Offshore Voluntary Disclosure Initiative The 4 Choices You Do Have
And the IRS demands to know where all the taxpayers foreign accounts are located
--- it is a crime to keep these foreign bank account secret if they are over $10,000.00 in value. For those taxpayers in non-compliance, the Internal Revenue Service ran two offshore voluntary disclosure initiatives (OVDI). The last one expired on August 31, 2011. For those people wondering what to do, this piece discusses their 4 remaining options.
The first option is to do nothing except hope and pray. The advantage is that it costs zero to do, and there is certainly a possibility, no matter how minor, that the taxpayer can get away with the crime. The disadvantages are that if caught, the penalties are harsh. In both monetary cost and in emotional drain of being charged with a federal crime. Even if found not guilty, a criminal trial is still incredibly costly.
Here's the thing despite what you hear, the US is still by far the largest ecomony in the world and has the richest population by far. Every foreign foreign bank must compete for American customers. And in order to do so, these banks must comply with what the Internal Revenue Service tell them to. Part of being on the good side of the Internal revenue service is to disclose what the Internal Revenue Service says to cough up. As a result the bank is really at the mercy of the Internal Revenue Service.meaning so are the banks' account holders. So you see, hiding behind the shadows becomes a more dangerous and dangerous. And once the Internal Revenue Service starts an investigation, there are no option left exceptpay outrageous taxes and the highest penalties and face the significant possibility of real jail time.
The second option is to renounce nationality and leave the country --- as this is the only way to escape the taxing jurisdiction of the Internal Revenue Service. But be warned --- expatriation only works to dodge upcoming tax debts and submission issues. The only method to properly give up is to essentially come clean about all offshore foreign bank financial accounts and actually pay an expatriation tax (in many ways it was easier to leave Soviet Block country than to leave the USA completely intact with your wealth.)
The third option is to quietly filed amended 1040X's and not mention to the IRS that you are seeking to come clean. This is known as a "quiet" or "soft" disclosure. This is basically a "cheap" alternative and that's is only advantage . But the disadvantages are that you may give the IRS a roadmap to charge you criminally, and if you are caught, you are experience a pain of high penalties and a nasty and real possibility of criminal charges.
The Department of Justice states that it has begun prosecutions on people who have attempted soft disclosures. So this option has some serious problems
There are other problems with "Quiet Disclosures." One massive failing is that they do not address the matter of the taxpayer's failure to report the bank account on the FBAR; as a willful failure to file an FBAR is a criminal charge. As a result simply filing a soft disclosure 't go far enough to eradicate any possibility of criminal investigations. In fact, the amended return may --- well here's the problem with this alternative --- it does nothing concerning the failure to FBAR forms. There are still criminal and civil charges that may be pending for failing to file an FBAR, but simply give the IRS a very handy to locate you.
Option 4: Pre-emptive Disclosure and Negotiation (" Offshore Voluntary Disclosure Initiative") This is the best option. Even though the time to file under the 2011 initiative has expired, it is not too late. The only thing that passed on August 31, 2011 was the particular off-the-shelf terms of the 2011 OVDI. It was simply a pre-agreed upon penalty arrangement. The Internal revenue service always welcomes voluntary disclosures.
There are 2 main requirements. First, the taxpayer can't already be under audit or investigation. And next, the foreign financial accounts can't be connected to any criminal activity like money laundering or drug trafficking. Once these prerequisites are satisfied, any criminal indictments come off the table and the case is sent to the civil division for assessment of taxes, interest and penalties. A voluntary disclosure offers reduced penalties and a promise of absolutely no criminal charges. Although fines and penalties may be considerable, that's just a bill, they are insignificant compared to an .
Such pre-emptive off-shore disclosures and negotiations must be handled by a qualified OVDI lawyers, experienced in overseas compliance and delicate Internal Revenue Service negotiations.
by: dar3u75fpa
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