Search results for OVDP

OVDP or Streamlined: What Is My Best (Or Only) Option?

Recently, the IRS announced Streamlined Filing Compliance Procedures in order to encourage U.S. taxpayers to come into compliance with reporting their offshore financial accounts and assets.

For eligible U.S. taxpayers residing outside the United States, all penalties are waived under the streamlined procedures. For eligible U.S. taxpayers residing within the United States, the only penalty under the streamlined procedures is a miscellaneous offshore penalty equal to 5 percent of the highest aggregate balance of the taxpayer’s foreign financial assets that are subject to the miscellaneous offshore penalty during the years in the covered tax return period and the covered FBAR period. Read More

Written by | Posted in FBAR • OVDP

Transitional Treatment Under OVDP

1. What is the purpose of transitional treatment under OVDP?

Transitional treatment under OVDP allows taxpayers currently participating in OVDP who meet the eligibility requirements for the expanded Streamlined Filing Compliance Procedures announced on June 18, 2014, an opportunity to remain in the OVDP while taking advantage of the favorable penalty structure of the expanded streamlined procedures.

2. When am I considered to be currently participating in an OVDP for purposes of receiving transitional treatment?

A taxpayer is considered to be currently participating in an OVDP for purposes of receiving Read More

Written by | Posted in OVDP

Offshore Account Penalties to Double With Start of 2014 OVDP Program

On Wednesday, June 18, 2014, the IRS announced that it was trying to make it easier for taxpayers to come clean about offshore accounts. The Service made changes to two key programs – one intended for taxpayers that willfully sought to evade tax laws, and another for those that avoided taxes despite trying to comply with the law.

John Koskinen, the IRS commissioner, said in a statement that the changes would convince more taxpayers to get up-to-date on their taxes.

“The new versions of our offshore programs reflect a carefully balance approach to ensure everyone pays their fair share of taxes owed.”

“Through the changes we are announcing today, we provide additional flexibility in key Read More

Written by | Posted in FBAR • OVDP • Tax Fraud/Evasion/Crimes

OVDP — IRS Commissioner Offers Hope For The Minnow

On June 3, 2014 the new IRS Commissioner, John A. Koskinen indicated there may be hope for the numerous US persons who “non-wilfully” did not properly report their offshore assets and financial accounts. The relevant text of his remarks, is reproduced below. The full report can be accessed here. Maybe there is hope for the sea of minnows! Let’s stay tuned. I will be curious to know whether the contemplated “modifications” to the OVDP will address recompense for those taxpayers who have completed OVDP and paid the penalties now viewed as inappropriate.

“Now, while the 2012 OVDP and its predecessors have operated successfully, we are currently considering making further program modifications to accomplish even more. We are considering whether our voluntary programs have been too focused on those willfully Read More

Written by | Posted in FATCA • FBAR • OVDP

Taxpayer Advocate Delivers Annual Report to Congress – Focus: Taxpayer Bill of Rights, OVDP & IRS Funding

National Taxpayer Advocate Nina E. Olson today released her 2013 annual report to Congress,urging the Internal Revenue Service to adopt a comprehensive Taxpayer Bill of Rights – a step she said would increase trust in the agency and, more generally, strengthen its ability to serve taxpayers and collect tax.

The Advocate also expressed deep concern that the IRS is not adequately funded to serve taxpayers, pointing out that the IRS annually receives more than 100 million telephone calls from taxpayers and that, in fiscal year 2013, the IRS could only answer 61 percent of calls from taxpayers seeking to speak with an IRS customer service representative.

Olson said: “From challenges can come opportunities, and this report presents a ‘21st Read More

Written by | Posted in IRS • OVDP

IRS Continues to Mine Data from OVDP – Uncovering More Undisclosed Accounts

Data Mining

Since 2009 with the inception of the first Internal Revenue Service Offshore Voluntary Disclosure Program (OVDP), over 38,000 taxpayers have provided detailed information to the IRS which has been steadily fed into its E–Trak System. The information has come from those participating in the various IRS’s Offshore Voluntary Disclosure Initiatives and Programs (OVDI/OVDP). There have now been three separate programs with more and more taxpayers coming forward.

Some taxpayers entering the Programs have had face-to-face interviews with the IRS and/or Read More

Written by | Posted in OVDP

Green Card Holders Can Be Deported For Not Filing FBAR & OVDP – May Not Be The Cure?

On Tuesday, February 21, 2012, we posted Filing False Returns is a Deportable Felony – Supreme Court, where we discussed that the United States Supreme Court February 21, 2012 decided that lawful permanent residents who have pled guilty to charges related to the filing of false tax returns that resulted in a loss to the government of more than $10,000 have committed aggravated felonies involving fraud or deceit and are subject to deportation (Kawashima v. Holder, U.S., No. 10-577, 2/21/12). Petitioners Akio and Fusako Kawashima (“the Kawashimas”) are Japanese natives and citizens, but have been lawful permanent residents of the United States since 1984. The Kawashimas established a successful restaurant in California, owned by Nihon Seibutsu Kagaku Center, Inc., a Read More

Written by | Posted in Tax Fraud/Evasion/Crimes

Are You One of the 10,000 US Taxpayers Who Need To Enter the OVDP Program?

TaxConnections Blog post regarding OVDPNumerous U.S. taxpayers with previously undisclosed interests in TaxConnections Blog post FATCA and FBAR are not dirty wordsforeign financial accounts and assets continue to analyze and seek advice regarding the most appropriate methods of coming into compliance with their filing and reporting obligations.

Many are pursuing participation in the current IRS offshore voluntary disclosure program (the OVDP which began in 2012), modeled after similar programs in 2009 and 2011. Taxpayers participating in the ongoing 2012 OVDP generally agree:

1. To file amended returns and file FBARs for 8 tax years,

2. Pay the appropriate taxes,

3. Pay Interest on the taxes,

4. Pay an accuracy related penalty equivalent to 20% of any income tax deficiency; and

5. Pay an “FBAR-related” penalty (in lieu of all other potentially applicable penalties associated with a foreign financial account or entity) of 27.5% of the highest account value that existed at any time during the prior eight tax years.

The 2012 OVDP is ongoing and does not have a stated expiration date but it can be terminated by the Internal Revenue Service at any time either entirely or as to specific classes of taxpayers. Read More

Written by | Posted in International • United States

Israeli Bank Account Owners Readmitted to OVDP

Offshore Voluntary Disclosure Blog PostAlthough the Internal Revenue Service won’t comment on the reason Bank Leumi customers were kicked out of the IRS’ Offshore Voluntary Disclosure Program (OVDP) after not only being accepted into the program, but after some had already received a final clearance and paid the amounts due to the IRS, it is suspected that the IRS admitted the taxpayers into the program in error. If a taxpayer is already under investigation or audit, he won’t be admitted into OVDP. Once admitted, a taxpayer can be removed if he does not cooperate with the government or makes false statements with regard to the disclosure. Since some of these taxpayers were readmitted, it is likely they were originally admitted in error. Regardless, the right result was reached with this reversal if the IRS wants taxpayers to continue to come forward and disclose offshore accounts.

In accordance with Circular 230 Disclosure

Written by | Posted in FBAR • International

Are You A U.S. Citizen Living Outside The United States? You Are Subject To Worldwide Taxation!

Are You A U.S. Citizen Living Outside The United States? You Are Subject To Worldwide Taxation!

I am guessing (actually I know for sure) that you arrived here because of some aspect of being a U.S. citizen living outside the United States. Maybe you are a Green Card holder. Perhaps you are a former U.S. resident who has just learned that you may still be subject to U.S. “worldwide taxation” even though are a “tax resident” outside the USA. I also know how you are feeling.

“U.S. citizens” and “Green Card holders” are referred to as “U.S. Persons”. So, if you are a “U.S. Person Abroad”, well, life is pretty tough. in fact living as a “U.S. Person” outside the United States is: hard, expensive, confusing and (quite frankly) unsustainable.

Some of you are NOT in compliance with the intricate and (almost) impossible to understand web of tax and reporting requirements. Non-compliance has its share of problems.
Some of you ARE in compliance (as far as you know) with the intricate (and almost) impossible to understand web of tax and reporting requirements. Compliance also has its share of problems (stress, expense, anxiety).

Whether you are in compliance or not in compliance, you have problems. This is because:
U.S. citizenship is the one citizenship in the world that affects virtually every aspect of your life. in addition to the information on this blog, I help people with the following kinds of specific problems/questions (which include):
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Written by | Posted in U.S. Citizen Living Outside The United States • Worldwide Taxation

IRS Releases A New Program: Tax Relief Procedures For Certain Former United States Citizens Without Risking Any Penalties

IRS Releases A New Program: Tax Relief Procedures For Certain Former United States Citizens Without Risking Any Penalties

The IRS released a new program that allows former U.S. citizens to become compliant with the U.S. tax law without risking any penalties – Relief Procedures For Certain Former Citizens. If you only recently found out about your tax filing obligation to the U.S./your second citizenship and you’re contemplating renouncing it, this program might be for you.

In this article, we will explore relief procedures available to former U.S. citizens, as well as the eligibility requirements for this new amnesty program. Credit attribution for this article is given to Kasia Strzelczyk who is an Enrolled Agent with 1040 Abroad.

What Are The Relief Procedures For Certain Former Citizens The IRS Offers?
The United States is one of the only two countries that taxes their citizens and permanent residents (green card holders) on their worldwide income. It means that even if you live and work abroad, you still need to report all your foreign source income and file a U.S. tax return each year.

Unfortunately, this also applies to Accidental Americans – people who weren’t even aware they are considered U.S. citizens according to the United States immigration law. They might have received their U.S. citizenship at birth or through a U.S. citizen parent. The good news is, there is a way to become compliant and avoid all the penalties, charges for late filing, and other less favorable tax implications. And if one chooses to give up their U.S. passport, he/she can do so now too.

Background
Back in 2019, the Internal Revenue Service announced the opening of a new tax amnesty program called Relief Procedures for Certain Former Citizens. Amnesty programs are created to encourage indebted taxpayers to come forward and declare their tax liabilities. In return, they guarantee not to impose punishments on those unpaid taxes, and may even allow criminal offenses to go without prosecution.

Relief procedures for certain former American citizens is a program designed to address the concerns of accidental Americans. The program is aimed at tax-delinquent U.S. citizens who renounced (or intend to renounce) their American citizenship without facing back taxes and penalties.
These procedures cover individuals only. Trusts, corporations, partnerships, and other types of taxpayers are not eligible for the amnesty program.
These procedures are limited to taxpayers who have been out of compliance due to non-willful conduct. Non-willful conduct is a result of negligence, mistake, or a good-faith misunderstanding of the requirements of the law. In short, this means that you didn’t deliberately dodge your federal tax obligations.

Relief Available Under This Program
If you qualify for the new program, you will not owe any taxes, penalties, or interest to the United States. You will also not be considered a “covered expatriate”, allowing you to avoid the Exit Tax as well.
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Written by | Posted in IRS New Tax Relief Program • Relief Procedures For Certain Former Citizens
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