Offshore
International
Today
Jan 2012
By Lance Wallach, CLU, CHFC
Abusive Tax Shelter, Listed Transaction, Reportable Transaction Expert Witness
Abusive Tax Shelter, Listed Transaction, Reportable Transaction Expert Witness
Jan. 9, 2012
Today, the Internal Revenue Service reopened the offshore
voluntary disclosure program to help people hiding offshore accounts get
current with their taxes. Additionally, the IRS revealed the collection
of more than $4.4 billion so far from the two previous international programs.
The Offshore Voluntary Disclosure Program (OVDP) was reopened
following continued strong interest from taxpayers and tax practitioners after
the closure of the 2011 and 2009 programs. The third offshore program comes as
the IRS continues working on a wide range of international tax issues and
follows ongoing efforts with the Justice Department to pursue criminal
prosecution of international tax evasion. This program will remain open
indefinitely until otherwise announced.
Lance Wallach and his associates have received thousands of phone
calls from concerned clients with questions about the prior programs. Some of
Lance’s associates are still very busy helping people with the last program.
Not a single person has been audited and most are pleased with the results and
are now able to sleep easily without worrying about the IRS. According to
Lance, it requires years of experience to obtain a good result from the
program.
He suggests using a CPA-certified, ex-IRS agent with lots of
international tax experience. While this is not a requirement to file under the
program, Lance has heard many horror stories from people who have tried to file
by themselves or who have used inexperienced accountants.
“Our focus on offshore tax evasion continues to produce strong,
substantial results for the nation’s taxpayers,” said IRS Commissioner Doug
Shulman. “We have billions of dollars in hand from our previous efforts, and we
have more people wanting to come in and get right with the government. This new
program makes good sense for taxpayers still hiding assets overseas and for the
nation’s tax system.”
The new program is similar to the 2011 program in many ways, but
it has a few key differences. Unlike last year, there is no set deadline for
people to apply. However, the terms of the program could change at any
time going forward. For example, the IRS may increase penalties in the
program for all or some taxpayers or defined classes of taxpayers – or decide
to end the program entirely at any point.
“As we've said all along, people need to come in and get right
with us before we find you,” Shulman said. “We are following more leads and the
risk for people who do not come in continues to increase.”
The third offshore effort accompanies another announcement that
Shulman made today, that the IRS has collected $3.4 billion so far from people
who participated in the 2009 offshore program. That figure reflects
closures of about 95 percent of the cases from the 2009 program. On top of
that, the IRS has collected an additional $1 billion from up front payments
required under the 2011 program. That number will grow as the IRS
processes the 2011 cases.
In all, the IRS has seen 33,000 voluntary disclosures from the
2009 and 2011 offshore initiatives. Since the 2011 program closed last
September, hundreds of taxpayers have come forward to make voluntary
disclosures. Those who come in after the closing of the 2011 program will
be able to be treated under the provisions of the new OVDP program.
The overall penalty structure for the new program is the same for
2011, except for taxpayers in the highest penalty category.
The new program’s penalty framework requires individuals to pay a
penalty of 27.5 percent of the highest aggregate balance in foreign bank
accounts/entities or the value of foreign assets during the eight full tax
years prior to the disclosure. That is up from 25 percent in the 2011 program.
Some taxpayers will be eligible for 5 or 12.5 percent penalties; these remain
the same in the new program as in 2011.
Participants must file all original and amended tax returns and
include payment for back-taxes and interest for up to eight years as well as
paying accuracy-related and/or delinquency penalties.
Participants face a 27.5 percent penalty, but taxpayers in limited
situations can qualify for a 5 percent penalty. Smaller offshore accounts will
face a 12.5 percent penalty. People whose offshore accounts or assets did not
surpass $75,000 in any calendar year covered by the new OVDP will qualify for
this lower rate. As under the prior programs, taxpayers who feel that the
penalty is disproportionate may opt instead to be examined.
The IRS recognizes that its success in offshore enforcement and in
the disclosure programs has raised awareness related to tax filing
obligations. This includes awareness by dual citizens and others who may
be delinquent in filing, but owe no U.S. tax.
Lance Wallach, National Society of Accountants Speaker of the Year and member of the AICPA faculty of teaching professionals, is a frequent speaker on retirement plans, abusive tax shelters, financial, international tax, and estate planning. He writes about 412(i), 419, Section79, FBAR, and captive insurance plans. He speaks at more than ten conventions annually, writes for over fifty publications, is quoted regularly in the press and has been featured on television and radio financial talk shows including NBC, National Pubic Radio’s All Things Considered, and others. Lance has written numerous books including Protecting Clients from Fraud, Incompetence and Scams published by John Wiley and Sons, Bisk Education’s CPA’s Guide to Life Insurance and Federal Estate and Gift Taxation, as well as the AICPA best-selling books, including Avoiding Circular 230 Malpractice Traps and Common Abusive Small Business Hot Spots. He does expert witness testimony and has never lost a case. Contact him at 516.938.5007, wallachinc@gmail.com or visit www.taxadvisorexpert.com.
The information provided
herein is not intended as legal, accounting, financial or any other type of
advice for any specific individual or other entity. You should contact an
appropriate professional for any such advice.
No comments:
Post a Comment