Offshore Money, FBAR International Tax and the IRS
By
Lance Wallach, CLU, CHFC
Abusive Tax Shelter, Listed Transaction, Reportable Transaction Expert Witness
Lance Wallach, CLU, CHFC
Abusive Tax Shelter, Listed Transaction, Reportable Transaction Expert Witness
FBAR, International Tax, IRS audits be careful. IRS
Offshore Voluntary Disclosure Program Reopens Do YOU have money overseas? By
Lance Wallach, CLU, CHFC - Recently the Internal Revenue Service reopened the
offshore voluntary disclosure program to help people hiding offshore accounts
get current with their taxes.
Offshore Voluntary Disclosure Program Reopens Do YOU have money overseas? By
Lance Wallach, CLU, CHFC - Recently the Internal Revenue Service reopened the
offshore voluntary disclosure program to help people hiding offshore accounts
get current with their taxes.
Additionally, the IRS revealed the collection of
more than $4.4 billion so far from the two previous international programs.
The Offshore Voluntary Disclosure Program (OVDP) was reopened following
continued strong interest from taxpayers and tax practitioners after the
closure of the 2011 and 2009 programs. The third offshore program comes as the
IRS continues working on a wide range of international tax issues and follows
ongoing efforts with the Justice Department to pursue criminal prosecution of
international tax evasion. This program will remain open indefinitely until
otherwise announced.
Lance Wallach and his associates have received thousands of phone calls from
concerned clients with questions about the prior programs. Some of Lance’s
associates are still very busy helping people with the last program. Not a
single person has been audited and most are pleased with the results and are
now able to sleep easily without worrying about the IRS. According to Lance, it
requires years of experience to obtain a good result from the program.
He suggests using a CPA-certified, ex-IRS agent with lots of international tax
experience. While this is not a requirement to file under the program, Lance
has heard many horror stories from people who have tried to file by themselves
or who have used inexperienced accountants.
“Our focus on offshore tax evasion continues to produce strong, substantial
results for the nation’s taxpayers,” said IRS Commissioner Doug Shulman. “We
have billions of dollars in hand from our previous efforts, and we have more
people wanting to come in and get right with the government. This new program
makes good sense for taxpayers still hiding assets overseas and for the
nation’s tax system.”
The new program is similar to the 2011 program in many ways, but it has a few
key differences. Unlike last year, there is no set deadline for people to
apply. However, the terms of the program could change at any time going
forward. For example, the IRS may increase penalties in the program for all or
some taxpayers or defined classes of taxpayers – or decide to end the program
entirely at any point.
“As we've said all along, people need to come in and get right with us before
we find you,” Shulman said. “We are following more leads and the risk for
people who do not come in continues to increase.”
The third offshore effort accompanies another announcement that Shulman made
today, that the IRS has collected $3.4 billion so far from people who
participated in the 2009 offshore program. That figure reflects closures of
about 95 percent of the cases from the 2009 program. On top of that, the IRS
has collected an additional $1 billion from upfront payments required under the
2011 program. That number will grow as the IRS processes the 2011 cases.
In all, the IRS has seen 33,000 voluntary disclosures from the 2009 and 2011
offshore initiatives. Since the 2011 program closed last September, hundreds of
taxpayers have come forward to make voluntary disclosures. Those who come in
after the closing of the 2011 program will be able to be treated under the
provisions of the new OVDP program.
The overall penalty structure for the new program is the same for 2011, except
for taxpayers in the highest penalty category.
The new program’s penalty framework requires individuals to pay a penalty of
27.5 percent of the highest aggregate balance in foreign bank accounts/entities
or the value of foreign assets during the eight full tax years prior to the
disclosure. That is up from 25 percent in the 2011 program. Some taxpayers will
be eligible for 5 or 12.5 percent penalties; these remain the same in the new
program as in 2011.
Participants must file all original and amended tax returns and include payment
for back-taxes and interest for up to eight years as well as paying
accuracy-related and/or delinquency penalties.
Participants face a 27.5 percent penalty, but taxpayers in limited situations
can qualify for a 5 percent penalty. Smaller offshore accounts will face a 12.5
percent penalty. People whose offshore accounts or assets did not surpass
$75,000 in any calendar year covered by the new OVDP will qualify for this
lower rate. As under the prior programs, taxpayers who feel that the penalty is
disproportionate may opt instead to be examined.
The IRS recognizes that its success in offshore enforcement and in the
disclosure programs has raised awareness related to tax filing obligations.
This includes awareness by dual citizens and others who may be delinquent in
filing, but owe no U.S. tax.
more than $4.4 billion so far from the two previous international programs.
The Offshore Voluntary Disclosure Program (OVDP) was reopened following
continued strong interest from taxpayers and tax practitioners after the
closure of the 2011 and 2009 programs. The third offshore program comes as the
IRS continues working on a wide range of international tax issues and follows
ongoing efforts with the Justice Department to pursue criminal prosecution of
international tax evasion. This program will remain open indefinitely until
otherwise announced.
Lance Wallach and his associates have received thousands of phone calls from
concerned clients with questions about the prior programs. Some of Lance’s
associates are still very busy helping people with the last program. Not a
single person has been audited and most are pleased with the results and are
now able to sleep easily without worrying about the IRS. According to Lance, it
requires years of experience to obtain a good result from the program.
He suggests using a CPA-certified, ex-IRS agent with lots of international tax
experience. While this is not a requirement to file under the program, Lance
has heard many horror stories from people who have tried to file by themselves
or who have used inexperienced accountants.
“Our focus on offshore tax evasion continues to produce strong, substantial
results for the nation’s taxpayers,” said IRS Commissioner Doug Shulman. “We
have billions of dollars in hand from our previous efforts, and we have more
people wanting to come in and get right with the government. This new program
makes good sense for taxpayers still hiding assets overseas and for the
nation’s tax system.”
The new program is similar to the 2011 program in many ways, but it has a few
key differences. Unlike last year, there is no set deadline for people to
apply. However, the terms of the program could change at any time going
forward. For example, the IRS may increase penalties in the program for all or
some taxpayers or defined classes of taxpayers – or decide to end the program
entirely at any point.
“As we've said all along, people need to come in and get right with us before
we find you,” Shulman said. “We are following more leads and the risk for
people who do not come in continues to increase.”
The third offshore effort accompanies another announcement that Shulman made
today, that the IRS has collected $3.4 billion so far from people who
participated in the 2009 offshore program. That figure reflects closures of
about 95 percent of the cases from the 2009 program. On top of that, the IRS
has collected an additional $1 billion from upfront payments required under the
2011 program. That number will grow as the IRS processes the 2011 cases.
In all, the IRS has seen 33,000 voluntary disclosures from the 2009 and 2011
offshore initiatives. Since the 2011 program closed last September, hundreds of
taxpayers have come forward to make voluntary disclosures. Those who come in
after the closing of the 2011 program will be able to be treated under the
provisions of the new OVDP program.
The overall penalty structure for the new program is the same for 2011, except
for taxpayers in the highest penalty category.
The new program’s penalty framework requires individuals to pay a penalty of
27.5 percent of the highest aggregate balance in foreign bank accounts/entities
or the value of foreign assets during the eight full tax years prior to the
disclosure. That is up from 25 percent in the 2011 program. Some taxpayers will
be eligible for 5 or 12.5 percent penalties; these remain the same in the new
program as in 2011.
Participants must file all original and amended tax returns and include payment
for back-taxes and interest for up to eight years as well as paying
accuracy-related and/or delinquency penalties.
Participants face a 27.5 percent penalty, but taxpayers in limited situations
can qualify for a 5 percent penalty. Smaller offshore accounts will face a 12.5
percent penalty. People whose offshore accounts or assets did not surpass
$75,000 in any calendar year covered by the new OVDP will qualify for this
lower rate. As under the prior programs, taxpayers who feel that the penalty is
disproportionate may opt instead to be examined.
The IRS recognizes that its success in offshore enforcement and in the
disclosure programs has raised awareness related to tax filing obligations.
This includes awareness by dual citizens and others who may be delinquent in
filing, but owe no U.S. tax.
Lance Wallach, National Society of
Accountants Speaker of the Year and member of the AICPA faculty of teaching
professionals, is a frequent speaker on retirement plans, abusive tax shelters,
financial, international tax, and estate planning. He writes about
412(i), 419, Section79, FBAR and captive insurance plans. He speaks at more
than ten conventions annually, writes for more than 50 publications, is quoted
regularly in the press and has been featured on television and radio financial
talk shows including NBC, National Public Radio’s “All Things Considered” and
others. Lance has written numerous books including “Protecting Clients from
Fraud, Incompetence and Scams,” published by John Wiley and Sons, Bisk
Education’s “CPA’s Guide to Life Insurance and Federal Estate and Gift
Taxation,” as well as the AICPA best-selling books, including “Avoiding
Circular 230 Malpractice Traps and Common Abusive Small Business Hot Spots.” He
does expert witness testimony and has never lost a case. Contact him at
516.938.5007, wallachinc@gmail.com or visit www.taxadvisorexpert.com.
The information provided herein is not intended as legal,
accounting, financial or any type of advice for any specific individual or
other entity. You should contact an appropriate professional for any such
advice.
accounting, financial or any type of advice for any specific individual or
other entity. You should contact an appropriate professional for any such
advice.
While every effort has been made to ensure the accuracy of this publication,
it is not intended to provide legal advice as individual situations will differ
and should be discussed with an expert and/or lawyer. For specific technical or
legal advice on the information provided and related topics, please contact the
author.
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