The miscellaneous offshore penalty under the Streamlined Procedures is five percent of the highest aggregate account balance during the disclosure period. A number of factors can influence exactly how this penalty will be calculated in your case.
Asset Balances That Are Counted
The balances in all of your foreign financial accounts will generally be counted for the penalty calculation. The year-end balances will be reviewed and the highest aggregate balance will be used to determine your penalty amount.
Any asset that should have been reported will count for these purposes. Even if assets were reported on an FBAR, but the income from these accounts wasn’t reported on your tax return, they will also be counted for the penalty calculation.
Simply find the highest aggregate account balance and multiply it by five percent to determine your penalty amount under the Streamlined Procedures. This is the penalty that applies to domestic taxpayers.
For many U.S. expats who are delinquent in their expat tax filings, the Streamlined Procedures offer a great solution for catching up with limited or no penalties. Due to the Streamlined program’s qualification requirements, however, American citizens living in Canada, or other countries, who regularly visit the U.S. may find it particularly difficult to participate in the program. Read More
Despite the overall success of the IRS tax amnesty programs in recent years, many expats remain hesitant to enter the programs due to a number of misunderstandings surrounding their requirements and their outcomes. In this blog, we separate fact from fiction so that you can decide intelligently whether tax amnesty is right for you. Read More
With the recent heavy focus on Congress and the Trump’s administration’s tax reform proposals, it can be easy to forget that the IRS continues to proactively crackdown on offshore tax evasion. Read More
In a recently published Chief Counsel Advice, the IRS chief counsel’s office offered advice to taxpayers participating in its amnesty programs regarding the issue of whether refunds for past overpayments of tax can be used to offset additional taxes or penalties triggered under the program.
Before we get to the advice, let’s first review the amnesty programs that could potentially be affected by the conclusions made in the published advice.
The IRS announced that over 100,000 taxpayers have now participated in its disclosure programs, which have been available to delinquent filers since 2009. More specifically, according to the IRS, 55,800 taxpayers have used the Offshore Voluntary Disclosure Program (OVDP) to resolve their tax obligations, paying more than $9.9 billion in taxes, interest and penalties, while an additional 48,000 taxpayers have used the Streamlined Procedures, paying approximately $450 million.
Since their inception in 2009, the IRS tax amnesty programs have been fairly successful in encouraging delinquent taxpayers to come forward and disclose their offshore activities to the IRS. As the IRS receives more bank account information from foreign institutions however, it may begin to revisit amnesty applications to see whether the bank account info provides evidence that forgiven taxpayers did not in fact qualify for amnesty.
There are some shortcomings of the Streamlined Program:
“Despite the seemingly taxpayer-friendly incentives, the streamlined program has several shortcomings. The devil is in the details! First, participants are not guaranteed immunity from criminal prosecution. Second, with respect to the Streamlined Domestic Offshore Procedures, the five-percent penalty is imposed on a broader base of foreign assets – not just those relating to FBAR reporting.
Finally, to the extent that the IRS undertakes an examination of the taxpayer’s returns and finds that the taxpayer was willful, the taxpayer could be subject to any one of the following parade of horribles. First, and most obvious, the taxpayer will be barred from participating Read More
A Look At The Certification For Non-Willfulness In Streamlined Procedures
Growing up, your mother probably resorted to sweetness to get you to confess to the broken window she knows your baseball caused. It was easier for you to take the blame then because her words were comforting and put your mind at ease. Well, the IRS has resorted to something quite similar.
On June 18, 2014, it announced changes to its offshore voluntary compliance programs to accommodate the needs of individuals whose failure to report overseas accounts wasn’t willful. Three options were offered as a result: Read More
The IRS has really streamlined the Streamline Procedures. IRS has just updated the Streamlined Procedure forms for both its “offshore” and “domestic” procedures. All is now in fillable format; even the statement of facts can be cut and pasted right onto the Form.
Certification for Persons OUTSIDE the US
Certification for Persons INSIDE the US
You can learn more about the new Streamlined Procedures at my blog post, here.
Original Post By: Virginia La Torre Jeker, J.D. Read More
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. Read More