[US Tax] What are some of the Civil penalties and the Criminal charges that might apply if you fail to file US tax or/and information returns and the IRS examines you?

[US Tax] What are some of the Civil penalties and the Criminal charges that might apply if you fail to file US tax or/and information returns and the IRS examines you?

Depending on a taxpayer’s particular facts and circumstances, the following penalties could apply:

Fail to be compliance with	Civil penalties	Criminal charges
FinCEN Report 114, Report of Foreign Bank and Financial Accounts (FBAR)	A penalty for failing to file FBARs. United States citizens, residents and certain other persons must annually report their direct or indirect financial interest in, or signature authority (or other authority that is comparable to signature authority) over, a financial account that is maintained with a financial institution located in a foreign country if, for any calendar year, the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the year. The civil penalty for willfully failing to file an FBAR can be as high as the greater of $100,000 or 50 percent of the total balance of the foreign financial account per violation. See 31 U.S.C. § 5321(a)(5). Non-willful violations that the IRS determines were not due to reasonable cause are subject to a $10,000 penalty per violation.	Failing to file an FBAR subjects a person to a prison term of up to ten years and criminal penalties of up to $500,000.
Form 8938 reporting the taxpayer’s interest in certain foreign financial assets (FATCA)	Beginning with the 2011 tax year, a penalty for failing to file Form 8938 reporting the taxpayer’s interest in certain foreign financial assets, including financial accounts, certain foreign securities, and interests in foreign entities, as required by IRC § 6038D. The penalty for failing to file each one of these information returns is $10,000, with an additional $10,000 added for each month the failure continues beginning 90 days after the taxpayer is notified of the delinquency, up to a maximum of $50,000 per return.	A person who fails to file a tax return is subject to a prison term of up to one year and a fine of up to $100,000. No statute of the limitation is applicable to failure to file. Filing a false return subjects a person to a prison term of up to three years and a fine of up to $250,000. A person convicted of tax evasion is subject to a prison term of up to five years and a fine of up to $250,000. A person convicted of conspiracy to commit offense or to defraud the United States is subject to a prison term of not more than five years and a fine of up to $250,000. A person convicted of conspiracy to defraud the government with respect to claims is subject to a prison term of up to not more than 10 years or a fine of up to $250,000.
Form 3520, Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts.	A penalty for failing to file Form 3520, Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts. Taxpayers must also report various transactions involving foreign trusts, including creation of a foreign trust by a United States person, transfers of property from a United States person to a foreign trust and receipt of distributions from foreign trusts under IRC § 6048. This return also reports the receipt of gifts from foreign entities under IRC § 6039F. The penalty for failing to file each one of these information returns, or for filing an incomplete return, is the greater of $10,000 or 35 percent of the gross reportable amount, except for returns reporting gifts, where the penalty is five percent of the gift per month, up to a maximum penalty of 25 percent of the gift.
Form 3520-A, Information Return of Foreign Trust With a U.S. Owner	A penalty for failing to file Form 3520-A, Information Return of Foreign Trust With a U.S. Owner. Taxpayers must also report ownership interests in foreign trusts, by United States persons with various interests in and powers over those trusts under IRC § 6048(b). The penalty for failing to file each one of these information returns or for filing an incomplete return, is the greater of $10,000 or 5 percent of the gross value of trust assets determined to be owned by the United States person.
Form 5471, Information Return of U.S. Persons with Respect to Certain Foreign Corporations	A penalty for failing to file Form 5471, Information Return of U.S. Persons with Respect to Certain Foreign Corporations. Certain United States persons who are officers, directors or shareholders in certain foreign corporations (including International Business Corporations) are required to report information under IRC §§ 6035, 6038 and 6046. The penalty for failing to file each one of these information returns is $10,000, with an additional $10,000 added for each month the failure continues beginning 90 days after the taxpayer is notified of the delinquency, up to a maximum of $50,000 per return
Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business	A penalty for failing to file Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business. Taxpayers may be required to report transactions between a 25 percent foreign-owned domestic corporation or a foreign corporation engaged in a trade or business in the United States and a related party as required by IRC §§ 6038A and 6038C. The penalty for failing to file each one of these information returns, or to keep certain records regarding reportable transactions, is $10,000, with an additional $10,000 added for each month the failure continues beginning 90 days after the taxpayer is notified of the delinquency.
Form 926, Return by a U.S. Transferor of Property to a Foreign Corporation	A penalty for failing to file Form 926, Return by a U.S. Transferor of Property to a Foreign Corporation. Taxpayers are required to report transfers of property to foreign corporations and other information under IRC § 6038B. The penalty for failing to file each one of these information returns is ten percent of the value of the property transferred, up to a maximum of $100,000 per return, with no limit if the failure to report the transfer was intentional.
Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships	A penalty for failing to file Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships. United States persons with certain interests in foreign partnerships use this form to report interests in and transactions of the foreign partnerships, transfers of property to the foreign partnerships, and acquisitions, dispositions and changes in foreign partnership interests under IRC §§ 6038, 6038B, and 6046A. Penalties include $10,000 for failure to file each return, with an additional $10,000 added for each month the failure continues beginning 90 days after the taxpayer is notified of the delinquency, up to a maximum of $50,000 per return, and ten percent of the value of any transferred property that is not reported, subject to a $100,000 limit.
A tax return under IRC § 6651(a)	A penalty for failing to file a tax return imposed under IRC § 6651(a)(1). Generally, taxpayers are required to file income tax returns. If a taxpayer fails to do so, a penalty of 5 percent of the balance due, plus an additional 5 percent for each month or fraction thereof during which the failure continues may be imposed. The penalty shall not exceed 25 percent.
A tax payment under IRC § 6651(a)(2)	A penalty for failing to pay the amount of tax shown on the return under IRC § 6651(a)(2). If a taxpayer fails to pay the amount of tax shown on the return, he or she may be liable for a penalty of .5 percent of the amount of tax shown on the return, plus an additional .5 percent for each additional month or fraction thereof that the amount remains unpaid, not exceeding 25 percent.
Minimum late filing	If you file your return more than 60 days after the due date or extended due date, the minimum penalty for late filing is the smaller of $135 or 100 percent of the unpaid tax.
A tax matter under IRC § 6662	An accuracy-related penalty on underpayments imposed under IRC § 6662. Depending upon which component of the accuracy-related penalty is applicable, a taxpayer may be liable for a 20 percent or 40 percent penalty.
A tax matter under IRC §§ 6651(f) or 6663	Fraud penalties imposed under IRC §§ 6651(f) or 6663. Where an underpayment of tax, or a failure to file a tax return, is due to fraud, the taxpayer is liable for penalties that, although calculated differently, essentially amount to 75 percent of the unpaid tax.

Note:

(1) If you are an alien (not a U.S. citizen), you are considered a nonresident alien unless you meet one of two tests. You are a resident alien of the United States for tax purposes if you meet either the green card test or the substantial presence test for the calendar year (January 1-December 31).

(2) April 15 was the tax day deadline for most people. If you file your federal tax return late and owe tax with the return, two penalties may apply. The first is a failure-to-file penalty for late filing. The second is a failure-to-pay penalty for paying late. If the failure-to-file penalty and the failure-to-pay penalty both apply in any month, the maximum amount charged for those two penalties that month is 5 percent. If you are due a refund there is no penalty if you file a late tax return. But if you owe tax, and you failed to file and pay on time, you will usually owe interest and penalties on the tax you pay late. You should file your tax return and pay the tax as soon as possible to stop them.

(4) File even if you can’t pay. In most cases, the failure-to-file penalty is 10 times more than the failure-to-pay penalty. So if you can’t pay in full, you should file your tax return and pay as much as you can. Use IRS Direct Pay to pay your tax directly from your checking or savings account. You should try other options to pay, such as getting a loan or paying by debit or credit card. The IRS will work with you to help you resolve your tax debt. Most people can set up an installment agreement with the IRS using the Online Payment Agreement tool on IRS.gov.

Source: IRS

※ The tax, accounting, or tech business information above is for your reference, and is not legally binding.

[Tech Business] How Cloud Computing Is Changing Management

[Tech Business] How Cloud Computing Is Changing Management

by Quentin Hardy

YAGI STUDIO/GETTY IMAGES

Theories and practices of management often spring from the opportunities created by new technologies. Interchangeable parts spurred ideas about structuring assembly lines and logistics. The complex calculations of the field known as Operations Research were enabled by mainframe computing. Client-server technology begat enterprise resource planning systems, and the consequent system-wide visibility that was required for what we call business process management (BPM).

That makes it imperative to start thinking about how management will be changed by the most impactful information technology of our time: cloud computing. What does it allow us to do differently, and how will that change the way we do things in the future?

History suggests that the main way information technology changes management is through changes in how information is gathered: the large-scale analysis of Operations Research reflected painstaking data collection around a few metrics, which were transferred to punch cards. BPM reflected the interactions of different stakeholders, from product creation through supply chain to final assembly.

How organizations are changing

With cloud, information travels rapidly in both directions, across computing systems that, with attributes like virtualization, scaling up or down to handle bigger workloads, or automated security patching across thousands of machines, are far more flexible. This will likely mean a more flexible work structure as well, in the interest of products and services that ideally can be adjusted to anticipate customer needs. Key to the new system are rapid data collection and analysis, followed by over the air changes to product software.

Likely outcomes of the move to cloud include changing how products are designed; closer collaboration between the corporate IT department and other business units, including sales, finance and forecasting; and more customer interaction, even to a point of jointly developing products with their consumers. In particular, new ways of writing and deploying software will encourage new types of faster-acting organizational designs. And the best way to anticipate how these changes will occur is to hear from companies already aggressively implementing them.

“It’s already changing organizations, by moving IT from a cost center to something with a place at the table in a lot of different meetings,” said Chris Jackson, head of cloud platforms at Pearson, a global learning company. If Pearson is looking at, say, a new online learning course, Mr. Jackson is part of early product design meetings, offering tips on what user interaction data should be collected, how, and how often a course might be tweaked. A job like his used to be concerned only with things that happened later in the process, like launching and maintaining a piece of software.

Public cloud computing, offered by companies like Amazon Web Services, Microsoft Azure, and my employer, Google Cloud, is still viewed by many as a cheaper and more efficient way for companies to store and process data. The cost may be lower, but like traditional computers, it is still a cost.

Lower costs have been reason enough for many companies to shut down their proprietary data centers and consume computational power and attendant software as a series of on-demand services. Others use cloud computing software in their own data centers, as a means of increasing resources and working faster.

How it effects product design and customer experience

As cloud technology improves, however, it is becoming easier for companies to create products and services within the cloud, or model new products or marketing campaigns as cloud-based software prototypes. The cloud is also a common repository for the collection and analysis of new data, and the place where an increasing number of artificial intelligence operations, like image and speech recognition, are conducted.

The evidence is already there, as startups increasingly conceive of their goods and services largely as software-centric entities, from which data is continually derived. Changes and upgrades become part of a continuous process. Organizational functions blur as processes become increasingly iterative.

The ride-hailing company Uber has stressed the importance of its hybrid cloud model to ensure not just constant uptime, but an indivisible relationship between product development and deployment. Uber is able to model a virtual fleet of taxis from private cars through a combination of mobile software, large-scale data analysis, mapping, and social networking.

A similar dynamic of redefined processes and constant iteration is happening with industrial products. Oden Technologies is a New York-based startup that builds sensor systems for factories, enabling continuous, precise monitoring of large and complex processes.

One recent project involved building a tablet-based system for carrying out complex calculations in real-time. The product, which might normally take six months to a year to create, was finished in 10 weeks, thanks to accelerated testing, and direct communication with the customer about needs and specifications during design and construction. In effect, over time the initial design and the prototype incrementally became the product, with the customer participating in its creation.

“The relationship with the customers tightens,” said James Maidment, the team leader of the project. “We deployed faster, we got new requirements directly, and we iterated more quickly. In a way, we don’t have a final product, we have a customer relationship involved with a product.”

What else needs to change?

The constant relationship between management theory and applied technology shouldn’t be too surprising. William Hewlett, a founding father of Silicon Valley, famously said “you cannot manage what you cannot measure.” It seems to logically follow that opposite also holds true – what and how you measure something influences the way it is managed.

How soon will cloud be as influential for management as the mainframe or client-server computing? In a recent paper, Erik Brynjolfsson, Daniel Rock, and Chad Syverson found that major technology improvements may lag productivity gains for years, even decades. The most tantalizing reason why: An ecosystem of other changes has to arise, along with new thinking about how the technology should be used, in order for it to have full impact.

Brynjolfsson, a professor at MIT’s Sloan School of Management, thinks software-based advances like AI and cloud-style software will find a place faster than many of the earlier advances. For one thing, lower costs mean they can be quickly adopted by startups unencumbered by legacy costs and practices. And, unlike hardware-based advances, the influence this time will be from software – in particular, what happens when teams throughout the corporation build products and services using what is termed cloud-native software.

“With the cloud, we can replicate processes more quickly,” he said. “But you still need three things to be updated before you fully take advantage: Organizational innovation, trained human capital, and social institutions, like infrastructure and regulation, that accommodate new technologies.” He added, “the biggest issue now is that important new technologies are moving ahead, and people aren’t thinking enough about the big implications.”

The shift to “cloud native” organizations

The way software is conceived of for cloud computing may turn out to be as important as the physical infrastructure of cloud (which is millions of computer servers dispersed around the globe, connected by high-speed fiber optic lines.)

“Cloud native” software approaches stresses ease of use and low-impact alteration of components of any given software application. Massive applications are subdivided into a series of “microservices” that can be tweaked with little effect on a running piece of software.

Traditional complex software often has a series of relationships, called dependencies, with other lines of code, requiring big rewrites for even trivial changes. Think of it as the way a plant’s roots can grow over a big area, and intermingle with other roots. By orchestrating microservices into highly portable units, called containers, the dependencies are potted.

That means it is possible to deploy and manage an application globally, from a single location, with relatively little hassle. Kubernetes, the most popular open source software for orchestrating such container usage, was originally developed inside Google to run the company’s many global applications, and easily alter products and issue software fixes at the greatest possible scale.

Google now runs about 2 billion containers a week on its in-house version of Kubernetes. Open source Kubernetes is managed by the Cloud Native Computing Foundation, which counts among its members Google Cloud, Microsoft, IBM, Oracle, and Amazon.

Dan Kohn, the foundation’s executive director, has predicted that eventually much the world’s legacy software, worth about $100 trillion in net GDP, will be ported into Kubernetes, for better servicing.

Blackrock, the world’s largest asset manager, recently built and released an investor research application using Kubernetes in 100 days, about the time it might normally take simply to procure computer equipment, on the cloud software it runs on its own computers. The team of 20 people represented technology, infrastructure, production operations, development and information security parts of the business.

Michael Francis, who led the project, noted how Kubernetes encouraged collaboration. “I saw junior developers working directly with senior managers, asking what they were looking for,” he said. “The feedback is much more rapid.” In addition, there is less fear about taking on a big project, since the thousands of processes involved in a large software project can be transparently managed, and issues resolved quickly.

Kubernetes works well, in part, because it fits a larger ethos in cloud technology, flexibility. The computer server virtualization in cloud enables more workloads per machine, and sudden influxes of data can “burst” onto other machines, even in remote locations. Data and work can also be apportioned in smaller units and dispersed, either for security or to maximize resources. As customers of public clouds typically rent computation instead of buying assets, IT spending moves from a fixed capital commitment to a more flexible operating expense.

Pearson uses Kubernetes to develop, deploy and manage new kinds of online learning systems in developing markets like India and Mexico. About 10 products serve several hundred thousand students a month, and products are designed to fine-tuned all the time, as opposed to an older twice-yearly model.

“It forces our internal teams to think about innovating faster,” said Mr. Jackson. “Conservatively, we can have 10 times more release activity.” The software is designed to watch interactions with students, seeking ways to ensure they’re learning, and this also requires closer consultation among product people, software developers, and IT executives like Mr. Jackson, who handle resource allocation.

He calls it “a redistribution of accountability” with the organization, “changing the perception of what IT is, when it becomes a value enabler.” The new way of deploying software, he said, also gives him visibility on where and how it is consumed, providing information about future costs. That modifies his job from solely capital expenditure to operating expense, and effectively a collaborator on growth.

In 1967, still early days in the Information Technology revolution, John Culkin had a brilliant insight. “We become what we behold,” he wrote. “We shape our tools and then our tools shape us.” Five decades on, we have the benefit of much IT history, and can think how we, and our organizations may be shaped by new technology. As our systems and people gain in their capabilities to adapt to changing markets, every aspect of a business will become more responsive.

Fixed job roles, like software engineering or financial planning, may evolve towards domain knowledge, which is shared in collaborative teams, brought together and disassembled for some part of a product life cycle. Companies may partner more deeply, taking advantage of each other’s comparative advantage to meet a new market need. Managers will need to concentrate more than ever on skills such as collaboration, empathy, learning, and novel rewards to create an organization hopefully even more adaptive than the cloud computing IT tool it beholds.

Source: Harvard Business Review (https://hbr.org/2018/02/how-cloud-computing-is-changing-management)
※ The tax, accounting, or tech business information above is for your reference, and is not legally binding.

[Tech Business] Amazon AWS Marketplace and SaaS Seller Guide

[Tech Business] Amazon AWS Marketplace and SaaS Seller Guide

1. What is AWS Marketplace

AWS Marketplace enables qualified sellers to market and sell their software to AWS customers (customers). AWS Marketplace is an online software store that helps customers find, buy, and immediately start using the software and services that run on AWS. AWS Marketplace is designed for Independent Software Vendors (ISVs), Value-Added Resellers (VARs), and Systems Integrators (SIs) who have software products they want to offer to customers in the cloud. Sellers use AWS Marketplace to be up and running quickly and to offer their software products to customers around the world.

*  Marketing & New Users: Sellers can take advantage of the Management Portal to better build and analyze their business, while using features such as Free Trials to drive marketing activities and customer adoption.

*  Simplified Delivery: Deliver your software as an easy to build Amazon Machine Image (AMI) or Software as a Service (SaaS) listing and take advantage of our 1-click deployment feature. Enable customers to launch your software in minutes pre-configured to run on AWS.

*  Billing: Leave the metering, billing, collections, and disbursement of payments to AWS – focus on marketing and selling your software.

2. Becoming an AWS Marketplace Seller

If you are interested in selling your software on AWS Marketplace, review the requirements, and then follow the steps to register as a seller. There are different registration requirements based on where you reside and what type of products you want to list. To register as a seller on AWS Marketplace, you can use an existing AWS account or create a new account. All AWS Marketplace interactions will be tied to the AWS account you choose.

2-1. Seller Requirements for Publishing Free Products on AWS Marketplace

*  Sell publicly available, full-feature production-ready software (not a beta product).

*  Provide a means to keep software regularly updated and free of vulnerabilities.

*  Follow best practices and guidelines when marketing your product on AWS Marketplace.

*  Be an AWS customer in good standing and meet the requirements set forth in the terms and conditions for AWS Marketplace sellers.

2-2. Additional Seller Requirements for Publishing Paid or BYOL Products on AWS Marketplace

*  Be a permanent U.S. or European Union (EU) resident or citizen, or a business entity organized or incorporated in the United States or member state of the EU.

*  Tax and bank account information are required. For U.S. based entities, a W-9 and banking account from a U.S. based bank are required.

*  European Union state members are required to provide a W-8, Value Added Tax (VAT) number, and U.S. bank account. If you do not have a U.S. bank account, you can register for a virtual U.S. bank account from Hyperwallet.

To sell into the AWS GovCloud (US) Region, sellers must have an AWS GovCloud account. For details on ITAR requirements, refer to the AWS GovCloud (US) User Guide.

3. Download Guidebook

*  AWS Marketplace Seller Guide

*  AWS Marketplace SaaS Seller Integration Guide

Source: Amazon AWS Marketplace

※ The tax, accounting, or tech business information above is for your reference, and is not legally binding.

[US Corporation] Cloud service, Cybersecurity, and Cloud security

[US Corporation] Cloud service, Cybersecurity, and Cloud security

"March 3, 2016, 700 current and former Snapchat employees had their personal information stolen when hackers used a phishing scam to trick an employee into emailing them the private data."

"September 22, 2016: Yahoo announced that a hacker had stolen information from a minimum of 500 million accounts in late 2014. The thief, believed to be working on behalf of a foreign government, stole email addresses, passwords, full user names, dates of birth, telephone numbers, and, in some cases, security questions and answers."

According to a 2015 study conducted by the Ponemon Institute, the frequency of attacks against the cyber infrastructures of global governments and commercial enterprises continues to grow. These attacks can include stealing an organization's intellectual property, confiscating online bank accounts, creating and distributing computer viruses, posting confidential business information on the Internet, and disrupting a country's critical national infrastructure. Ultimately, the cybersecurity has become the key part of the internal control over the corporation.

Cybersecurity is the set of processes, best practices, and technology that protects critical infrastructure such as networks and databases from accidental or intentional damage due to attacks, unauthorized access, or natural disasters. There are several types of cybersecurity: operational security, data security, application security, network security, cloud security, and payment card industry (PCI) data security.

Especially, the cloud service is the service provided based upon cloud computing which is a model for enabling convenient, on-demand, and configurable computing resources such as servers, file storage, applications, and services and in terms of the cloud security regarding the cloud service, an organization’s scope and control over the cloud computational environment depend on the type of cloud service model.

Type of service model	Infrastructure-as-a-service (IaaS)	Platform-as-a-service (PaaS)	Software-as-a-service (SaaS)
Scope	A model of service delivery where the basic computing infrastructure of servers, software, and network equipment is provided as an on-demand service.	A model of service delivery where the computing platform is provided as an on-demand service upon which applications can be developed and deployed.	A model of service delivery where one or more applications are provided for use on demand.
Control	Security provisions beyond the basic infrastructure are carried out mainly by the cloud consumer.	Security provisions are split between the cloud provider and the cloud consumer.	Security is the cloud provider's responsibility, and the cloud consumer does not control the underlying cloud infrastructure or individual applications.

Cloud security advantages and disadvantages

Advantages	Disadvantages
Although there are date security challenges unique to cloud computing, improvements are continuously made, enabling organizations to enjoy security and privacy benefits by transitioning to a public cloud computing environment. (a) Staff specialization (b) Platform strength (c) Resource availability (d) Backup and recovery (e) Mobile endpoints (f) Data concentration	Cloud computing has several disadvantages over traditional data centers. (a) System complexity (b) Shared multitenant environment (c) Internet-facing services (d) Loss of control the organization's direct control.

AICPA Cybersecurity standards

On April 26, 2017, the AICPA introduced a market‐driven, flexible, and voluntary cybersecurity risk management reporting framework. The new framework will enable all organizations in industries worldwide to take a proactive and agile approach to cybersecurity risk management and to communicate on those activities with stakeholders.

There are Trust Services Criteria for Security, Availability, Processing Integrity, Confidentiality, and Privacy:

(1) Established by the Assurance Services Executive Committee (ASEC) of the AICPA,

(2) May be used when evaluating the design and operating effectiveness of relevant controls of one or more systems or type of information processed, and

(3) Organized consistent with COSO's Internal Control—Integrated Framework (COSO).

Source: Becker Professional

※ The tax, accounting, or tech business information above is for your reference, and is not legally binding.