Information About The 2012 Offshore Voluntary Disclosure Initiative Information

As U.S. taxpayers, whether dual citizens or otherwise, seek to avoid the possibility of criminal prosecution, which does exist outside the protection of an IRS program for disclosure and compliance of a previously undisclosed offshore account, The Internal Revenue Service's Senior Counsel in charge of the Offshore Program recently provided more guidance for offshore account holders who are dual citizens. How those taxpayers whose foreign accounts have not previously been disclosed will be affected by the new guidance is a work in progress. Information on the current 2012 IRS Voluntary Disclosure Program can be found at http://www.irs.gov/uac/2012-Offshore-Voluntary-Disclosure-Program. The IRS is, in any case, offering people with undisclosed income from offshore accounts another opportunity to get current with their tax returns. The 2012 OVDP has a higher penalty rate than the previous program but offers clear benefits to encourage taxpayers to disclose foreign accounts now rather than risk detection by the IRS and possible criminal prosecution. U.S. authorities continue to aggressively pursue foreign banks allegedly aiding U.S. taxpayers to commit tax fraud [foreign banks currently under investigation include HSBC Holdings Plc, Zuercher Kantonalbank, Julius Baer Group Ltd. and Bank Hapoalim BM, among others], and are now ratcheting investigations up a notch to include asset forfeitures and to create a special group called The IRS Global High Wealth Industry Group to conduct audits of wealthy individuals and families.

Moreover, Switzerland recently authorized its banks to hand over the names of professional employees, external wealth mangers, lawyers and trustees who have helped U.S. taxpayers commit tax evasion, and more and more banks abroad are being forced to cooperate in the release of the account information of United States citizens being investigated by IRS, making it more likely than not that the IRS will establish attempted tax fraud and/or evasion cases against them. U.S. taxpayers currently under investigation have found themselves facing down even the release of email traffic in connection with "allegedly" undisclosed foreign bank accounts.

There Is No Time To Delay When Audits Of Offshore Accounts Arise

Waiting is no longer an option. If you have a United States identity you will be tied to ownership of a foreign account eventually, and if it has not been disclosed in regular filings and/or through an IRS "OVDI" program by then, disclosure will not be considered "voluntary." My experience with the 2009, 2011 and 2012 IRS Amnesty Programs is extensive, and the experiences of the clients of my firm who have participated and followed my advice have seen favorable results, relative to the alternatives, it must be said. The alternative to voluntary participation in an OVDI initiative program can and often is criminal prosecution and loss of assets, where the program alternative is a [currently] 27.5 percent charge against the highest balance realized historically [over the years covered by an OVDI program] in the undisclosed foreign account, taxation and interest on unreported income from the account, possibly a one-year 75 percent civil penalty against the tax on income from the account, and a 20 percent penalty on tax for each year in the program - harsh, yes, the worst-case scenario - no.

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Contact An Experienced Massachusetts' Tax Lawyer

Now more than ever is the time to call my office and ask for help through the 2012 IRS Amnesty Program, or through a voluntary disclosure generally. Experience matters. Skill in advocacy matters. Results matter. When one is in tax trouble, one can be blind to the foolish folly that can be committed. Look to where a professional has been — to experience.

Theodore Craft has the experience needed to assist U.S. taxpayers to achieve compliance through the 2012 IRS Amnesty Program, or to negotiate through the minefield of "voluntary" disclosure.

The 2012 OVDI program (which has not yet ended as of April 1, 2014) requires a new protocol for filing foreign bank account reports. The FinCen BSA e-filing system, replacing FBAR filings - Form TD 90 f-22.1.

Contact our Melrose office by calling 888-TAX-RISK.