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Tag Archive for OVDP

I’m Sorry…

In 1811, President James Madison started the Federal Conscience Fund, which allows guilt-ridden Americans to surreptitiously atone for their financial sins. Over the years, generous benefactors have achieved various levels of catharsis. Typical donors range from guilty individuals, such as a Massachusetts woman who mailed in nine cents, because she re-used three postage stamps, to a government contractor haunted by the ghosts of Christmas past who sent in some $400,000.

Predictably, many people send in offerings to clear their consciences “with the IRS and with God.” One anonymous woman generously offered a few hand-made quilts to settle her tax debt. But perhaps the best of all is a man who emptied his conscience by writing, “I cheated on my income taxes and haven’t been able to sleep. So, I enclose a cashier’s Read more

OVDP And Double Counting: Oh The Agony! – Part II

This is a continuation of Part I. This hypothetical pertains to a taxpayer who has applied to OVDP and who has transferred assets from one foreign account, which was recently closed, to another during the disclosure period.

This is a simple example, yet it illustrates some of the common mistakes that are associated with double counting.

Joe has applied to the OVDP. He had two foreign accounts in 2010: one at Bank A and another at Bank B.

The opening balances in each account were as follows: Read more

Ms. Fournie Shows Fortitude in Fight Against the IRS

Undeclared accounts are the latest bane for Swiss banks, which are being pushed to the brink by U.S. authorities to release details of their U.S. accountholders who park assets there in order to avoid paying U.S. taxes. Many Swiss banks have what are referred to derogatively as, “recalcitrant accountholders.” Recalcitrant accountholders are those who, despite the bank’s prodding, refuse to report their foreign accounts to the IRS. Very simply, this group is what stands in the way of a “cooperating” bank opening up the kimono – i.e., by sending the U.S. government the records of its U.S. accountholders – and the pot of gold at the end of the rainbow: immunity from prosecution and overbearing penalties. Soon, the Foreign Account Tax Compliance Act (FATCA) will change all that. If the United States’ demands to expose tax-evaders are fulfilled, all data on these recalcitrant Read more

OVDP Penalty Increased To 50% For 13 Foreign Banks

The new revisions to the US offshore voluntary disclosure initiative, which we posted on 6/18/14 “IRS Makes Changes to Offshore Programs; Revisions Ease Burden and Help More Taxpayers Come into Compliance“, now provides for and increased 50% FBAR Penalties for ‘Willful’ Non-Disclosers.

This group includes those individuals who have offshore bank accounts with a foreign financial institution which has been publicly identified as being under investigation, or is cooperating with a government investigation. IRS has published a list of those foreign financial institutions or facilitators.

The complete list is as follows: Read more

OVDP And Double Counting: Oh The Agony!

What is this phenomenon known as double counting? Why is it important? If you are shepherding clients through the OVDP program, or you are going through the program yourself, it is critical that you understand what it means and the governing principles behind it. Otherwise, you could be paying an offshore penalty that is exponentially higher than what it ought to be.

This article will explain the principles behind double counting and what type of supporting evidence the taxpayer must produce in order to prove double counting to the satisfaction of the IRS. As is my ordinary practice, I will make use of a hypothetical.

As a refresher, the offshore penalty is determined by isolating the highest aggregate Read more

IRS Actively Seeking US Tax Dodgers Abroad!

According to Bloomberg (subscription required) The Department of Justice Tax Division is ramping up an intense crackdown on offshore tax evasion, and people hiding assets overseas should come forward as soon as possible, an agency official said March 6, 2015. Caroline D. Ciraolo , principal deputy assistant attorney general for policy and planning at the division said:

“Time is of the essence,”
“Come in now or face the consequences.”

Speaking at the Federal Bar Association Tax Law Conference, Ciraolo said the government’s reach has extended far beyond Switzerland to jurisdictions including: Read more

What Do You Do Next After You’ve Been Pre-accepted Into OVDP?

You’ve submitted your OVDP letter and attachments to the Voluntary Disclosure Coordinator and are reclining in your arm chair watching the “big game” while opening up the day’s mail. The upper left-hand corner of one of the envelopes in your pile is adorned with the IRS’s logo. You open it up. The letter is but a few paragraphs long and as you start glancing at it you breathe a sigh of relief. It says that your disclosure has been preliminarily accepted by CI as timely.

It provides instructions for the second phase: completing and submitting the full voluntary disclosure package to the Austin Campus within 90 days of the date of the timeliness determination (and cooperating with the examiner in resolving all civil liability). You’ve made it this far, but you are uncertain about what is meant by a “full voluntary disclosure Read more

IRS Agents To Hunt Tax Dodgers Overseas

On a recent airplane trip from the Bay Area to Southern California, I sat beside a distinguished-looking elderly man. I initiated a conversation with him and found out he was a former judge now living in Mexico. We talked about everything, including taxation.

The former judge admitted that he was an American citizen and he and some of his friends have problems sleeping because of Foreign Account Tax Compliance Act (FATCA). So, I asked him what about Foreign Bank Account Reporting (FBAR), as that was more serious than FATCA. But he had never heard about it. I wondered how many people are like the former judge and his friends who can’t sleep at night because of FATCA and who never heard of FBAR. Read more

IRS Extended A Sweetheart Deal On Valentine’s Day To U.S. Taxpayers With Undisclosed Foreign Bank Accounts

On June 18, 2014, the IRS announced major changes in the 2012 offshore account compliance programs, providing new options to help taxpayers residing in the United States and overseas. The changes are anticipated to provide thousands of people a new avenue to come back into compliance with their tax obligations and would largely waive these penalties if taxpayers come forward and show that they didn’t hide the money on purpose.

Separate from United States income tax returns, many U.S. persons are required to file with the U.S. Treasury a return commonly known as an “FBAR” (or Report of Foreign Bank and Financial Accounts; known as FinCEN Form 114), listing all non-US bank and financial accounts. These forms are required if on any day of any calendar year an Read more

Clients of HSBC Geneva Are Named Publicly!

The media has obtained the names of HSBC account holders, some of which will be named in a TV program to be shown by the British Broadcasting Corporation (BBC).

The HSBC files, the biggest banking leak in history, reveal the full scale of malpractice at its Swiss subsidiary,  as more fully discussed in out post
Another Offshore Whistle Blower – Former HSBC Employee! Recent court cases in the US and Europe have provided individual examples of the bank’s wrongdoing, but the leaked files show how these cases were part of a persistent pattern of misconduct.

At its height, HSBC’s secretive Swiss arm hid a total of $120bn (£78bn) in assets. These funds were collected from wealthy clients all over the world and have already led to Read more

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