Archive | April, 2013

IRS Offshore Voluntary Disclosure Program – OVDP

April 26, 2013  |   Posted by :   |   Voluntary Disclosure   |   0 Comments

In January, 2012 the IRS began their third Offshore Voluntary Disclosure Program (OVDP); the two prior initiatives (2009 OVDP, which ran from 3/23/09 through 10/15/09, and 2011 OVDI which ran from 2/8/11 through 9/9/11). The OVDP was established to encourage taxpayers to disclose previously undisclosed foreign offshore accounts, and undisclosed income from offshore accounts. U.S. […]

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IRS OVDP – Tax Compliance 2012

April 26, 2013  |   Posted by :   |   Tax Evasion,Voluntary Disclosure   |   0 Comments

The IRS/OVDI program requires: 1. Filing complete and accurate Form 1040(x) amended federal income tax returns for all tax returns covered by the voluntary disclosure, with applicable schedules detailing the type and amount of previously unreported income from the account or entity (Schedule B for interest and dividends, Schedule D for capital gains and losses, […]

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IRS OVDP – Statute of Limitations

April 25, 2013  |   Posted by :   |   Voluntary Disclosure   |   0 Comments

Under the normal rules, a three year statute of limitations applies for the IRS to assess tax penalty and interest. The three year statute of limitations may be extended: 1. To six years, if the IRS can prove a substantial omission of gross income; 2. If there was a failure to file information returns; e.g., […]

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IRS OVDP – Title 26 Penalty of 27.5%

April 25, 2013  |   Posted by :   |   Unreported Income,Voluntary Disclosure   |   0 Comments

The Title 26 Penalty of 27.5% of the highest aggregate balance in foreign bank accounts/foreign assets includes unreported foreign bank accounts/assets held by individuals or businesses. This “offshore penalty” is intended to apply to all of the taxpayer’s offshore holdings that are related in any way to tax non-compliance, regardless of the form of the […]

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Offshore Tax Evasion – File Leaks Expose Secrets of the Rich

On April 4, 2013 the Digital Journal, The Guardian and Spiegel online reported that an informational network of journalists (15 month research project), 86 journalists from 46 countries, working with a nonprofit organization, The International Consortium of Investigative Journalists (including media firms: UK: The Guardian and the BBC; France: Le Monde; U.S.: Washington Post) reported […]

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IRS OVDP – FBAR Signatory Authority

April 24, 2013  |   Posted by :   |   FATCA/FBAR,Voluntary Disclosure   |   0 Comments

A taxpayer who has failed to file a FBAR to report a foreign account over which the taxpayer has signatory authority but no beneficial interest (e.g. an account owned by his employers), that foreign account will not be included in the asset base for calculating the taxpayer’s 27.5% offshore penalty. The account that the taxpayer […]

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IRS OVDP – Closing Agreement

April 23, 2013  |   Posted by :   |   Voluntary Disclosure   |   0 Comments

The penalty framework for offshore voluntary disclosure and the agreement to limit tax exposure to an 8 year period are package terms under the OVDP. If any part of the offshore penalty is unacceptable to the taxpayer, the case will be examined and all applicable penalties will be imposed. After a full examination, any tax […]

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IRS OVDP – IRS and Tax Practitioners

April 23, 2013  |   Posted by :   |   Voluntary Disclosure   |   0 Comments

If the taxpayer seeks the advice of a tax practitioner, the practitioner must exercise due diligence in determining the corrections of any oral or written representations made to the client about the program and the implications for that taxpayer of going forward. If the taxpayer decides to proceed with the disclosure, the practitioner must exercise […]

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IRS OVDP – International Investors

April 18, 2013  |   Posted by :   |   Voluntary Disclosure   |   0 Comments

International investors, classified as U.S. income tax residents, may enter voluntary disclosure agreements. International investors may be classified as U.S. income tax residents for each tax year that: 1. They have a U.S. green card; i.e., Lawful Permanent Resident (“The Green Card Test”); 2. They are in the U.S. as a tax resident under the […]

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IRS OVDP – International Investors and U.S. Income Tax

April 18, 2013  |   Posted by :   |   International Investors,Voluntary Disclosure   |   0 Comments

International investors are subject to tax reporting and tax payment of U.S. income taxes as either a U.S. income tax resident, or as a non-resident alien. Resident aliens (under either the “Green Card” or “Substantial Presence Tests”) are subject to taxation on their world-wide income which includes annual tax filings: Form 1040 (report world-wide income), […]

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