crimes Enforcement Network (FinCEN) was originally a network established in 1990 to provide intelligence and analytics regarding money laundering to the US Treasury. The Patriot Act made FinCEN a bureau of the US Treasury.

FinCEN imposes data collection and reporting requirements on banks and other financial entities in order to track potential money laundering activity. Money laundering is the process of “cleaning” money received from illegal activity by reintroducing the money into the legal financial system so that it looks legitimate. One way to launder money is by purchasing expensive residential property through a company that essentially exists only on paper (known as a “shell” company).

From March 1, 2016, through August 27, 2016, FinCEN issued a “geographic targeting order” that required title companies to report ownership information of legal entities that bought high-value residential real estate without external financing. The targeted areas were Manhattan and Miami-Dade County, “high-value” was defined as $1 million in Miami-Dade County and $3 million in Manhattan, and the title companies were required to file the information on Form 8300. Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, is a dual purpose IRS and FinCEN form. Failure to file Form 8300 can mean assessment of criminal and/or civil penalties, as well as prison time.

What is the maximum dollar criminal penalty for a willful failure to file Form 8300?

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Note: Taxing Lessons provides a summarized version of sometimes lengthy court decisions. The full case may include facts and issues not presented here. Please use the link provided in the post to read the entire case.

This information should not be considered legal, investment or tax advice. Taxing Lessons and Top Drawer Ink Corp. do not provide legal, investment or tax advice. Always consult your legal, investment and/or tax advisor regarding your personal situation.

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