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(506) 2223-1327                        Published Tuesday, March 13, 2012, in Vol. 12, No. 52                            Email us
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U.S. IRS stonewalls on blistering overseas criticism
By the A.M. Costa Rica staff

The U.S. Internal Revenue Service's own internal taxpayer advocate has issued a highly critical report on the tax-collecting agency and specifically cited unfair treatment of overseas taxpayers.

Despite the report, Doug Shulman, IRS commissioner, appears ready to ignore it despite a legal requirement to make a reply.

American Citizens Abroad, a private advocacy organization for Americans living abroad, wrote Shulman Friday and called on him to respond to the advocate's concerns.

The advocate is Nina Olson, and her agency is an independent entity within the IRS. She went so far as to accuse the tax collectors of engaging in bait and switch with overseas taxpayers.

Ms. Olson delivered her report to the U.S. Congress Dec. 31.  Shulman had until the end of January to respond. One of her concerns was how overseas Americans were treated in the 2009 offshore voluntary disclosure program. The title of this section is: “The IRS’s Offshore Voluntary Disclosure Program 'Bait and Switch' May undermine Trust for the IRS and Future Compliance,”  notes American Citizens Abroad, adding that:

The section on international issues provides the most thorough analysis to-date of the significant issues facing American residents overseas, including:

    * the overwhelming complexity and cost of compliance,
    * the risk of steep civil and criminal penalties for even inadvertent non-compliance,
    * the need for better IRS services for individual U.S. taxpayers living overseas and small businesses involved in international economic activity.

The taxpayer advocate discussed the IRS’s policy change in applying key terms of the Offshore Voluntary Disclosure Program more than a year after the application deadline had passed.  The report states that the policy change contravenes the IRS’s written pledge that “under no circumstances will a taxpayer be required to pay a penalty greater than what he would otherwise be liable for under existing statutes.”

She ordered several IRS divisions to take various steps to correct this treatment, including allowing taxpayers who had paid penalties under the compliance program to request a reduced penalty, noted American Citizens Abroad. The compliance program allowed U.S. Taxpayers who had not followed the rules for filing to do so with reduced penalties.

Said Ms. Olson in her report: While the maximum penalty for a “willful” failure to report foreign accounts on Form TD F 90–22.1, Report of Foreign Bank and Financial Accounts (Fbar), is severe, people who voluntarily correct inadvertent violations are generally not subject to a significant penalty. Nonetheless, the IRS “strongly encouraged” nearly everyone with a violation to participate in the 2009 offshore voluntary disclosure program or face potentially excessive civil and criminal penalties. More than a year after the 2009 [Offshore Voluntary Disclosure Program] ended, the IRS changed key terms of the program to the detriment of those with inadvertent violations, damaging the IRS’s credibility. The IRS’s statements also leave the public confused and concerned that excessive Fbar penalties may apply to inadvertent violations.”

"The IRS harmed taxpayers seeking to correct honest mistakes," she said.
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Many participants in the Offshore Voluntary Disclosure Program have been Americans living overseas who had no idea they had to make a tax declaration to the United States, which is the only country in the world (besides renegade
Eritrea) which taxes on the basis of citizenship instead of residence, said American Citizens Abroad.

In her memorandum, Ms. Olson further wrote of the program, "a more effective initiative would have prompted even more taxpayers to come into compliance without leaving those who did come forward feeling terrified, tricked, or cheated," the organization noted.

Mary Louise Serrato, executive director of American Citizens Abroad who signed the letter to Shulman, said: “By imposing large penalties for a simple filing omission, the IRS has adopted a camouflaged policy of taxing assets of Americans abroad through penalties." She was quoted in a news release.

Anne Hornung-Soukup, finance director of American Citizens Abroad and the other signer of the letter, said, “Our letter to Commissioner Shulman of the IRS makes it clear that ACA is in full agreement with efforts to find and hold accountable tax evaders. However we also know first hand from our members how devastating the indiscriminate use of penalties under the OVDP has been for many American citizens living outside of the United States. Most of them are not tax cheats; they were sincerely and completely unaware of the Foreign Bank Account Report (Fbar) filing requirement, since it was not enforced until just a few years ago.”

“Many of the U.S. citizens living abroad who entered the OVDP in fact owed no taxes to the United States, since they had paid full taxes in their country of residence. Yet because of not filing their Fbar forms, they faced IRS imposed fines and penalties amounting in some cases to their entire lifetime savings. Many Americans living overseas are now terrified to regularize their status because they’re afraid of being fined huge amounts, even if they owe no taxes.”

American Citizens Abroad wants the U.S. Congress to abandon citizenship-based taxation and to adopt residence-based taxation for individuals at the same time they adopt residence-based taxation for corporations, it said in the release.

The Internal Revenue Service put its own spin in a press release about the report by Ms. Olson. The release emphasized her statement that the IRS is not adequately funded to serve taxpayers and collect taxes.
The release did note that Ms. Olson said the IRS voids taxpayer annual returns without telling them or giving them a chance to respond and also stalls on making large refunds.

The full Taxpayer Advocate report is on the Web HERE!

The IRS reopened the voluntary compliance program for a third year in January. The third offshore effort comes as Shulman also announced that the IRS has collected $3.4 billion so far from people who participated in the 2009 offshore program, reflecting closures of about 95 percent of the cases from the 2009 program, the agency said.

On top of that, the IRS has collected an additional $1 billion from up front payments required under the 2011 program, it added. 

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Cultural tax deadline
will be coming soon

By the A.M. Costa Rica staff

Owners of Costa Rican corporations have another little chore this month. The deadline March 31 is for the education and cultural tax.

The amount is minimal. The biggest corporations pay only 9,000 colons. But if the tax is not paid penalties can be a pain.

The law has been on the books since 1976. If a company is active or inactive, it still is liable for the tax.

Many expats have corporations to hold the ownership of vehicles and even homes.

The tax this year can be filed on paper with a local bank or via the EDDI, software that can be downloaded for free from the Dirección General de Tributación.

Intruders invade homes
in San Pedro, Desamparados

By the A.M. Costa Rica staff

Bandits invaded a home in Barrio Dent about 11 p.m. Sunday. A resident in Desamparados suffered the same fate four hours later.

The home in Barrio Dent, San Pedro, was not far from the Embassy of Colombia where there is a 24-hour police presence. The Judicial Investigating Organization said that the occupants heard a loud noise as masked men barged in through a door. There were at least four persons, the occupants told investigators.

One of the intruders hit the women of the house on the head and took a chain she was wearing. The bandits also took other jewelry and valuables.

In Desamparados the man in the home also was hit on the head, said investigators. There appeared to be just two intruders. They tied up the man and took flat screen televisions and other household items.

Two quakes recorded

By the A.M. Costa Rica staff

A 3.2 magnitude earthquake took place at the mouth of the gulf of Nicoya at 5:25 p.m. Monday. The location was about 28.2 miles west southwest of Jacó in the central Pacific and 26.5 kilometers east of Cabo Blanco at the tip of the Nicoya peninsula. That's about 16 miles.

Some 19 minutes later another quake took place 25 kilometers southeast of Tayutic de Turrialba. That has a magnitude of 3.3, said the Red Sismológica Nacional at the Universidad de Costa Rica.
Find out what the papers
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By the A.M. Costa Rica staff

Here is the section where you can scan short summaries from the Spanish-language press. If you want to know more, just click on a link and you will see and longer summary and have the opportunity to read the entire news story on the page of the Spanish-language newspaper but translated into English.

Translations may be a bit rough, but software is improving every day.

When you see the Summary in English of news stories not covered today by A.M. Costa Rica, you will have a chance to comment.

This is a new service of A.M. Costa Rica called Costa Rica Report. Editor is Daniel Woodall, and you can contact him HERE!
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Cartago gets
new police HQ

A new 940-million-colon police station was inaugurated Monday in Cartago. The two-story structure is north of the municipal museum.

The amount is about $1.9 million. The structure will be the police headquarters for the entire province.

Cartago station
Ministerio de Gobernación, Policía y Seguridad Pública photo

Colombia detains key suspect in killing of Facundo Cabral
By the A.M. Costa Rica staff

Latin America's most wanted suspect has been detained in Colombia, the Judicial Investigating Organization confirmed Monday afternoon.

He is Alejandro Jiménez González, who is known as el Palidejo. The Policía Nacional de Colombiana said he was detained when he tried to enter the country on an apparently false passport.

The Colombian police sent prints to San José that were matched with the prints of Jiménez in the judicial archives, the agency said.

He is the principal suspect of being the mastermind behind an ambush in Guatemala last July 9 that killed famed Argentine singer Facundo Cabral. The target of the shooting is believed to be Henry Fariña, who survived. Fariña, an entertainment promoter, was delivering Cabral to the airport.

Sources in Colombia said that Jiménez was in a boat with two other persons in the Pacific in southern Choco province.
At least four gunmen were involved in the Guatemala City shooting. They have been detained. Jiménez vanished from his Alajuela home shortly after the shooting, and police raided the location and confiscated a number of possessions. The home of his parents also was raided as were businesses in Heredia and Alajuela.

Periodically there were police efforts in Costa Rica to detain him after they received possible reports of his whereabouts. None was successful.

Costa Rican officials said after the shooting that Jiménez was involved with a criminal gang that dealt in drugs and money laundering throughout Central America. They said at the time the family had accumulated wealth without obvious income.

Fariña has been linked to a string of night clubs, and the shooting followed an effort to force him to sell the businesses, investigators have said. He is Nicaraguan.

Costa Rica investigators have worked closely with their Guatemalan counterparts to track the suspects.

More blazes in south of country get help from strong winds
By the A.M. Costa Rica staff

Although a long burning fire at Parque Nacional Chirripó is under control, there are three more significant blazes, including one that is menacing Parque Internacional La Amistad on the border with Panamá.

Once again, firefighters have to hike long distances to attack the blazes.

Emergency and environmental officials authorized a fly over of the area to develop a plan.  In the canton of Buenos
Aries burning at La Fecha in Ujarrás, Youbin in the native territory of  Salitre and at Cerro Las Tubas in the native territory Cabagra.

The largest, at La Flecha, the blaze has consumed 200 hectares, nearly 500 acres, said emergency officials. They
ordered an alert for the area. The fires are being aided by high winds that are typical at this time of year. As a result of the inspection from the air, officials put into action plans to construct fire breaks. This was successful at Chirripó.

Officials at the Comisión Nacional de Prevención de Riesgos y Atención de Emergencias and the Ministerio del Ambiente, Energía y Telecomunicaciones also said that they wanted to emphasize prevention.

There have been 47 fires already this year, many due to negligence, they said.

Most of the fires have been in protected woodlands. More than 2,200 acres or about 900 hectares have been scorched.

Officials are turning their eyes to Guanacaste the site of many previous fires and also the southern part of the country.

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Industrial chamber expected to issue optimistic report
By the A.M. Costa Rica staff

The economic news is encouraging in the industrial sector. The Cámara de Industrias de Costa Rica will report Wednesday on a survey of firms.

An advance look said that 59 of every 100 companies in the industrial sector considers the current situation encouraging. And 63 of every 100 firms expects to increase production. 35 percent expect to increase the workforce, according to the preliminary figures.

The industrial chamber's optimism is not consistent with a brief polling of expat business people. They had mixed
opinions of the country's economic situation for 2012 when contacted Monday.

Editors at A.M. Costa Rica have seen an increase in interest in Costa Rica from readers outside the country, mainly North America. Subscribers to the newspaper's daily digest have increased after being flat over the Christmas holidays.
Advertising sales have been brisk as local real estate operators appear to believe that the economic recovery in the First World is well underway.

The industrial chamber also said that in its press conference today it would outline priorities to attack the factors that negatively affect the competitivity of the sector.

Costa Rica ocean depths yield another scientific breakthrough
By the University of Oregon news service

The ocean off Costa Rica has yielded evidence that Archaea – a type of single-celled microorganism — can be dinner for another life form.

A team of scientists has documented for the first time that animals can and do consume Archaea which is thought to be among the most abundant life forms on Earth.

Archaea that consume the greenhouse gas methane were in turn eaten by worms living at deep-sea cold seeps off Costa Rica and the West Coast of the United States, researchers found. Archaea perform many key ecosystem services including being involved with nitrogen cycling, and they are known to be the main mechanism by which marine methane is kept out of the atmosphere.

The finding of this new study adds a wrinkle to scientific understanding of greenhouse gas cycles. Results of the study, which was funded by the National Science Foundation, have been published online in the International Society for Microbial Ecology Journal, a subsidiary of the journal Nature.

“This opens up a new avenue of research,” said Andrew Thurber, a post-doctoral researcher at Oregon State University and lead author on the study. “Archaea weren’t even discovered until 1977, and were thought to be rare and unimportant, but we are beginning to realize that they not only are abundant, but they have roles that have not fully been appreciated.”

Archaea are considered one of the three domains of life on Earth, along with bacteria and eukaryota (plants and animals). Despite their abundance, no member of the Archaea domain has been known to be part of a food web.

One of the basic questions scientists have asked is whether this life form could act as a food source for animals.

To answer this, the researchers performed a laboratory study during which they fed two types of Archaea to worms, as well as meals of bacteria, spinach or rice, and the worms thrived on all of the food sources, growing at the same rate.

“That showed us that Archaea can be a viable food source for at least some animals,” Thurber pointed out.

Thurber and his colleagues initially were looking at biological life forms at a cold seep in the deep ocean off Costa Rica, when they opened up a rock and found worms living within the crevices. They found that the worms had been feeding on Archaea, which had, in turn, been consuming methane. They were able to trace the isotopic signature of the methane from the Archaea to the worms.

Oregon State University/Andrew Thurber
This family of worms, the Dorvilleids, is the first documented case of animals consuming Archaea.

From what they learned from the Costa Rican study, the scientists also discovered that worms of the same family asthose found in the rocks consume methane-munching Archaea at cold seeps off northern California and at Hydrate Ridge off the central Oregon coast, west of Newport. The researchers think the family of worms, the Dorvilleids, uses its teeth to scrape the Archaea off rocks.

The consumption of Archaea is particularly interesting because the only way it could be documented was by tracing the isotopic biomarkers from the methane. When the researchers attempted to trace consumption of Archaea through other mechanisms, they failed because the chemicals and proteins broke down within the worms.

“It could be that many other animals are consuming Archaea but we haven’t been able to detect it,” pointed out Thurber, who did much of the research as a doctoral candidate at the Scripps Institution of Oceanography.  “We still haven’t found the right technique to identify animals that eat Archaea that don’t rely on methane, but now we know to look.

“Hopefully, this will open up a lot of new research,” Thurber added, “and provide a greater understanding of how the world works.”

The deep ocean sequesters vast amounts of methane and researchers believe that Archaea consume a majority of it before it reaches the water column. The role of Archaea consumers now will have to be taken into effect, Thurber said.

“We’re not yet sure of the implications,” said Thurber. “But Archaea are found in many different places, from estuaries to the deep sea, so it is possible that they fit into food webs beyond the cold seeps where we documented the process.”

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Colombian rebel suspect
pleads innocent in U.S.

By the A.M. Costa Rica wire services

An alleged member of Colombia's rebel group has pleaded innocent to taking three Americans hostage after their single-engine plane crash-landed in Colombia in 2003.

Alexander Beltran Herrera entered the plea during an arraignment in a U.S. federal court in Washington Monday. He is believed to be a member of the Fuerzas Armadas Revolucionarias de Colombia.

Beltran Herrera was extradited to the United States.  Another court hearing is scheduled for May 4.  He faces a possible sentence of life in prison if convicted.

Prosecutors say Beltran Herrera was involved in the seizing of the three U.S. government contractors after their aircraft made the crash landing.  Another American and a Colombian national were murdered by the Fuerzas Armadas Revolucionarias de Colombia at the crash site.

The three Americans were released in 2008 during a Colombian military operation that also freed former Colombian presidential candidate Ingrid Betancourt.

Dozen countries called
enemies of the Internet

By the A.M. Costa Rica wire services

A global media watchdog group has released its “Enemies of the Internet” list for 2012, citing countries that inhibit freedom of expression on, or access to, the Internet.

In the report released Monday, Reporters Without Borders said the Arab Spring is changing the face of Internet freedom, noting countries like Bahrain that have successfully caused an information blackout with "an impressive arsenal of repressive measures" in order to curtail protest. The report said the Arab Spring also has led to the opening up of some governments, like Libya.

The countries are:

Bahrain, Belarus, Burma, China, Cuba, Iran, North Korea, Saudi Arabia, Syria, Turkmenistan, Uzbekistan and Vietnam.

Reporters Without Borders credited the Internet and social networks like Twitter for the successes of the Arab Spring, the cascade of revolts across the Arab world.

The annual report also draws up a list of countries "under surveillance," for censoring certain online content or punishing users for illegal downloads. Countries on that list include Australia, France, India, Egypt and South Korea.

The report also says cyberattacks in the form of "distributed denials of service" are widespread — including in Russia, where it says a series of such attacks on the eve of the December parliamentary elections took place with the aim of stifling political discussion. In Belarus, the report says web users trying to connect to a social networking site were redirected to sites containing malicious software.

Reporters Without Borders says Pakistan is seeking to create a national Internet filtering system, which could land it on the enemies list next year.

Recently, the state-run Pakistani Telecommunications Authority published a request for proposals to companies worldwide for what it called the “deployment and operation of a national level URL Filtering and Blocking System.” That would establish in a similar fashion to China's Golden Shield, or "Great Firewall of China".

That proposal has drawn the attention of free speech groups, including the San Francisco based Committee to Protect Journalists.

Researcher seeks burger
without killing cow

By the A.M. Costa Rica wire services

Paying $330,000 for a hamburger might seem like a lot, but that's what it cost for scientists in The Netherlands to prove it's possible to make a meat-like patty from a cluster of muscle cells.

At the University of Maastricht, Mark Post and his team started with a muscle biopsy from a cow and are now culturing clumps of muscle-tissue cells in Petri dishes.

"We have committed ourselves to make of couple thousand of these small tissues and then assemble them into a hamburger," Post says.

The Dutch are among the most advanced of several teams around the world trying to produce meat without killing animals. Post wants to demonstrate that the world's rising appetite for meat can be satisfied in a more efficient and environmentally benign way.

"It's a combination of two things, care for environment and food production for the world," he says. "And second is just a generic interest in life-transforming technologies."
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President seeks Internet
without high restrictions

By the A.M. Costa Rica staff

President Laura Chinchilla came out against restrictions on the Internet Monday when she addressed the 43rd reunion of the Internet Corporation for Assigned Names and Numbers that is meeting here.

She urged a democratization of the Internet and called for governmental protection of minors who use the Web.

The president also said she opposed the Stop Online Piracy Act that is supported by movie makers and recording executives in the United States. She said she supported an alternate proposal, the Online Protection and Enforcement of Digital Trade Act.

“The legitimate preoccupations for privacy, security and protection of intellectual property ought not become an excuse to justify tendencies that seek to exercise highly restrictive functions in cyberspace,” said the president.

She said that soon Costa Rica would become the most connected country in Latin America.

Art festival opening
features Calle 13 group

By the A.M. Costa Rica staff

The concerts and the more interactive part of the International Arts Festival will kick off on Friday afternoon with the inaugural concert of Calle 13, later on that night.

All festival activities are free and open to the public.

The Puerto Rican band is set to take the stage at 9 p.m. inside the Tarima Kolbi. The band has won two Grammy Awards and 19 Latin Grammy Awards.

The Festival Internacional de las Artes, or International Arts Festival, has concerts lined up for every day until March 25. This is part of a 10-day event at La Libertad in between Desamparados and La Únion, southeast of San José.

The festival is for all ages. And includes activities for everyone, regardless of age. Some of the activities include workshops, music, concerts, dance, vendors, food, theater, and art.

This year the honored country is Korea. Visitors will be able to experience Korean culture and food. 

Three held in tourist theft

By the A.M. Costa Rica staff

Three men were detained last weekend as suspects in trying to steal from a car rented by a tourist. The vehicle was in the parking lot of the Cataratas de Río Fortuna.

The Policía Turística said that the crooks who took items from the car fled in the direction of La Fortuna. Police stopped a vehicle going in that direction to make the arrests.

Police said they recovered two backpacks that were the property of the tourists.

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