U.S. Taxpayers With Undisclosed Overseas Accounts Still Need To Enter Into The IRS Offshore Voluntary Disclosure Program: Caution Required With New Streamlined Program
Kevin E. Thorn, Managing Partner of Thorn Law Group, discusses the importance of assessing whether the IRS’s new Streamlined Filing Compliance Procedures are right for you.
Washington, DC (PRWEB) September 18, 2014 - In June, The IRS introduced an alternative to its popular Offshore Voluntary Disclsoure Program (“OVDP”) for taxpayers with undisclosed offshore bank accounts. These new Streamlined Filing Compliance Procedures have drawn a lot of attention by U.S. taxpayers looking to come into compliance with their past foreign reporting requirements. However, the past few months suggest that they may not be the best option for all taxpayers.
Kevin E. Thorn, Managing Partner of Thorn Law Group cautions against jumping into the Streamline Program and states, “If a U.S. taxpayer has an undeclared offshore account at a foreign bank, he should still consider applying for the full IRS OVDP.” A successful OVDP allows a taxpayer to reveal his undisclosed foreign account to the IRS and come back into compliance by filling the mandatory Report of Foreign Bank and Financial Accounts form, or FBAR, which should have been filed every year that the account existed over the past eight years. In return, the IRS will agree to the taxpayer’s compliance, will assess a pre-determined penalty and will not pursue criminal charges.
In comparison the Streamlined Program provides for a lower penalty than the full OVDP for failure to file the required forms. However, the IRS will not confirm the taxpayers’ compliance, and may pursue a full audit and maximum penalties from the taxpayer.
As part of the Streamlined Program, taxpayers must sign an oath under penalties of perjury that their failure to report income from a foreign asset or failure to report a foreign account was not done willfully. Thorn cautions that "What many taxpayers do not understand is that their idea of 'non-willful' may not be the same as the IRS's. If the IRS does not agree with the taxpayer's claim of non-willfulness, then it may reject the taxpayer's Streamlined submission." Thorn has observed that “many people who have tried to participate in the Streamlined Program are not being approved by the IRS as qualifying for the preferential program. In fact, people who are seeking amnesty through Streamlined Programs may end up unable to participate in OVDP at all. This can result in very large financial penalties and even the potential risk of criminal prosecution if the IRS does not accept the Streamlined submission.”
Thorn, recommends that U.S. taxpayers with undisclosed overseas accounts enter into the IRS's Offshore Voluntary Disclosure Program in order to reduce the risk that you will be prevented from getting amnesty.” It is important to speak with an IRS voluntary disclosure lawyer as soon as possible for help in comparing the OVDP with the Streamline Program, assessing whether the Streamlined Program or OVDP is appropriate, and understanding the risks involved.
For additional information on the news that is the subject of this release, contact Kevin E. Thorn, Managing Partner of Thorn Law Group at 202-270-7273 or visit us at https://www.thorntaxlaw.com/.
About Thorn Law Group, PLLC: Thorn Law Group, PLLC is a law firm dedicated to helping clients resolve complicated tax, criminal tax, and international tax problems.
Kevin E. Thorn
Managing Partner Thorn Law Group, PLLC