Offshore Voluntary Disclosure – Interview with your examiner
Brotman Law
The OVDI Process – Part Two
The OVDI Process – After Preclearance is received
If a taxpayer makes all the requisite disclosures and receives the preclearance then they must make their disclosure. Note these guidelines are subject to change. Consult the IRS’s website for the most recent OVDI procedures. [1] Under the IRS’s guidelines:
The Offshore Voluntary Disclosure Process – Part One
The precise procedures under the Offshore Voluntary Disclosure process are murky at best. They resemble loading a revolver and handing it to someone with an itchy trigger finger. As other countries and their foreign financial institution buckle to the pressures of FATCA, the value of self-disclosure is beginning to lose its luster to the federal investigators. The lack of precise protocols and standards can only be an indication of the fact that the Offshore Voluntary Disclosure rocess will have a short life as foreign compliance escalates and the Streamlined programs are taken advantage of those whose conduct was non-willful. Under the current regulations, what is in it for the taxpayer according to the IRS:
Streamlined Voluntary Disclosure for Non-Residents
Eligibility: In order for non-residents U.S. taxpayers to be eligible to participate in the Streamlined Voluntary Disclosure for Non-Residents program they must:
Streamlined Offshore Voluntary Disclosure Penalties
A Summary of the Streamlined Offshore Voluntary Disclosure Penalties
The Title 26 miscellaneous offshore penalty is equal to 5 percent of the highest aggregate balance or value of the taxpayer’s foreign financial assets that are subject to the miscellaneous offshore penalty during the years in the covered tax return period and the covered FBAR period. For this purpose, the highest aggregate balance or value is determined by aggregating the year-end account balances and year-end asset values of all the foreign financial assets subject to the miscellaneous offshore penalty for each of the years in the covered tax return period and the covered FBAR period and selecting the highest aggregate balance/value from among those years.
Streamlined Voluntary Disclosure Eligibility
Streamlined Voluntary Disclosure Eligibility Requirements
In addition to having to meet the general eligibility criteria described above, individual U.S. taxpayers, or estates of individual U.S. taxpayers, seeking to use the Streamlined Domestic Offshore Procedures described in this section must:
IRS Streamlined OVDI – Part Two
All tax returns submitted under the IRS streamlined OVDI procedures must have a valid Taxpayer Identification Number (TIN). Tax returns submitted without a valid SSN or ITIN will not be processed under the streamlined procedures. However, for taxpayers who are ineligible for an SSN but do not have an ITIN, a submission may be made under the IRS streamlined ODVI procedures if accompanied by a complete ITIN application.
Streamlined Offshore Voluntary Disclosure Program – Part One
On September 1, 2012, the IRS first offered the streamlined offshore voluntary disclosure program to bring non-resident taxpayers back into compliance. [1] The key factor of the streamlined offshore voluntary disclosure program is that failure to file must not have been willful. As the program proved popular, the IRS has made major changes to the program to make it available to a broader base of taxpayers. First, the taxpayer has to certify that their failure to report foreign financial assets and pay all the tax due did not result from willful conduct on their part. If the failure to file was not willful, the program provides a streamlined process for filing amended or delinquent returns, and terms for resolving the tax penalty obligation. At this point, the program is in place for an indefinite time.
IRS Voluntary Disclosure
Tax professionals, the IRS, and FinCEN have independently and together worked to find ways of bringing taxpayers back into compliance through the IRS Voluntary Disclosure program. Currently there are many ways to come clean with the IRS and FinCEN. Each method will be discussed in detail later. This section will provide an overview. A method previously advised by accountants is doing nothing and hope for the best.[1] With the growing number of countries and foreign financial institutions becoming complainant under FATCA, this no longer is a sensible option. If you hold a non-disclosed offshore account, it will eventually be discovered. Now is the time to act. To decide what option is best for your situation, you should retain legal counsel whose practice concentrates in taxation. Your conversations with your accountant are not protected by attorney/client privilege. You should engage legal counsel to assist you in deciding what the best course of action is.