subject: Are You Properly Knowledgeable Of Your Ovdi India Options [print this page] And the Internal Revenue Service demands to know where all the citizens
foreign accounts are located --- it is a crime to keep these account secret if they are over
$10,000.00 in value. 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 piece talks about their
four remaining options.
The first option is to do nothing except hope and pray. The advantage is that it costs nothing to do, and
there is certainly a possibility, no matter how minor, that the taxpayer
can get away with the crime. The downside that is if
discovered, there is an unbelievable emotional strain for anybody who become a
criminal defendant. Even if acquitted, the entire process will be the most arduous time of someone's life. Even if found
not guilty, a criminal trial is still incredibly costly.
Here's the thing despite what you hear, the American is still by far the largest ecomony in
the world and has the richest population by far. Every 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.
In order to be on the good side of the Internal revenue service is to disclose what the Internal Revenue Service says to disclose.
Accordingly the bank is really at the mercy of the IRS.meaning so are the
banks' foreign account holders. So you see, hiding becomes riskier and riskier. And once the IRS starts an investigation, there is only one option leftpay outrageous taxes and the highest penalties
and face the significant possibility of real jail time.
The next option is to renounce citizenship and depart the country --- as this is the only
way to escape the taxing jurisdiction of the IRS. But
be warned --- expatriation only works to avoid future tax debts and submission troubles. The lone technique to correctly
renounce is to essentially come clean about all
foreign foreign bank financial accounts and actually pay an expatriation excise (many commenters have noted that it was easier to leave cold war USSR with your wealth
intact than the modern day USA. .)
The third option is to quietly filed amended 1040X's and not mention to 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 IRS a roadmap
to charge you criminally, and if caught, you are experience a pain of high penalties and a
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
The "soft" disclosure option is incredibly risky for several reasons.
One reason is that a soft disclosure does not address the issue 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. So simply filing a quiet disclosure 't go far enough to eliminate any
possibility of criminal investigations. In fact, the amended return may --- well
here's the problem with this option --- it
does nothing concerning the failure to FBAR forms. There are still criminal and civil
investigations that may be pending for failing to file an FBAR, but simply give the IRS a
roadmap to find you.
Option 4: Pre-emptive Disclosure and Negotiation (" Offshore Voluntary Disclosure Initiative") This is the optimal solution. Even
though the time to file under the 2011 OVDI has expired, there is
time to act. The only deal that expired on August 31, 2011 was the specific standards terms of the 2011 disclosure. It was simply a pre-agreed upon penalty
structure. The IRS always welcomes voluntary disclosures.
There are two main requirements. First, the taxpayer can't already be under examination or
investigation. And next, the foreign accounts can't
be connected to any criminal activity think money laundering or drug trafficking. Once these
qualifications are met, criminal charges are removed from the continuum of possibilities and the taxpayer's is referred to the regular civil assessment division for assessment of taxes, interest and penalties. A
successful OVDI offers reduced penalties and a promise of no criminal prosecution. Even though fines and penalties may be significant, they are meaningless compared to an .
If someone is still questioning what the suitable course of action
is, it is imperative that they only talk to a qualified overseas tax
law firm. The attorney-client privilege only applies in communications to an attorney. The Internal Revenue Service can subpoena a CPA or nearly anyone else to testify against a taxpayer.
