Knowing These Four Choices About Offshore Voluntary Disclosure Initiative Will Save Your Neck
So many people got caught off guard with the recent attention the IRS is giving holders of offshore bank accounts. With the off-the-shelf deals previously offered, the terms of the settlement were known and predictable. Now that the 2009 and 2011 offshore voluntary disclosure initiatives (OVDI) have ended, the IRS has not yet issued a new OVDI, so many non-compliant taxpayers are wondering if they should come forward and what the cost of coming forward will be. These are the four options still available.
Option One: Stick your head in the sand and pray the IRS never catches you. Perhaps your account is at a foreign bank that you believe to be "off the radar" or is in a quiet country, or under a friend's name, or opened with a non-US passport. Well, it used to be that a bank account's actual owner could be kept anonymous. However, now, the IRS has vastly many more tools than it did previously to find previously unreported accounts.
Here's the thing -- despite what you hear, the American is still by far the largest ecomony in the world and has the richest population by far. Every foreign foreign bank must compete for US customers. And in order to do so, these banks must comply with what the Internal Revenue Service tell them to. Part of being on the good side of the IRS is to disclose what the IRS says to disclose. Consequently the bank is really at the mercy of the Internal Revenue Service….meaning so are the banks' foreign account holders. So you see, hiding becomes a more dangerous and dangerous. And once the Internal Revenue Service starts an investigation, there is only one option left…pay outrageous taxes and the highest penalties and face the significant possibility of real jail time.
The next option is to renounce citizenship and depart the country --- as this is the only way to escape the taxing jurisdiction of the Internal Revenue Service. But be warned --- this only works to avoid future tax debts and conformity issues. The only way to properly give up is to essentially come clean about all overseas bank financial accounts and actually forfeit an expatriation tax (in many ways it was easier to leave Soviet Block country than to leave the USA completely intact with your wealth.)
Option 3: Soft (or quiet) disclosure. An option that some people attempted is to file amended tax forms 1040X's and mail them to the IRS just think "regular" 1040X's, pay the taxes, and hope the IRS won't figure out what was going on. Sounds think a good strategy, right? Perhaps one could avoid all those excessive penalties of the OVDI programs?
There may be serious problems with this alternative. One major drawback is that the Department of Justice states that it has begun criminal proceeding against taxpayers who attempted to utilize the "soft" disclosure process.
There are other problems with "Quiet Disclosures." One massive failing is that they do not address the problem of the taxpayer's non-compliance in FBAR filing; failing to filing an FBAR can be a criminal charge just by itself. So simply filing a quiet disclosure does not go far enough to eliminate any likelihood of criminal investigations. In fact, the amended return may --- well here's the massive problem with this option --- the soft disclosure does nothing about the failure to the FBAR. There are still criminal and civil charges that may be pending for failing to file an FBAR, but simply give the IRS a very handy to find you.
The forth option is a pre-emptive disclosure and subsequent negotiation of the penalties. This is the best option. Even though the time to file under the 2011 initiative has passed, it is not too late. The only thing that passed on August 31, 2011 was the specific standards terms of the 2011 OVDI. The 2011 OVDI was simply a pre-agreed upon penalty arrangement. The Internal revenue service always welcomes voluntary disclosures.
There are only two requirements. Initially, the taxpayer can not be under audit. In addition, the source of the money in the foreign bank accounts can not be from an illegal source. Like drug trafficking or money laundering.
Such pre-emptive off-shore disclosures and negotiations must be handled by a qualified Offshore tax attorneys, experienced in offshore compliance and sensitive IRS negotiations.
Get added from a genuine authority that has found out the law in relation to Offshore Voluntary Disclosure Initiative [http://blog.bitcomet.com/post/2604989] -. Don't obtain assistance as regards IRS Medic - from an individual who has not studied tax law.
Option One: Stick your head in the sand and pray the IRS never catches you. Perhaps your account is at a foreign bank that you believe to be "off the radar" or is in a quiet country, or under a friend's name, or opened with a non-US passport. Well, it used to be that a bank account's actual owner could be kept anonymous. However, now, the IRS has vastly many more tools than it did previously to find previously unreported accounts.
Here's the thing -- despite what you hear, the American is still by far the largest ecomony in the world and has the richest population by far. Every foreign foreign bank must compete for US customers. And in order to do so, these banks must comply with what the Internal Revenue Service tell them to. Part of being on the good side of the IRS is to disclose what the IRS says to disclose. Consequently the bank is really at the mercy of the Internal Revenue Service….meaning so are the banks' foreign account holders. So you see, hiding becomes a more dangerous and dangerous. And once the Internal Revenue Service starts an investigation, there is only one option left…pay outrageous taxes and the highest penalties and face the significant possibility of real jail time.
The next option is to renounce citizenship and depart the country --- as this is the only way to escape the taxing jurisdiction of the Internal Revenue Service. But be warned --- this only works to avoid future tax debts and conformity issues. The only way to properly give up is to essentially come clean about all overseas bank financial accounts and actually forfeit an expatriation tax (in many ways it was easier to leave Soviet Block country than to leave the USA completely intact with your wealth.)
Option 3: Soft (or quiet) disclosure. An option that some people attempted is to file amended tax forms 1040X's and mail them to the IRS just think "regular" 1040X's, pay the taxes, and hope the IRS won't figure out what was going on. Sounds think a good strategy, right? Perhaps one could avoid all those excessive penalties of the OVDI programs?
There may be serious problems with this alternative. One major drawback is that the Department of Justice states that it has begun criminal proceeding against taxpayers who attempted to utilize the "soft" disclosure process.
There are other problems with "Quiet Disclosures." One massive failing is that they do not address the problem of the taxpayer's non-compliance in FBAR filing; failing to filing an FBAR can be a criminal charge just by itself. So simply filing a quiet disclosure does not go far enough to eliminate any likelihood of criminal investigations. In fact, the amended return may --- well here's the massive problem with this option --- the soft disclosure does nothing about the failure to the FBAR. There are still criminal and civil charges that may be pending for failing to file an FBAR, but simply give the IRS a very handy to find you.
The forth option is a pre-emptive disclosure and subsequent negotiation of the penalties. This is the best option. Even though the time to file under the 2011 initiative has passed, it is not too late. The only thing that passed on August 31, 2011 was the specific standards terms of the 2011 OVDI. The 2011 OVDI was simply a pre-agreed upon penalty arrangement. The Internal revenue service always welcomes voluntary disclosures.
There are only two requirements. Initially, the taxpayer can not be under audit. In addition, the source of the money in the foreign bank accounts can not be from an illegal source. Like drug trafficking or money laundering.
Such pre-emptive off-shore disclosures and negotiations must be handled by a qualified Offshore tax attorneys, experienced in offshore compliance and sensitive IRS negotiations.
Get added from a genuine authority that has found out the law in relation to Offshore Voluntary Disclosure Initiative [http://blog.bitcomet.com/post/2604989] -. Don't obtain assistance as regards IRS Medic - from an individual who has not studied tax law.