The Tax Law Firm of Moskowitz, LLP represents individuals and businesses that have not reported their foreign bank accounts or income.
Since the IRS cracked UBS in 2008, the agency has been on a crusade to end the practice of hiding offshore income and bank accounts valued at more than $10,000. Although foreign income has been taxable for nearly 100 years, only in the last decade have foreign account disclosures been aggressively enforced by the IRS and the Department of Justice.
Passage of the Foreign Account Tax Compliance Act (FATCA), which directs foreign financial Institutions to report on accounts held by U.S. citizens, has made it easier to identify noncompliant taxpayers, and the penalties are significant.
Correcting Foreign Information Reporting Noncompliance
For many years, the Offshore Voluntary Disclosure Program (OVDP) provided an opportunity for taxpayers to come clean with their unreported foreign income. The program was widely available and so well-publicized that it is almost impossible now to succeed in a claim that you were ignorant of your foreign asset reporting requirement. Whether you earned or inherited your foreign assets, have your own accounts or have a spouse with foreign holdings, whatever your situation – obtaining good legal tax representation is critical.
Although the OVDP has closed, taxpayers still have other options for coming into compliance with tax and foreign information return requirements. Your tax attorney can help you determine which is the best option under your particular circumstances.
Voluntary Disclosure Practice
If you have committed a tax or tax-related crime, making a complete and truthful voluntary disclosure through designated IRS procedures is not an absolute guarantee of immunity from criminal prosecution, but may still be helpful in avoiding it. Your disclosure must be timely, meaning that it must be made before a criminal investigation or civil examination has commenced, and before the IRS has received information from a third party regarding your noncompliance. You must cooperate fully with the IRS and make good faith arrangements to pay your tax liability, interest, and applicable penalties in full. Voluntary Disclosure Practice is appropriate for taxpayers whose conduct was willful. It is not, however, available to taxpayers whose foreign income is illegal under federal law.
Streamlined Filing Compliance Procedures
Streamlined filing compliance procedures are often a good choice for taxpayers who have additional taxes and penalties to pay, but whose failure to comply with foreign reporting requirements was not willful. Your tax attorney can assist you with following the proper procedures for filing your amended or delinquent returns, and with resolving your tax liabilities.
Delinquent FBAR Submission Procedures
If you haven’t yet been contacted by the IRS and are not the subject of a civil examination or criminal investigation, you should file your delinquent FBARs now. There will be no FBAR penalty so long as you have reported and paid tax on your foreign income. Under these procedures, you will need to file your FBARs electronically at FinCEN, along with a statement as to why you are filing late FBARs. Note that you may still be subject to an audit.
Delinquent International Information Return Submission Procedures
If you have failed to file any required international information returns but have reasonable cause for not filing them and no additional taxes and/or penalties to pay, there are other delinquent international information return submission procedures that may be a good option for you to explore. These procedures require that you file all delinquent returns, along with a statement that establishes your reasonable cause for not filing in a timely manner.
Note that you will not qualify if you have already been contacted by the IRS or are otherwise under an IRS civil examination or criminal investigation. Although following these procedures will not necessarily result in an audit, an audit is always possible.