New IRS Streamlined Filing Procedures Encourage More U.S. Taxpayers with Undisclosed Foreign Accounts to Come ForwardPress Releases
Posted in on July 28, 2014
Kevin E. Thorn, Managing Partner of Thorn Law Group, discusses the new IRS streamlined filing procedures that have been expanded and modified to include more U.S. taxpayers with undisclosed foreign bank accounts.
Washington, DC (PRWEB) July 28, 2014 - The IRS has added new streamlined filing compliance procedures to its offshore Voluntary Disclosure Program for U.S. taxpayers with undisclosed foreign accounts. The new procedures are available to United States taxpayers who can prove that their failure to report foreign financial accounts and pay all tax due in respect of those assets did not result from willful conduct on their part. Those taxpayers who qualify can come into compliance for a reduced penalty. (See IRS Press Release, at http://www.1.usa.gov/1zkyrlB.)
Among the notable changes to The IRS OVDP streamlined program are: the extension of streamlined program eligibility to U.S. taxpayers living in the United States; the elimination of the $1,500 U.S. tax limit; and the elimination of the risk assessment process associated with the procedure. The streamlined program is only open to individual taxpayers, including estates of individual taxpayers, who meet the definition of either a non-U.S. resident under the Streamlined Foreign Offshore Procedures or a U.S. resident under the Streamlined Domestic Offshore Procedures programs. U.S. taxpayers in this program must be able to prove non-willful conduct. If the IRS is already investigating the taxpayer’s returns for any year, the taxpayer will not be eligible for this program.
The streamlined procedures are an alternative to the IRS OVDP for taxpayers with undisclosed foreign accounts. Once a taxpayer makes a submission under either the Streamlined Foreign Offshore Procedures or the Streamlined Domestic Offshore Procedures, the taxpayer may not participate in the regular OVDP. Similarly, a taxpayer who submits an OVDP voluntary disclosure letter to enter the regular OVDP is not eligible to participate in the streamlined procedures.
Kevin E. Thorn, of Thorn Law Group notes, “If someone has an undeclared overseas account at a foreign bank, they should come forward.” Thorn observes that, “The new streamline program will make it easier for U.S. taxpayers who live abroad and at home to come back into compliance. Once the Department of Justice or IRS starts an investigation into a taxpayer, that taxpayer will not be eligible for this program or the OVDP.”
Thorn recommends that U.S. taxpayers with undisclosed overseas accounts enter into the IRS's Offshore Voluntary Disclosure Program or the Streamlined Program in order to avoid the 50% annual penalties and possible criminal prosecution for continued failure to disclose. “The new IRS streamlined program, which is open to non-willful U.S. taxpayers with undisclosed overseas accounts, is something that should be considered and discussed with a tax attorney, because once the DOJ and the IRS obtain account information or the identities of U.S. taxpayers with hidden foreign accounts in these overseas banks, they will not allow the account holders to enter into the IRS's Offshore Voluntary Disclosure program.” He also notes that “the IRS and the DOJ will continue to put pressure on all foreign banks in order to obtain U.S. Taxpayer account information.”
Thorn cautions, however, against jumping right into The Streamlined Procedures. “The IRS has not yet provided guidance on what behavior it considers to meet the definition of non-willful conduct for purposes of the streamlined programs.” Thorn adds that he has spoken with several officials at The IRS who expect the criteria to be strict. “Taxpayers need to understand the consequences of entering the Streamlined Programs. The streamlined procedures seem easy, but if the IRS rejects a taxpayer’s certification of non-willfulness the consequences can range from severe financial penalties to prosecution. Taxpayers should consult with a tax attorney, who is experienced in tax law and IRS procedure, before deciding the best way to disclose their accounts.”
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 http://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