How a Washington DC Tax Attorney Can Help You Select the Right Offshore Voluntary Disclosure Option
When taxpayers want to come into legal compliance on their offshore bank accounts, the IRS provides several options. These options are designed to give an incentive to taxpayers by providing them with protection against criminal prosecution and other penalties. However, choosing the appropriate option for any particular taxpayer’s situation is no easy matter.
Washington DC tax attorney Kevin E. Thorn can provide the assistance these taxpayers desperately need. While the IRS’ voluntary disclosure options can be beneficial, they have their downsides as well. Unfortunately, some options will not work at all for certain situations. With the help of a DC tax lawyer, a U.S. taxpayer can rest assured that they are selecting the best offshore voluntary disclosure option.
What Are the Options for Offshore Voluntary Disclosures?
The primary options provided by the IRS for voluntary disclosures of offshore accounts are the following:
▪2018 Updated Voluntary Disclosure Program: In September 2018, the IRS ended its Offshore Voluntary Disclosure Program (OVDP). In place of the OVDP, the IRS instituted the 2018 Updated Voluntary Disclosure Program. As with the OVDP, this program allows taxpayers to report previously undisclosed foreign accounts while receiving protection from criminal prosecution. There are several key differences between the Updated Disclosure Program and the previous OVDP, including the need to disclose far more information under the new program.
▪Streamline Program: Officially known as Streamlined Filing Compliance Procedures, this program requires the taxpayer to submit a certification that their failure to report foreign accounts was non-willful. The taxpayer must also submit delinquent or amended FBARs and tax returns. U.S. residents must pay a five percent offshore penalty.
▪Delinquent FBAR Submission: This program is for taxpayers who have unreported foreign accounts, but do not have any unreported income from those accounts. The lack of unreported income might be because the taxpayer reported the income on their filed returns. In the alternative, it may be due to the fact that their foreign accounts did not produce any income.
▪Delinquent FBAR Submission Procedures: Under this program, the taxpayer files a delinquent FBAR and provides a reason for the late filing.
Choosing the Best Voluntary Disclosure Option
A knowledgeable Washington DC tax attorney will advise you that not all of the above options are created equal.
For the 2018 Updated Voluntary Disclosure Program, the taxpayer must first deal with the IRS’ Criminal Investigation Division (CID). The taxpayer must make a preclearance request to the CID, then provide a detailed narrative of the facts and circumstances surrounding the noncompliance. Only then can the taxpayer start the onerous process of following the program’s steps.
The remaining options are for lower-level violations of tax reporting law. These taxpayers are less concerned about criminal prosecution, but they still want to become legally compliant and minimize tax penalties.
Speak With a Washington DC Tax Attorney at Thorn Law Group About Your Offshore Voluntary Disclosure Options
If you need to come into compliance with previously undisclosed offshore accounts, seek assistance from Thorn Law Group and discuss your options with a Washington DC tax attorney. Contact Kevin E. Thorn, Managing Partner, at 202-349-4033 to schedule a consultation today.