HOw can I help you?
As planned I have posted the documents on Google document view. my email for that account is XXXXX@XXXXXX.XXX and password XXXXX XXXXX you will see on the the IRS notice of Deficiency and my 2005 1099. I would like to ask you how much time you will have to dedicate to this as I am very concerned that I compensate you appropriately - so please make a suggestion and I will add the funds to the account.
Since we can not share emails on line here, I will need another user name to access the document. CAn you contact admin firstname.lastname@example.org and ask for their assistance in getting the user name to me.
Is it possible to change the user name for document share from an email to a screen name?
I contacted admin and they said that if you are unable to provide a non-email login, that you can send the documents to them as an attachment and they will forward the document to me.
I will do that tomorrow as it is chaotic in London today we are all snowed in and this has not happened in 18 years. I will chat to you then
Wow,,,,is it global warming?
I wait for your reply.
it is back to the ice age here!
looks like your admin department have sent me a message I will check - I have two pdf files can I just upload them here?
WE can not upload PDF's. we can only upload images. (jpegs, etc) Just send them to the admin. It will be easier.
I have uploaded the files on Firemedia.com at your admin department's suggestion
can you let me know if you can see them on this link
This link worked perfectly thanks.
I am down loading the documents now.
Great I am glad we finally got over the first bit.
Please do let me know how much time you are spending on this as we need to discuss how best to compensate you for the time.
The download worked fine.
Everything looks good.
What I now need is to known what the cost basis is. Essentially this would be what you paid for the stocks when you purchased them.
Do you have a record of the stock purchases, so I can find out what you paid for them?
This was not part of the documents we shared.
If you do not know that, then i can use an alternate method if you can tell me the date they were purchased.
Also. did you file a U.S. tax return in 2005?
If so, do you have a copy of that or at least a transcript?
I do not know when exactly these shares were bought but my best guess would be some time in 1996 or 1997 (I left the US in March 1997).
I have never filed any taxes in the US after that date as I have only filed here in the UK. However I did not report those gains in the UK in 2005 as the gains were unrealized and were either reinvested or used to pay down the margin in the brokerage account.
Does that help?
I got a message to accept your reply but I did not get a reply after my last message and you still have not told me how much time you are spending on this issue and what is a fair rate to post on the account. Please be assured that I appreciate all the advice and I hope you will also be satisfied.
You may be getting some prods like that. The price you have posted is fair enough. Your question is not showing back up in the queue because of age, so we have to be vigilant to keep checking. I just wanted to make sure I was not ommittien any 2005 earned income you may have had in the U.S. during the year in question.
I need a tighter window in order to determine when you bought the shares.
Do you have any documents or statements from 1996 or 1997 listing what you bought the shares for. I have prepared a trail return, but capital gains is the price you sold stock for minus what you bougth it for.
you have some capital gains reported on your 1099-DIV but that appears to be unrealed to the stock sells.
If I at least know a month and year of purchase for the stocks indicated as sold, I can estimate the cost basis by using the average market open and close for that month. I can do the same thing if all you can do is pin it down to a quarter (3 month period)...
Lehman Brothers as you know is bankrupt, and while there are successor people to handle the accounts it may be hard to pin down with them.
My recommendation is to go through your copy the documents you provided to me, and where you sold somthing try to indicate in which month and year or 3 month period and year it was bought.
I hestiate to go beyond that. If stock is falling in price, and I average it on the downs, then it would increase your capital gain exposure because cost basis will tend to be lower.
let me now what you can do lets keep this window open so we can communicate.
By the way: can you remember the name of your account manager when you were with Lehman?
I got a hold of your investment house yesterday and they are going to see if they have a income statement for you from 1996 and 1997.
It is essential so that we can reduce the amount of capital gains. We may even find that you have a loss and wipe out this debt.
Just checking in to make sure our line stays open.
I appreciate very much all your time and effort
Thanks. We are just waiting on feedback from your brokerage to get cost basis of your stocks. I should get that today or tomorrow.
The lady who used to cover me was Nancy Carroll but she has left - I really hope you have more luck with them than I did.
Not a proble, I will be posting the results soon to the shared link.
thanks Ed, I am looking forward to seeing what the damage is meanwhile I will speak to my accountant here and explain that I am filing in the US for shares I bought there when I lived there. I understood that you said I will have to file in the UK as well?
Any news from Lehman/Barclay Wealth? I am going to be away on holdiay all of next week so thought I'd check in before I go. I can be reached on eamil as I have my blackberry with me.
I spoke to Barklay's today.
They do not know if they can get archive statements for 1996 or 1997. The non-archived records only go back to 2000.
I will be finalizing the 2005 U.S. returns for you today. AND await your instructions on the next move.
The deadline for filng is April 15th, so you still have about a month before we need to panic. It is just that you do not want to file your UK return until you file the U.S. return.
The UK taxes world wide income and so yes, you have to file in the UK, but the UK will give you credit for taxes paid to the U.S.
Barklays is working on finding your archive record, BUT, they will not release them from me, because I am not on the account or do not have a power of attorney on file.
They will release them to you.
The person you spoke to no longer works at Barklay's for reasons that I am not alowed to disclose.
I spoke to Jessica. She had the record of your converstation two weeks ago, and noted that no one spoke then about archive records. I am not sure if that is true, as every word is not recorded.
Jessica said for me to have you contact them at(NNN) NNN-NNNN
Make sure you speak to Jessica. Let her know you are the person Ed Johnson spoke to her about, the lady from the UK.
Make sure you let her know that you need is any possible archival record of financial statement that shows what you purchased in stocks during 1996 and the first quarter of 1997.
THey will email or fax the statements to you, if they can find them at all.
Understand that since this was the result of a liquidation of assets thorugh bankruptsy, some of the archival records may not be recoverable.
If that is the case, let me know, I wil lfinalize the returns again, up load them to you. through the file share program you used before.
Let me know when you have given Barklays one more try.
I have not heard back from you, so I am posting to the shared document links the tax documents I promised you.
I picked interrum dates. There was a problem with Medico Health Solutions. You had told me you made all stock purchases between 1995 and 1996.
Medico did not exist in the open market until 2003. So for that I chose an average stock price from the moving averages for 2003.
For the others I used the moving average between march 1995 and May 1996 to determine cost basis. it is close I am sure from what I can tell.
If you are able to get the 1995 and 1996 income statements from Lehman, we can fine tune the results,but I think they are good now.
I have uploaded the ones for mailing, and the detailed work sheets for your records.
You can take these to your accountant to figure your tax for the UK if you need to.
The file labeled RECORDS is for you and your accountant. The other is for mailing as an attachement to you letter response tothe IRS letters you received. Please include a copy of the letters. with your submission.
Let me know when you down load these so I can remove them from the site. (this is to protect your privacy and safety).
The 200 dollar fee is acceptable. Bonuses are appreciated but not necessary.
Remember there is a deadline. If you get the information from Lehman, let me know and it will only take a few minutes for me to update the return.
A coulple of more followup items:
1. If you were married in 2005, we can change your filing status to reduce your tax. Let me know.
2. Youi need to add your birthdate to the forms I sent you.
3. It occured to me that if you are not a legal permanent resident of the U.S. (Green Card Holder), in 2005, we may have to add a form. let me know.
Sorry I did not come back to you earlier. I was travelling last week and had scarce access to internet.
1. Medico was issued to shareholders of Eli Lilly or Merck so I did not buy it - it was a spin off.
2.I was married in 2005.
3.I will add birth date to the forms
4. I have not heard back from Lehman/Barclays
5. I was not a green card holder or legal resident of the US in 2005.
I will review the forms and chat with you later today.
Just another question. The IRS had also asked me to pay a fine based on the amount owing - how does that work out now.
Super, thanks.. Also what was your marital status in 2005?
The documents gave you a time to respond by.
You will notice that my return showed a lot less tax due even before considering the penalties and interest.
So what you are trying to do is respond to the letter with an appeal I will instruct you on writing a letter appeall and including the tax return.
The basis of the appeal is that you were unware of a filing requirement because you were a non-resident alien as of the date of the sale.
That you had departed the U.S. on (date given)
You will be asking them to accept and process the return as if timely filed an to abate the interest and penalties.
They will either accept your appeal or not. If not they will then rebill the interest and penalties which may be more or less.
BUT, they indicated in the letter to accept the charges or file a return. So I am hopeful you will not have to pay that much. BUT unfortunately with the IRS there is never any gaurantee. But for the amount they are assessing it is worth the try.
I will make the changes and repost for you. I will be happy to provide some sample lanaguage,but since you are actually filing this yourself, the letter needs to be put into your own words.
I am sick right now, but will have this done by tomorrow (friday some time).
Sure that is good.
Changing your marital status on the return did not change the tax due, so I left it to match what the IRS said. Adding your husband to the return did not make a difference.
You can pick up your files here:
I also have one more form to give you. Let me know when yhou have down loaded the forms.
Yes, these have to be filed by mail. They can not be filed electronically.
WE have one more form to do. I want you to replace the form 1040 with a form 1040-NR. I will fill that out for you to day and upload it.
The instructions in the IRS Cover letter tell you that you should reply by letter and to attach your return.
I had computer connectivity issues yesterday. I have been working from Manhattan this week, and we had a big storm that disrupted my remote connections to my office computer.
Everything is working well today, so I am able to upload the final document.
When you down loaded the files, one was for filing the return and one was for your RECORDS.
Save the one for your records.
For the file you down loaded for filing: it contained all the documents required for filing including a form 1040, schedule D, etc.
When I upload form 1040-NR, (NR stands for non-resident), you will take out the form 1040 from the packet, and replace it with the form 1040NR, then mail the entire packet that is for filing, along with your cover letter.
On the date you sold these securities, you were a Non-resident.
In your cover letter:
1. Make sure you mention the following. That because of your overseas shipment process back to the UK, orignal institutional financial statements were lost. You attempted to recover the financial statements from your brokerage(name the old name), but because of their bankruptsy operations and transfer of owenrship, they have been unable to recover for you any statements or transactions to indicate the orignal cost basis of the securities represented in schedule D.
2. To determine cost basis you used the average of the high and low open and close for the quarter in which you made the purchases. I was unable to determine brokerage fees, so these costs are not included in cost basis.
3. Regarding the Medico stock. I used the average and low open and close on the date the stock was transfered to you.
I am uploading your form 1040NR today.
Just an FYI.
Fling the non resident return means that you will not get the standard deduction.
If you file the resident return, the IRS will detect it, and will make the correction and assess addtional taxes.
My recommendation is to go ahead and pay the additional tax with the non-resident return. If it represents an over payment, the IRS will refund any excess. It is your decision to file the resident or the non-resident return.
You will note that the non-resident return has a back page that needs to be filled out by you.
The tax liability as a non-resident return is 1,198 dollars.
You were a resident when you purchased the shares, but you were a non-resident when you sold them.
I have down loaded the letter and am making some minor changes. I hope to have the final document prepared today for uploading.
This is the link to the 1040NR and the cover letter with changes.
They are the files dated March 06th. One titled 1040NR and the other with the name CHANGE1 in the title.
The tax calculated does not include any penalties or interest. We are hoping the IRS will abate the interest and penalties. If they do not, expect an additional bill from the IRS for interest and penalties.
Do not forget to use the cover page from the IRS notice as part of the return.
You have to complete page 5 of the form 1040NR. I labeled it draft becuase you may make an error on page 5 and need to start over. To save time, simply down load a new form from the IRS website at the following link, and copy my figures over.
You you do not have to apologize, Non-resident returns can be complicated, and when doing it with remote assistance, requires extensive communication efforts.
For the 1040NR:
1. You will be replacing the form 1040 with the form 1040NR and submit then entire packet that was labled for filing, not the one labeled for record. The for record one contains worksheets that do not have to be mailed in. So you will be mailing in the entire packet, with the 1040NR instead of the form 1040.
2. For the form 1040NR.
On Line H: indicate the number of actual days instead of the phrase 1 week. 7 days, 8, days, etc.
On Line J: indicate 1997, Form 1040.
Country of Tax treaty: indicate United Kingdom, Article XIII, Capital Gains
The next bulleted item, (type and amount of effectively connected income exempt). Leave this section blank.
The second bulleted item after country of tax treaty, leave it blank.
Where it says were you subject to tax in the country indicate yes. Enter a hand written note in the line spacing beneath the entry: (UK Citizens taxed on world wide income, ,this income not yet reported in UK). Also add a sentence to this effect in the cover letter.
for cover letter add in: It is my understanding that allthough UK Citizens are taxed on world wide income including capital gains, that the UK. US. tax treaty permits the U.S. to tax the capital gains in this situation. This income has not yet been reported to the UK pending resolution of the U.S. filing requirement.
For the part of section M that indicates permanent faciltiy check the box no.
For Line P, is this an expat return, check box NO.
Which line on schedule D is different.
lets get this right.
The original file should have included a schedule C-EZ for the 270. If it does not let me know. C and C-EZ are the same form, the EZ is a simpler version.
The differenence is due to a rounding error in the software. Change the 1040NR to read 2,172.
Please look for a schedule C-EZ. If not then I may have to upload it again.
that is correct.
Also include a copy of your biographic page from your passport and copy of your Visa, even though expired.
about paying on line: in this instance lets not pay on line.
My recommendation to pay on line was to pay the debt if you were accepting it. BUT, if you do not have a U.S. bank, then money orders or paying on line is a better way.
What we have done is filed the return in a way to capture the best possible treatment under the tax treaty.
The tax treaty in this case does not exclude the capital gains from tax, but provides that capital gains be taxed under U.S. law. That is why we indicated the UK tax treaty in part M, and did not exclude income.
We are hoping that they accept the 1,198 dollar tax liablity, or reduce it.
what we have done is figured your tax according to what we consider your benefit. The IRS will accept it or refigure the tax. We treated it as if it were a timely filed return.
It is my belief they will treat this favorably and accept the 1,198 as we figured it, especially since, if you file this post marked before 15 April, you will have met the cut off befor the 3 year statute of limitations for refunds. This means you will get the full benefit of any tax deductions and exemptions.
Your filing status for this return in U.S. tax terms is "married seperate".
Unless you have a U.S. bank, I would use money orders or pay on line.
I understand the issue with "her majesty's" passport. So you will not have a copy of the L-1 visa. But you need to still include the biographic page in your passport. It is evidence required to show you are really a UK citizen. (for the tax treaty portion).
If you had a copy of the old that would also be good. But if not, that is ok.
Attach a note or make a note on the copy to indicate that you were married on date, and your maiden name is______.
They will match the date of birth and other information in thier system to match you up.
Yes, mail it to the holtsville, ny address.
Make sure you put the front page on top of everything.
What can I do for you?
I understand from reading the letter, that they are not accepting the appeal from before.
Based on the information provided previously, you still should have had time to file and incurred a lessor base tax. However in so doing, if they accepted the return, they still did not abate the penalties and interest for later filing.
This sometimes occurs. Even in situations where a person may have refund or owe no additional tax, they can incur a penalty simply because estimated taxes were not paid timely. In th letter they are stating that in their opinion, the reason they are not abating the penalties and interest is because, again in their opinion, you did not exercise due diligence in this matter. In essence, they are saying that you should have known of the requirement and exercised your responsibilities voluntarily before hearing from them.
They tend to take a hard nosed view when dealing with persons from overseas. This is because of the prevalence of tax avoidance by U.S. expats and non-resident aliens.
I believe you were confused about the rules and legitimately did not think in your circumstances you would have to pay the tax. But to get that point across to the IRS you may have to file a more formal appeal using a tax attorney.
the penalties and interest are significant and are worth while fighting.
So while you may have reduced the basic tax due, they are not abating interest and penalties; then in their letter they are allowing you to yet appeal again. In this letter, they are also implying that you should use a tax attorney to file your appeal for you. (or other person authorized to practice law before the IRS...enrolled agent or CPA.). I recommend a tax attorney.
In the mean time, they are saying you need to pay the penalties, and if they later determine you were not required to pay the penalties and interest, they will automatically refund them to you; or if on appeal you are determined to be due a refund, or if they decide to abate them based on the facts, you will be refunded them. If you do not pay them, then they will continue to accrue yet additional penalties and interest.
So at this point, I in the interest of what we call, "do no harm"; I would have to recommend you pay the interest and penalties; and retain a tax attorney to help you get them reduced or rebated in the entirety.
My first recommendation for a tax attorney in the UK, who may able to help would be PWC.
I am trying to think of something you could have said in the original appeal that would have helped, but I can not think of anything. It would have been nice for you to have had those financial statements; but even those would not explain away the issue of not meeting prior year filing requirements.
If an employer were to write a letter confirming you were not told of your filing requirements, that would be helpful, but most employers would not open themselves up to that kind of admission. (their attorney's would advise them not to make such a statement).
A tax attorney may be able to skillfully make such an argument in your behalf. Third party influence of attorney's arguing for you, using legal precedence and knowledgeably citing law can sometimes be more effective.
I am surprised they did not abate the penalties and interest because you were still within the 3 year window for filing the return, and your return was a proper return.
Are you able to make a cheap trip to the U.S.? If so what areas would you be staying in. If you had friends you could stay with for a few weeks, I could recommend a U.S. based attorney/firm to you; but if you can not, then I will be limited to a few in the UK. It would be best for a U.S. based attorney. It ends up being cheaper. If I recommend a UK based attorney with PWC, for example, they end up needing to transfer all activities in the U.S. to a U.S. based partner, and there are additional expenses.
I would be happy to work with you regarding the 2008 return.
I would call them to confirm the amount of the fine; or use the last communication where they billed you for it.
Let me know after you speak to PWC what you wish? In the mean time I will seek a U.S. based attorney for you. Will the NYC are be good?
If a 1099 was issued, you need to file a return. If no tax is due, because it was a loss, then it becomes an information only return.
If there were no 1099, and you had no gains or taxable profits, then you would not have to.
Remember what they did to you last time. Even though some of those stocks you sold were sold at a capital loss, because a return was not filed, and a 1099 was issued, then the IRS assumed a zero cost basis and assessed tax on all gains.
As you recall, you had to submit a return and actually claim a cost basis to reduce the tax.
The same thing can happen again. If a 1099 is issued and you do not submit the return to take advantage of the cost basis, the IRS will assume a zero cost basis and once again ask for a return.
I know it is a pain. Our tax panel is actually working on this issue, and the IRS has accepted our suggested solution. At some time in the future, (doesn't help you now), the brokers will be required to place the cost basis on the 1099. It was to have been implemented in 2009, but is not being done yet.
When that occurs, then there will be no need to file if you have a loss, unless you will be taking the losses against future earnings.
Actually you can carry forwared the capital losses to future years, so you would want to file anyway in case you have future U.S. earnings to offset.
thank you, XXXXX XXXXX downloaded the documents. do not delete them yet.
This document you have received is reducing the total tax by the amount of tax due. While they do not specifically state it, it means that they have accepted our cost basis determination for the stocks that were sold, where we used the average open and close price.
They are still assessing the penalty for late filing of the return, and so you still have the 822.24 to pay. Remember the return was filed late, so there would still be some penalty to pay.
They based the decision on what the law allows form the information and request you inlcuded in yoru cover letter. The IRS always reveiws these kinds of cases, because you submitted an appeal. The appeal review accepted your explanations, and adjusted your account to the extent of what the law allows.
Great job on that cover letter.
This should be all you now owe in additional tax.
Regarding the fee. I am not allowed to ask for a fee. You already paid for this question. However any bonus is acceptable. All I have done is reviewed the documents and offered an explanation.
Regarding the tax documents for 2008. The 2008 return for you is not due until post marked by June 30th.
I am on a family emergency and will not be able to work on the documents for you until I return next week. If that is acceptable let me know.
Thanks for your compliments and feedback.
I accessed Media Fire, and all I see is the documents from 2008.
I did get your 2002 1099, but I do not see anyother 2002 documentation.
(did you file the 2008 return?)
I have ran a preliminary 1040NR but we need to get the cost basis for that 1099-B.
UIT First Trust: Purchase date and cost basis ....for sale price 21,242.52
UIT First Turst: Purchase date and cost basis for sale price 7,288.52.
This helps for 2002, no problem. I am also traveling today. This is 4th of July Weekend in the states.
I can work some on this tonight but will not be able to finish until Saturday or Sunday.
I noticed all the 2008 documents were loaded so will put those together for you as well.
I am back now. I had some trouble getting reconnected (internet service) from my new location, but am now up and running. I will post the 2002 return today, later in the day.
Your posting of funds is fine.
Your 2002 should show no tax due. BUT will let you know the final result when I post it.
This is my portion of the 1040NR for 2002 and
Your schedule D for 2002.
Let me know if you have any questions.
I am working on the 2007 return. I should be done with it in a couple of days. I apoligze for getting back to you so late, but with the question no longer shows up in the que, and I have to check back to look for it.
Not a problem. I should be done with both by then.
Ed Johnson is temporarily unavailable as he is out on family emergency. He has asked me to take over for him. He has received the payments, and you do not have to pay again.
Lets pick up where he left off if you like?
Ed informed me of your situtation regarding capital gains tax on security sales (stock accounts, etc), and the need to file your returns in order to get penalty and interest payments refunded.
I have read the email strings, and was given access to the shared files and copies of your Schedule D, etc.
That is more than adequate. I am happy to proceed.
I can help you with the preperation of the returns at the same level that Ed had done. Because of site rules, which we agree to in order to use the site, we can not create a personal business relationship outside this venue. This means I may not represent you before the IRS.
When you use our services, the information you receive and any assistand with preperation of returns, is one level of valuable service.
Representation before the IRS is one or two levels higher. It usually works better to have someone in person to represent you before the IRS rather than filing your own, or to file your own and have a representative defend your position befor the IRS. Because of our relationship here, I can not do that for you. BUT, I can refer you to organizations and practitioners who can.
Let me know if you still want me to proceed. I have been in contact with Ed and he has briefed me.
In the meantime, I will reveiw your posted documents.
Thanks I will let you know when the documents are prepared.