Search results for OVDP

FATCA – IRS Says No More Delays!

The United States Foreign Account Tax Compliance Act (FATCA) will definitely come into effect on July 1 this year with no possibility of further delay, according to officials of the US Internal Revenue Service (IRS).

The difficulties include negotiations with foreign governments and problems in setting up the necessary administrative systems, for example a website where foreign banks can register their compliance.

FATCA affects not only Banks but also trusts and other entities.

Rumors and media speculation of yet another postponement have circulated in the past month, after some US official bodies criticized the IRS’s state of preparedness. Read More

Written by | Posted in FATCA • IRS • OVDP

Offshore Swiss Bank Account? This May Be Your Last Chance To File A Voluntary Disclosure!

The United States Justice Department has received 106 requests from Swiss entities to participate in a settlement program aimed at ending a long-running probe of tax-dodging by Americans using Swiss bank accounts according to a senior US official.

We first posted “Swiss Banks Agree to Plan to End Past US Tax Evasion Issues!” on August 29, 2013, where we discussed that Swiss banks were ready to pay hefty fines for sheltering United States tax fugitives under the terms of a new deal given the green light by the Swiss government.

Kathryn Keneally, a senior official of the United States DOJ’s tax division, said the department was ‘gratified’ by the response to the offer, although it does not expect that all Read More

Written by | Posted in OVDP

United Arab Emirates – Actively Helping FATCA Express Move On Through

In March 2013 United Arab Emirates Central Bank Governor, Sultan bin Nasser Al Suwaidi, announced that the UAE was considering signing an IGA with the United States in order to facilitate compliance with FATCA. He stressed the need for the UAE regulatory authorities to prepare procedures to facilitate FATCA compliance and set clear instructions for financial institutions under their supervision. Very recently, the UAE Central Bank issued Notices to financial institutions in the Emirates that clearly move the FATCA express steadily along its inevitable path of destruction.

While no IGA has yet been signed, all indications are that this may happen pretty soon. The Model that would be implemented with the UAE would apparently be a so-called “Model 1B IGA” – which is “nonreciprocal”. This means that only the UAE would provide Read More

Written by | Posted in Europe, Middle East • FATCA • IRS

Streamlined Procedure And Foreign Bank Account Regs For Non-Resident US Citizens

It all started with the announcement of the FATCA (Foreign Account Tax Compliance Act) going into effect, then the new streamlined compliance procedures were announced in 2012 to go into effect on September 1st, 2012.

They were implemented in recognition that some U.S. taxpayers living abroad had failed to timely file U.S. federal income tax returns or FBARs, Form TD F 90-22.1. These delinquent taxpayers may have recently become aware of their filing obligations and now seek to come into compliance with the law.

The new procedures are for non-residents including but not limited to dual citizens who have not filed U.S. income tax and other related information returns. Read More

Written by | Posted in FATCA • FBAR • OVDP

Revised IRS FBAR Penalty Appeals Procedures

On October 28, 2013 the IRS revised the Internal Revenue Manual (IRM) providing guidance and clarification regarding the administrative review of FBAR penalties by the IRS Office of Appeals. See http://www.irs.gov/irm/part8/irm_08-011-006.html

The IRM is essentially the operational manual providing guidance and procedures for the various functions carried out by the IRS.With respect to FBAR penalties being considered for resolution by IRS Appeals, the revised IRM 8.11.6 provisions reference 10 key points:

IRS FBAR Administrative File.

Limited Jurisdiction for Post-Assessed FBAR Penalties. Read More

Written by | Posted in FBAR • IRS

Offshore Voluntary Disclosure Program: The Basics (2013)

Let us start with the fact that the 2009 Offshore Voluntary Disclosure Program and the 2011 Offshore Voluntary Disclosure Initiative had deadlines but the new Offshore Voluntary Disclosure Program (OVDP) does not. This new program will be available until further notice to taxpayers who wish to come forward and disclose their foreign bank assets.

What Does the OVDP do? This program seeks to bring taxpayers who had undisclosed foreign bank accounts or undisclosed foreign entities for the purpose of evading or avoiding tax into compliance with the laws of the United States.

This program is a counter-part of the Criminal Investigation’s Voluntary Disclosure Practice. It Read More

Written by | Posted in FATCA • OVDP

FATCA: Fear And Terror Caused by America

TaxConnections Picture - Fatca FlagFear And Terror Caused by America – FATCA is Here to Stay

FATCA Express Leaves the Station – Coming Soon to Your Hometown

Yesterday the Department of the Treasury and the United States Internal Revenue Service (IRS) issued Notice 2013-69 for foreign financial institutions (FFIs) to comply with the information reporting and withholding tax provisions of the Foreign Account Tax Compliance Act (FATCA). The US Congress enacted FATCA in 2010 as the ultimate method to identify US persons using foreign accounts and entities to evade US taxes. Back in 2010, very few believed that FATCA would survive. Indeed, its implementation has been delayed several times. Now, however, FATCA is rapidly becoming the global standard to stop offshore tax evasion. We are seeing many other countries implementing FATCA wannabe laws and applauding the US model. The Treasury Department has now signed nine so-called Intergovernmental Agreements (IGAs), negotiated 16 agreements in substance, and is engaged in FATCA bargaining discussions with many more countries. All aboard the FATCA Express! Read More

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IRS Collected $5.5 Billion From OVDI, But According to GAO, May Be Missing Billions More?

The IRS may be missing potential taxCayman_Islands dodgers who report their foreign accounts but who avoid paying penalties by not reporting previous years’ returns. The Government Accountability Office (GAO) released Offshore Tax Evasion: IRS Has Collected Billions of Dollars, but May be Missing Continued Evasion (GAO-13-318):

Tax evasion by individuals with unreported offshore financial accounts was estimated by one IRS commissioner to be several tens of billions of dollars, but no precise figure exists. IRS has operated four offshore programs since 2003 that offered incentives for taxpayers to disclose their offshore accounts and pay delinquent taxes, interest, and penalties. GAO was asked to review IRS’s second offshore program, the 2009 OVDP. This report (1) describes the nature of the noncompliance of 2009 OVDP participants, (2) determines the extent IRS used the 2009 OVDP to prevent noncompliance, and (3) assesses IRS’s efforts to detect taxpayers trying to circumvent taxes, interests, and penalties that would otherwise be owed.

IRS has detected some taxpayers with previously undisclosed offshore accounts attempting to circumvent paying the taxes, interest, and penalties that would otherwise be owed, but based on  GAO reviews of IRS data, IRS may be missing attempts by other taxpayers attempting to do so. GAO analyzed amended returns filed for tax year 2003 through tax year 2008, matched them to other information available to IRS about taxpayers’ possible offshore activities, and found many more potential quiet disclosures than IRS detected. Read More

Written by | Posted in FATCA • International • IRS

Stakes Are High for Green Card Holders With Undeclared Foreign Income or Foreign Assets

TaxConnections Picture - 1040 and HandcuffsIf you hold a US Green Card, you can be deported for willfully filing a false tax return (or for aiding and abetting the filing of a false tax return), and, perhaps for willfully failing to file a so-called FBAR. The United States Supreme Court issued a decision on this very matter just last year.

Summary of Kawashima v. Holder

• A Japanese resident alien couple were convicted under the US tax laws for willfully filing a false tax return or aiding and abetting the filing of such a return

• They appealed their deportation under the Immigration and Nationality Act (8 U.S.C. §1227(a)(2)(A)(iii)) as aliens who had been convicted of a so-called “aggravated felony” based on their conviction.

• The United States Supreme Court, held that the crime of willfully making and subscribing a false tax return and the crime of willfully aiding and assisting the preparation of a false tax return are deportable offenses under the Immigration and Nationality Act. Read More

Written by | Posted in FATCA • Federal • IRS

The Unenviable Case of The Seggermans

TaxConnections Picture - Green Question GuyWhat if Someone Dies Owning an Undeclared Financial Account?
What Should The Heirs Do?

Henry Seggerman has first-hand experience with this type of situation. Without hesitation, my guess is that he’ll tell you to get the Estate into the IRS Offshore Voluntary Disclosure Program (“OVDP”). Henry is the son of a prominent New York businessman who passed away. Henry was named executor of his father’s estate, valued in excess of $24 million. Unfortunately, over half of this wealth, however, was maintained in secret and undeclared foreign bank accounts located in Switzerland and other jurisdictions. The father worked with his Swiss lawyer and other parties, arranging for over $12 million in the undeclared accounts to be left to his surviving spouse and five of his children, including Henry.

Henry’s position as executor charged him with various responsibilities, including filing an estate tax return for his deceased father. Henry signed the estate tax return for his father’s estate falsely underreporting its assets by over $12 million. Generally speaking one can say that an executor of an estate steps into the shoes of the deceased. Henry not only did that, he went a step further and perpetuated the fraud of the deceased. While this may possibly have pleased the deceased, it certainly did not please the Internal Revenue Service or the Department of Justice.

In order to access the undisclosed funds, the Swiss lawyer assisted Henry and three of his siblings (Suzanne Seggerman, Yvonne Seggerman, and Edmund Seggerman), in creating undisclosed Swiss bank accounts to hold the hidden money that they had inherited from their father. In order to tap the funds, Henry and his brother worked together, transferring funds from the brother’s Swiss account to a bank account for a foundation controlled by Henry. Henry then transferred the funds into the United States, in the guise of loan repayments. Read More

Written by | Posted in Estate Planning Tax • FBAR • Individual • IRS • North America • Property Tax

Spilling The Beans – Advisors Turning in Clients With Offshore Accounts

Swiss bank employees handing over US Depositor information to the United States.My earlier blog post predicts that foreign banks will tell all in order to avoid criminal prosecution for aiding tax evasion. Not only will the foreign banks tell all – it looks like personal financial advisors will be getting in on the act, too. Evidence of this can be gleaned from a recent article published by the Wall Street Journal (August 23, 2013), “Offshore-Adviser Plea Marks a Shift in Tax Crackdown”.

Laura Saunders, the author, believes that a recent guilty plea by a high-level Swiss adviser who helped United States taxpayers hide money overseas indicates a shift toward a new phase of the US Government’s campaign against undisclosed offshore holdings. The Government is making deals with the advisors who are willing to spill the beans. This latest tactic obviously gives the Government yet another very powerful weapon in its stockpile to combat offshore tax evasion.

A chart summarizing significant statistics about offshore account cases also accompanied Ms. Saunder’s article. It is quite revealing and is reproduced below. The numbers clearly demonstrate the IRS has hit the penalty jackpot by relentlessly pursuing undeclared foreign accounts. With all the penalty money coming at a time when the US debt is spiraling out of control, it is unfathomable that the Government will not do all in its power to keep riding this tidal wave of greenbacks. The statistics demonstrate that more US taxpayers have been criminally charged since 2009 than the number of taxpayers who have pled guilty or suffered a guilty verdict. The pressure is on and it looks more than likely that the number of pleas or verdicts will just continue to climb as the IRS keeps learning more and more. Read More

Written by | Posted in United States

Options Available for US Taxpayers With Offshore Accounts and/or Entities!

TaxConnections Blog post regarding OVDPThe IRS’ focus on offshore enforcement efforts and related disclosure programs has raised awareness among many U.S. citizens about their tax filing and information reporting obligations.

Situations of taxpayers with offshore compliance issues vary widely given the complexity of this area of tax law. Taxpayers that recently learned of these tax requirements should also be advised of the many options that are available, outside of the normal filing process, to help them get current with their tax obligations.

A number of the common situations and potential solutions are outlined below.

Situation 
Compliance Option 
Taxpayers who have properly reported all taxable income but recently learned that he/she should have been filing FBARs in prior years to report a personal foreign bank account or to report signature authority over bank accounts owned by an employer.

Taxpayers who reported, and paid tax on, all their taxable income for prior years but did not file FBARs, should file the delinquent FBAR reports according to the instructions (send to Department of Treasury, Post Office Box 32621, Detroit, MI 48232-0621) and attach a statement explaining why the reports are filed late.The IRS will not impose a penalty for the failure to file the delinquent FBARs if there are no underreported tax liabilities and you have not previously been contacted regarding an income tax examination or a request for delinquent returns. Read More
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