Do you have an offshore bank account or assets? Do
you have signatory authority over foreign assets or
financial accounts? If so, Boris Benic & Associates
wants you to know that the IRS has implemented a new
Offshore Voluntary Disclosure Program (OVDP). The
new program announced earlier this year provides
taxpayers with assets and accounts held in offshore
accounts the opportunity to “come
clean” with the IRS and face limited fines and
penalties. The program contains key changes from the
2011 initiative including an increased penalty
framework and additional filing requirements.
Concomitantly, the IRS also closed an important
loophole in the new program as well.
If you have foreign assets or financial accounts and
have not participated in past OVDP’s, then now is
the time to act! The IRS has implemented a third
disclosure program designed to bring U.S. taxpayers
back into the system with limited fines and
penalties. It’s essential to
ACT NOW as the terms of the current program are subject to
change at any time!
New OVDP Program
Due to the popularity of the 2009 and 2011 OVDP
programs the IRS launched another disclosure
initiative earlier this year (January 2012). While
the program is similar to past initiatives, the IRS
has made a few key changes taxpayers should be aware
of. These include:
The new program requires individuals to pay a
penalty of 27.5% (increased from 25%in the 2011
program) of the highest aggregate balance in foreign
accounts or value of assets held offshore during the
eight years prior to disclosure. However, in certain
situation taxpayers may be eligible for 5% or 12.5%
penalties (no increase from the 2011 program).
Taxpayers who participate in the new program must
provide copies of all original and amended returns
for the eight years prior to joining the program.
They are also required to include payments for back
taxes and interest, as well as, penalties and fees
depending on the specific situation.
Lower Penalty for Small Accounts.
For those individuals with offshore accounts or
assets that were not worth more than $75,000 in any
calendar year covered by the new program will
qualify for a reduced penalty rate of 12.5%.
Participants that find the penalty rate unjustified
may choose to undergo an IRS examination instead
(similar to the 2011 program).
No Established Deadline.
The IRS announced that there is no deadline for when
the latest OVDP will close. However, it was clearly
stated that the specifics of the program including
penalties could be increased at any time. As a
result, taxpayers are encouraged to come forward and
participate in the new program.
Key Loophole Closed
The IRS also closed a loophole that some taxpayers
with foreign accounts have been using to avoid
compliance. Under the existing law, if a taxpayer
challenges in a foreign court the disclosure of tax
information by the foreign government (to the US
government), the taxpayer is required to notify the
Department of Justice (DOJ) of the appeal.
Apparently this has not been happening allowing the
taxpayer to avoid compliance with IRS regulations.
To close this loophole there has been a change in
the eligibility requirements for the program. If a
taxpayer submits an appeal in a foreign court and
does not notify the DOJ, they will be immediately
disqualified from the program. This means they will
be responsible for
ALL back taxes, penalties and fines! The IRS also announced that
eligibility for the OVDP may also be terminated once
the U.S. government takes action with the taxpayers
foreign financial institution.
Do you or a family member have assets in an offshore
account? Have you not yet taken advantage of the
OVDP? If so, then contact us today! The changes
recently implemented by the IRS may have an impact
on your situation. For additional information please
Robert Puerto, CPA,
at 516-248-7361, or
click here to email
In a brief consultation he can review your specific
situation and determine whether you qualify for the