Pinoy Money Talk has an article showing how surprising it is that you have to pay taxes on Gains through HYIP and AutoSurfs. His information is based on Philippino Law, but it shares the same characteristics as U.S. Law regarding gains and taxable income.
Now with U.S. Law if you lose money in one of these scams as well it can be considered a Tax deduction as a loss. This maybe true as well in the Philippines as well, please check with your tax expert.
In Recoveryouregold.com Domain registration they show:
TheGoldGroup.com
The Gold Group (Whois Privacy and Spam Prevention by DomainTools.com)
6735 West Madison
New Yok
NY,10012
US
Tel. +00.2022346798
I then went to thegoldgroup.com:
I talked this morning with Mr. Hank Gold, the Owner of TheGoldGroup.com Website. He advised they are in no way shape or form related nor do they own recoveryouregold.com. Mr. Gold asked if he should seek legal counsel. I advised Mr. Gold that it would be a good Idea to seek legal counsel to get a Cease and Desist Order to Recoveryouregold.com from using their Domain name as a way to prop up Recoveryouregold.com Reputation. Mr. Gold thanks me and stated he would do that.
So Recoveryouregold.com is lying! My Idea is they are working with the HYIP’s to delete accounts of investors that may complain. Please do not Make Complaints to Recoveryouregold.com.
Ponzi Scheme: There is not much tax literature on Ponzi Schemes, probably because many people who lose their savings are too ashamed, embarrassed or afraid to report their victimization. In essence, a loss from a Ponzi Scheme is a theft loss; it is a casualty. An older, but still very powerful ruling, is FSA 1999-942, which is actually a 1993 field service advice. It contains excellent citations that you should review further. (The following are excerpts from an actual IRS document. To protect taxpayer privacy, all references to the company name and products manufactured have been changed using fictitious references.)
The facts of this case may be summarized as follows: X was a corporation. It represented itself to be in the business of selling product. In reality, X was an elaborate ponzi scheme which began operation as early as several years earlier. It is estimated that the operation defrauded many investors out of lots of money.
http://www.pac-c.org/tax%20relief.htm
Basically, if a Program Scammed you out of Money That is Theft, and you can use that as a tax break on your Taxes on your Schedule A 1040 Form! But don’t believe me Ask you Tax Professional About Losses to Scams, they are More than Willing to help out! You may have to provide additional documentation on the matter, but hey a TAX Break take it!
There are a few things I will go over here.
Failure to Furnish Correct Payee Statements
26 USC, Section 6722, states that any failure to furnish a payee statement on or before the date prescribed therefore to the person to whom such statement is required to be furnished and any failure to include all of the information required to be shown on a payee statement or the inclusion of incorrect information….shall result in a penalty of $50 for each statement with respect to which such a failure occurs, but the total amount imposed on such person for all such failures during any calendar year shall not exceed $100,000.
The draft regulations provide special rules for soliciting an individual’s TIN. The section 6723 penalty may apply to any individual who is required (but fails) to furnish his or her TIN to an institution or insurer. An institution or insurer that complies with the rules for soliciting the individual’s TIN will not be penalized for any failure to obtain or include a correct TIN on a Form 1098-T or the related information statement.
Failure to Comply with Other Information Reporting Requirements
26 USC, Section 6723, states that a failure by any person to comply with a specified information reporting requirement on or before the time prescribed therefor…shall result in a penalty of $50 for each such failure, but the total amount imposed on such person for all such failures during any calendar year shall not exceed $100,000.
The proposed regulations generally follow the rules under section 6724 for waivers of penalties for certain failures due to reasonable cause.
You may also want to check out This IRS Form 3949-A, It is a to Make a Report of False Tax Documentation, another words, if you receive a False 1099 from a Program, Fill out this Form!
http://www.irs.gov/pub/irs-pdf/f3949a.pdf
TIP: You can find their EIN number or SSN Number on the 1099 Form they Sent you!
Another point to make is if you had a Loss you can Fill out a Capital Loss Statement.
http://www.irs.gov/pub/irs-pdf/f6781.pdf
AS ALWAYS I AM NOT A LAWYER, TAX PROFESSIONAL OR IRS AGENT. PLEASE SEEK PROPER LEGAL AND PROFESSIONAL COUNSEL!
