Individuals and companies in the United States are required to account for income and pay appropriate taxes on foreign investments. This is not a new tax requirement, just one that readily enforced by the Internal Revenue Service. The Department of Justice is seeking maximum enforcement.
The Commissioner of the IRS continues to reiterate that combating international tax evasion is of top importance and that pursuit of those who use international borders to cheat honest taxpayers will continue. The tax treaty between the U.S. and Swiss governments finalized in August 2009 disabled the secrecy of many foreign banks thus making account holder information readily available to the U.S. Treasury and IRS.
As a result, on February 8, 2011, the Internal Revenue Service (IRS) announced the 2011 Offshore Voluntary Disclosure Initiative (OVDI) for taxpayers with unreported foreign financial accounts, entities, or income. This initiative is the second compliance program administered by the IRS; the previous amnesty successfully brought in hundreds of millions of dollars and over 1500 particapants avoided criminal prosecution.
Taxpayers that wish to participate in the 2011 OVDI of the program. Participants in the OVDI will be required to disclose all foreign income, foreign bank accounts, and ownership interests in foreign entities to the IRS for the 2003 through 2010 tax years. There is a formal disclosure process, including but not limited to, filing amending tax returns and filing all required information tax returns. The information returns must disclose all foreign bank accounts and interests in foreign entities such as corporations, partnerships, and trusts. The participant must interest, and penalties by August 31, 2011. If an individual cannot pay all tax, interest, and penalties for the 2003 through 2010 tax years, in certain circumstances, the IRS may be willing accept monthly payment arrangements.
There are many requirements to qualify for this program, including but not limited to, a timely disclosure. This 2011 OVDI is not for all U.S. individuals with foreign bank accounts and assets. Upon consultation we can determine if participation would be beneficial and further advise you as to your situation.
We have many years of substantial experience with the voluntary disclosure program, international tax issues, and related matters in advice, execution, and legal defense. If you have any questions or concerns regarding foreign business or investments, foreign bank accounts, reporting issues and amnesty programs please contact us.