The Four Issues You Need To Know About Ovdi India
The Internal Revenue
The Internal Revenue
Service has power to impose a tax on income from around the globe. The Internal Revenue Service
has universal jurisdiction to tax income anywhere it is earned --- even it was earned on the moon! Not only that, it is
a crime not to tell the Internal Revenue Service about foreign accounts if their value exceeds $10,000.00 by filing
an FBAR form every June. The IRS offered two previous offshore
voluntary disclosure initiatives. One in 2009 and the last one in 2011. The last one expired on August 31, 2011.
For those taxpayers wondering what to do, this article talks about their
4 remaining options.
Option One: Do nothing. You could do nothing and hope that the IRS does not find
out the account. Perhaps your account is at a
bank that you believe to be "off the radar" or is in a quiet country, or under a
friend's name, or opened with a non-US passport. Well, it used to be that a bank account's actual owner could be kept anonymous. However, now, the IRS has vastly
many more tools than it did previously to find secret accounts.
This is an important caveat. The
chances are that the Internal Revenue Service does not discover undisclosed accounts gets smaller and smaller. Why? Because in order to compete for
American customer and capital, foreign banks are coerced into complying with the Internal Revenue Service. That's
right --- foreign banks take their marking orders from the IRS as well. So if the Internal
Revenue Service wants information on American holders of foreign accounts, the IRS will
get that information. The IRS will also run names of other individuals it suspects of being American citizens but who opened their accounts with foreign passports. The Internal Revenue Service has more
power and intelligence that it ever had before. The Internal Revenue Service has the manpower and field agents in
every major city around the globe.
Option 2: Renounce citizenship; Leave the country. There is only way to escape the jurisdiction of the Internal
Revenue Service taxing authority. That is, to renounce one's citizenship and no longer be a American citizen. The process is complicated. Furthermore, a requirement of recognizable expatriation is that
you have to be in compliance with all tax laws and pay an expatriation tax in order to make it official.
If the expatriation is handled
improperly, the Internal Revenue Service treats it as a non-event, meaning you are still subject to the jurisdiction
of the IRS --- indefinitely . Expatriation may make sense to avoid future tax liabilities , but you have to report the existence of previously unreported financial accounts first.
This third way is to quietly filed amended 1040X's and not explicitedly tell the Internal Revenue Service 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 Internal Revenue Service a very handy clue
to charge you criminally, and if caught, you are see high penalties and a
nasty and real possibility of criminal charges.
The Internal revenue service says that these amended returns are "red flags." Even though the tax returns
are amended and back taxes paid, the Internal revenue service tells says that foreign account holders will
still face penalties and criminal charges. In addition to charging and prosecuting people with undeclared foreign income,
the Department of Justice claims that it has also begun prosecution of taxpayers whose "Quiet
Disclosures" were discovered by the Internal revenue service.
The "soft" disclosure option is incredibly risky for several reasons.
One massive failing is that a soft disclosure does not remedy the issue of the taxpayer's non-compliance in FBAR filing; failing to filing an FBAR can be a criminal charge just by itself. So simply filing a quiet disclosure 't go far enough to remove any
possibility of criminal investigations. In fact, the 1040X might --- well
here's the massive problem with this option --- it
does nothing about the failure to the FBAR. There are still criminal and civil charges that may be pending for failing to file an FBAR, but simply give the IRS a
roadmap to find you.
The forth option is a
pre-emptive disclosure and subsequent negotiation of the penalties. If getting sleep at
night and not worrying about going to prison is chief concern, there can be
no question that this alternative is the best option. Yes, the 2011 initiative expired, but that does not
mean a voluntary disclosure can not be filed. The Internal Revenue Service always welcomes offshore disclosures. The
only thing that expired was the particular conditions of
the 2011 OVDI which capped certain penalties.
There are only two requirements.
Initially, the taxpayer can not be under examination. Also, the source of the money in the
foreign bank accounts can not be from an illegal source. Like drug trafficking or money laundering.
If someone is still wondering what the appropriate course of action
is, it is imperative that they only talk to a experienced offshore tax
lawyer. The attorney-client privilege only applies in communications to an attorney. The IRS can subpoena a CPA or nearly anyone else to testify against a taxpayer.
by: car4xc31hu
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