Tag Archive for Offshore Penalty

Pinter Bank Swells List of Foreign Banks To Which Enhanced OffShore Penalty Applies

Most U.S. taxpayers who enter the IRS Offshore Voluntary Disclosure Program must pay an offshore penalty equal to 27.5 percent of the highest year’s aggregate balance of their offshore accounts during an eight-year look-back period. On August 4, 2014, the IRS increased this penalty from 27.5% to 50% if the following conditions exist:

(1) At the time the taxpayer initiated their disclosure, one or more of the following applies:

a. A foreign financial institution at which the taxpayer had an account had been publicly identified as being under investigation, the recipient of a John Doe Summons or is cooperating with a government investigation, including the execution of a deferred prosecution agreement or non-prosecution agreement; or Read More

Written by | Posted in OVDP

A Recipe For Whipping Up The Streamlined Offshore Penalty In Three Easy Steps

Before reading this blog, I make the following disclaimer. If it is getting close to lunch time and you can hear your stomach growling, you might want to put off reading this until after lunch. Readers who disregard this warning are doing so at their own risk.

Calculating the offshore penalty within the Streamlined Domestic Offshore Procedures can be tricky. It’s not as simple as tying your shoes. Before delving into the tricky part, let’s cover three basic concepts:

(1) The offshore penalty under the streamlined domestic offshore procedures is 5%.

(2) The 5% penalty is calculated based upon the value of foreign financial assets that would have otherwise formed the basis of the civil miscellaneous penalty under the Read More

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Rescued From The Brink of Insanity: Practical And Sound Advice For Making The Decision To Opt Out of The OVDI – Part II

Hypotheticals Demonstrating When Opting Out is Detrimental To the Taxpayer –

Under what circumstances might opting out of the OVDI be detrimental for the taxpayer? Below are two examples.

Example 3: Large Unreported Gain

Kevin is a U.S. citizen. In 2008, he opened a checking account in Country A with funds upon which U.S. taxes were previously paid. Kevin owned an apartment building in Country A that he sold in 2008. However, Kevin failed to report the gain from the sale of that building on his tax return. Read More

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