Soon after my vacation leave from Dubai on June 8th, the IRS announced new procedures that will help many Americans with overseas accounts and assets. Many of you may already know that the IRS sent the good news on June 18th by announcing far more practical methods of achieving tax compliance for US persons with regard to their offshore accounts or assets. I am still away from Dubai on vacation but wanted to alert my readers of the new developments.
While the new “Streamlined” procedures may sound somewhat simple, I caution readers to be very careful and to obtain sound advice with regard to using these new “Streamlined” procedures.
Tax compliance failures must be the result of “non-willful” conduct and statements must be provided explaining the reasons for any compliance failures. You should look carefully at any and all factors that may influence such a finding – for example, if you had a foreign account but checked “NO” in the box on Part III of Schedule B asking if you had such a foreign account, you need to be prepared to explain this in the event the IRS questions you. Other factors should be scrupulously examined – Did you seek professional tax advice? DId you reveal the foreign assets to your advisor? What did you write in any tax organizers and so on.
I will return from vacation on July 8th and hope to be able to write a more detailed blog post soon. Meanwhile, here are the relevant links to the new programs.
http://www.irs.gov/Individuals/International-Taxpayers/Streamlined-Filing-Compliance-Procedures General Info re New Streamlined Procedure
New Streamlined Procedure for taxpayers who are residing OUTSIDE the USA
EXCERPT HERE –
The following streamlined procedures are referred to as the Streamlined Foreign Offshore Procedures.
Eligibility for the Streamlined Foreign Offshore Procedures
In addition to having to meet the general eligibility criteria described above, individual U.S. taxpayers, or estates of individual U.S. taxpayers, seeking to use the Streamlined Foreign Offshore Procedures described in this section must: (1) meet the applicable non-residency requirement described below (for joint return filers, both spouses must meet the applicable non-residency requirement described below) and (2) have failed to report the income from a foreign financial asset and pay tax as required by U.S. law, and may have failed to file an FBAR (FinCEN Form 114, previously Form TD F 90-22.1) with respect to a foreign financial account, and such failures resulted from non-willful conduct. Non-willful conduct is conduct that is due to negligence, inadvertence, or mistake or conduct that is the result of a good faith misunderstanding of the requirements of the law.
A taxpayer who is eligible to use these Streamlined Foreign Offshore Procedures and who complies with all of the instructions outlined below will not be subject to failure-to-file and failure-to-pay penalties, accuracy-related penalties, information return penalties, or FBAR penalties. Even if returns properly filed under these procedures are subsequently selected for audit under existing audit selection processes, the taxpayer will not be subject to failure-to-file and failure-to-pay penalties or accuracy-related penalties with respect to amounts reported on those returns, or to information return penalties or FBAR penalties, unless the examination results in a determination that the original tax noncompliance was fraudulent and/or that the FBAR violation was willful. Any previously assessed penalties with respect to those years, however, will not be abated. Further, as with any U.S. tax return filed in the normal course, if the IRS determines an additional tax deficiency for a return submitted under these procedures, the IRS may assert applicable additions to tax and penalties relating to that additional deficiency.
New Streamlined Procedure for taxpayers who are residing INSIDE the USA are here:
http://www.irs.gov/Individuals/International-Taxpayers/U-S-Taxpayers-Residing-in-the-United-States
In accordance with Circular 230 Disclosure
Original Post By: Virginia La Torre Jeker, J.D.
Virginia La Torre Jeker J.D., has been a member of the New York Bar since 1984 and is also admitted to practice before the United States Tax Court. She has 30 years of experience specializing in US and international tax planning as well as international commercial transactions. She has been based in Dubai since 2001; prior to that time she worked in Hong Kong for 15 years as a US tax consultant for international law firms, major banks (including HSBC) international accounting firms (Deloitte) and trust companies. Early in her career she worked in New York with the top-tier international law firm, Willkie Farr & Gallagher.
Virginia is regularly asked to speak at numerous conferences and seminars for various institutes and commercial organizations; publishes a vast array of scholarly works in her area of expertise, been interviewed by CNN and is regularly quoted (or has her articles featured) in local and international publications. She was recently appointed to the Professional Tax Advisory Council, American Citizens Abroad, Geneva, Switzerland. She was a guest lecturer at the University of Hong Kong, LL.M Program (Law Department) and served as an adjunct Business Law professor at the American University of Dubai and at the American University of Sharjah where she also taught the legal / ethical aspects of internet law and internet based transactions.
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