Offshore Voluntary Disclosure Initiative
Stopping offshore tax evasion is a top enforcement priority for the IRS. Each U.S. person who has a financial interest in or signature or other authority over any foreign financial accounts, including bank, securities, or other types of financial accounts, in a foreign country, if the aggregate value of these financial accounts exceeds $10,000 at any time during the calendar year, must report that relationship each calendar year by filing TD F 90-22.1, Report of Foreign Bank and Foreign Accounts (FBAR) with the Department of the Treasury on or before June 30, of the succeeding year.
The civil and criminal penalties for noncompliance with the FBAR filing requirements are significant. Civil penalties for a non-willful violation can range up to $10,000 per violation, and civil penalties for a willful violation can range up to the greater of $100,000 or 50% of the amount in the account at the time of the violation. Criminal penalties for violating the FBAR requirements while also violating certain other laws can range up to a $500,000 fine or 10 years imprisonment or both. To make matters worse, civil and criminal penalties may be imposed together.
Current Offshore Voluntary Disclosure Initiative
On January 9, 2012 the Internal Revenue Service reopened the offshore voluntary disclosure program after the closure of the 2011 and 2009 programs. The third offshore program will be open for an indefinite period.
If taxpayers qualify for the offshore voluntary disclosure initiative (“OVDI”), then the IRS won’t impose certain penalties on taxpayers with unreported offshore income if the applicable requirements are met. Some of the requirements are as follows:
- A 27.5 percent penalty on the taxpayers’ undisclosed offshore accounts with the highest aggregate account balance over an eight-year period is assessed;
- Participants must pay back taxes and interest for up to eight years as well as accuracy relate, delinquency penalties or both.
- Participants must file all original and amended tax returns and include payments for taxes, interest and accuracy related penalties.
OVDI presents a rare opportunity to reduce your penalties, become compliant, and avoid criminal prosecution. The Law Offices of Todd S. Unger, Esq. LLC. can help you navigate through the intricacies of the offshore voluntary disclosure initiative. Contact the Law Offices of Todd S. Unger to discuss OVDI today.