{"id":2061,"date":"2014-07-09T18:32:25","date_gmt":"2014-07-09T18:32:25","guid":{"rendered":"http:\/\/www.ua-cpas.com\/?p=2061"},"modified":"2014-07-09T18:32:25","modified_gmt":"2014-07-09T18:32:25","slug":"new-options-for-foreign-bank-account-owners","status":"publish","type":"post","link":"https:\/\/www.ua-cpas.com\/blog\/index.php\/2014\/07\/09\/new-options-for-foreign-bank-account-owners\/","title":{"rendered":"New Options for Foreign Bank Account Owners"},"content":{"rendered":"

What is the Offshore Voluntary Disclosure Program?<\/span>
<\/strong>Since 2009, the IRS has announced various initiatives for taxpayers with unreported foreign assets. The Offshore Voluntary Disclosure Program (OVDP) requires filing 8 years amended tax returns and 8 years of Foreign Bank Account Reports (FBAR). In addition to paying 8 years of taxes, taxpayers must pay a 20% \u201caccuracy\u201d penalty on the tax plus interest. Taxpayers must also pay a 27 \u00bd % \u201cFBAR-related\u201d penalty on the highest balance of their foreign assets in the 8 year period (includes investments other than bank accounts).<\/span><\/p>\n

What are the Changes?<\/span>
<\/strong>On June 18, 2014 the IRS announced major changes to the OVDP which results in three possible \u201croutes\u201d: First, U.S. residents who did not report foreign income or assets but who certify that their non-compliance was not \u201cwillful\u201d, do not need to enter the OVDP, but are now able to address the issue by filing only 3 years amended returns and 6 years of FBARs. No income tax penalty and only a 5% \u201cFBAR-related\u201d penalty are due.<\/span><\/p>\n

Second, those who cannot certify that their non-compliance was not \u201cwillful\u201d can still join the OVDP. The June 2014 changes create a third category of those who enter the program after it becomes public that their foreign bank is under investigation by the IRS or Dept. of Justice. For these taxpayers, the June 2014 changes increase the 27 \u00bd % penalty to 50% of the highest balance (of the taxpayer\u2019s foreign assets during the preceding 8 years). This 50% penalty can be avoided only by completing the detailed preclearance filing procedures before August 3, 2014.<\/span>
For those who can\u2019t certify non-willful non-compliance, the OVDP is the only way to cap their civil tax exposure and to avoid criminal prosecution and possible jail time.<\/span><\/p>\n

What are the Risks?<\/span>
<\/strong>For those who choose to certify that their non-compliance was not \u201cwillful\u201d, be aware that there is NO protection against criminal prosecution if the IRS finds the Taxpayer\u2019s certification of non-willful conduct not to be true. Furthermore, the taxpayer will then be considered ineligible to participate in the OVDP.<\/span><\/p>\n

What Should I Do Now?<\/span>
<\/strong>Taxpayers need to ask themselves some hard questions in order to determine if they are eligible to claim that their non-compliance was \u201cnon-willful\u201d. Non-willful conduct is defined by the IRS as conduct that is due to negligence, inadvertence or mistake or conduct that is the result of a good faith misunderstanding of the requirements of the law.<\/span><\/p>\n

Time is Running Out<\/span>
<\/strong>The 2014 OVDP does not have a final end date. However, the IRS has reserved the right to end the program at any time. We work with several law firms who specialize in this area. Together with your legal counsel we can help you evaluate the most suitable alternative.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

New Options Available for Foreign Bank Owners- Major Changes to the Overseas Voluntary Disclosure Program to avoid criminal prosecution and pay a lower penalty<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[90,91],"class_list":{"0":"post-2061","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-tax-tips-for-individuals","7":"tag-foreign-accounts","8":"tag-foreign-asset-reporting","9":"entry"},"_links":{"self":[{"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/2061","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/comments?post=2061"}],"version-history":[{"count":0,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/2061\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/media?parent=2061"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/categories?post=2061"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/tags?post=2061"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}