Will the question for the Year 2017 be: Do you have Foreign Financial Accounts? – Foodman CPAs & Advisors
Since the Global Financial Crisis that began in 2007, domestic and international Taxpayers have been under increasing scrutiny. The financial system has been heavily regulated and closely monitored. In addition, the US Tax Gap (amount of taxes owed to the Government and the amount of taxes that are voluntarily paid on time) continues to be a driver in the US for raising additional sources of revenue. According to IRS, underreporting of income tax, employment taxes and other taxes represent approximately 80 percent of the US Tax Gap. Tax Underreporting involves individuals understating their incomes, taking improper deductions, overstating business expenses and erroneously claiming credits. A significant number of U.S. Taxpayers are US citizens and Residents who live and work abroad. For the past ten years, the US has undertaken initiatives such as FATCA and staffing up the IRS criminal Investigation Unit (IRS-CI) to combat tax evasion, and report sources of revenue from undeclared offshore accounts to the US.
FATCA reporting exchanges took place in 2015 and 2016. When during a FATCA exchange of information, the existence of undisclosed reportable FATCA accounts is reported to IRS, US banks may find themselves with clients who have not informed them of previously undisclosed reportable offshore account(s).
The tax amnesty programs available to US Taxpayers (Streamlined Filing Compliance Procedures and OVDP) require the attention and expertise of a tax compliance expert. The IRS states that there are Taxpayers that need protection from criminal prosecution because their reporting and payment failures have been non-willful. The Streamlined Filing Compliance Procedures are designed to assist Taxpayers with coming into compliance, and willingly remedy past mistakes. Its purpose is to provide Taxpayers with an option for becoming compliant and to remain compliant after the process.
Through its Offshore Voluntary Disclosure Program (OVDP), IRS encourages willfully noncompliant taxpayers to disclose unreported offshore accounts and related income. The key word for OVDP is Willful. Unlike the Streamlined Filing Compliance Procedures program which is intended for Taxpayers that have acted Non-Willfully, OVDP encourages Taxpayers who have acted willfully to immediately disclose through OVDP, eliminating a risk of prior IRS detection (an OVDP disqualifying fact) and virtually eliminating the possibility of criminal prosecution.
OVDP requires Taxpayers to cooperate with IRS and Department of Justice offshore enforcement efforts through providing information regarding financial institutions and other facilitators who helped the Taxpayer establish or maintain an offshore arrangement.
If you are a U.S. individual holding overseas assets, you must report and pay your taxes or we will be increasingly focused on finding you
Douglas H. Shulman,
Maintaining foreign financial accounts is legal for a US Person. The failure to disclose reportable foreign financial accounts and offshore reportable earnings violates the Internal Revenue Service and FinCEN regulations. If done willfully, it can lead to criminal charges and incarceration for a US Person.
Are you are a concerned US Taxpayer afraid of coming into compliance? Are you a US Taxpayer who believes that coming into compliance is not a priority and you have decided to take a chance? Don’t be a victim of your own making. The IRS will not Quit. The IRS will find You. Voluntary compliance is a foundation of our US tax system. Consult your Tax Specialist and come into US Tax compliance status. The question that will remain for 2017 and forward is: Do you have Foreign Financial Accounts?