Los Angeles California Tax Attorney Blog

Foreign Bank Account Tax Amnesty Attorney:

Internal Revenue Service IRS introduced new 2012 offshore voluntary disclosure program to encourage IRS taxpayers holding foreign or offshore bank accounts. Previous programs introduced in 2009 and 2011 have been extremely successful for the IRS. Based on the result of the Offshore Voluntary Disclosure Program (OVDP), IRS understands that it is cost effective and time wise to obtain tax compliance through "carrot and stick" framework than "stick" alone.

Althoug past criminal tax investigations focused on the offshore banking problems in Switzerland, future IRS criminal tax investigations will focus on the Asia Pacific regions including China, South Korea, Taiwan, Australia, Japan, Indonesia and Malaysia.

The key component in any voluntary disclosure participation with the IRS has always been early disclosure to IRS before they find out about you.

FEATURES OF THE 2012 OFFSHORE VOLUNTARY DISCLOSURE PROGRAM FOR OFFSHORE BANK ACCOUNTS

1) 2012 Offshore Bank Voluntary Disclosure will be open for an indefinite period:

Although IRS did not set a deadline for their Voluntary Disclosure program, a key component of any voluntary disclosure program requires that you disclose to the IRS before they find you. In addition, the terms of the voluntary disclosure program could change at any time and the likelihood of increased IRS tax penalties in the future.

2) 27.5% vs. 25% Tax Penalty:

IRS Tax Penalty under the 2012 Offshore Bank program requires taxpayers to pay a tax penalty of 27.5 versus 25% under the 2011 OVDP based on the highest total balance in offshore bank or foreign bank bank accounts.

3) 5% vs. 12.5% Tax Penalty:

Some taxpayers will be eligible for 5 or 12.5 percent penalties based on the level of the asset value and their culpability in establishing the offshore bank or foreign bank scheme. An example of a taxpayer who may qualify for the lower category of tax penalties would be a recent immigrant who came to the United States and kept a bank account in his or her home country and recently discovered the Foreign Bank Account Reporting Requirement.

4) 2012 Offshore Bank Account Participants Must File IRS Tax Returns:

IRS Taxpayers who want to participate in the Foreign Bank Account Program must file and pay all required tax returns for the past few years.

5) Dual Citizens - New Voluntary Disclosure Program for Certain Dual Citizens:

Although not certain, IRS is currently reviewing another disclosure program or new set of procedures for dual citizens of US who may owe no taxes to the IRS to come into FBAR compliance.

Quick Fact About IRS Voluntary Disclosure Program For Offshore Bank Accounts:
1) $3,400,000,00 - IRS Taxes collected so far under the 2009 offshore bank account program.

2) $1,000,000,000 - IRS Taxes collected so far under the 2011 offshore bank account program to date. This amount is expected to double as the IRS completes its investigation.

3) 33,000 - Number of IRS Taxpayers who voluntarily disclosed offshore bank accounts under the 2009 and 2011 programs.

If you have an offshore bank account, and would like to learn about your legal options, including a voluntary disclosure, contact us. All communications will be confidential and covered under the attorney client privilege.

California Tax Attorney:

Internal Revenue Service IRS catches another tax evader.

Another UBS client pleaded guilty today in a criminal IRS tax case concerning FBAR and Offshore Bank Accounts. According to the Wall Street Journal, US Taxpayer Barouh operated a watch business since 1976 and hid some of his unreported income in various UBS offshore accounts.

A Florida man pleaded guilty to filing a false tax return by failing to report income on money held in UBS AG (UBS) Swiss bank accounts.

In addition to any jail sentence, Barouh has agreed to pay some $5 million, half the estimated amount he owned or controlled offshore, as well as any additional taxes, interest and penalties.

In all likelihood, this taxpayer probably could not have participated in the preferred voluntary disclosure program which ended last year. Before any criminal tax case comes to an indictment or reaches guilty plea stage, there would have been an ongoing tax investigation into this taxpayer before the tax amnesty program became available.

Based on the IRS FBAR-Voluntary Disclosure program, any taxpayer(s) under any tax investigation would not have qualified for the tax amnesty program which existed last year.

If you did not disclose your foreign bank account(s) to the IRS yet, there are several options that are availabe to avoid criminal exposure so you can avoid sleepless nights.

California Tax Attorney:

Last year Democrats Proposed 30% Tax on Foreign Banks that refuse to disclose US Taxpayers as part of continuing efforts by the IRS to quash offshore asset protection and tax evasion strategies conjured up by various financial planners. US Taxpayers with offshore or foreign bank account are required to disclose this information by filing IRS Foreign Bank Account Report.

The Baucus-Rangel bill proposed to impose a thirty percent (30%) withholding tax on income from U.S. financial assets held by a foreign financial institution unless the offshore bank agrees to disclose the identity of any U.S. taxpayers with an account at the foreign bank with additional condition to annually report on the foreign account balance including payments and withdrawals from the foreign bank account.

However, the FBAR game has suddenly changed with this new development from Germany. According to Tax Section of Businessweek , Germany has decided to buy stolen bank data from a former employee of an unidentified Swiss bank. The data contains names of German citizens who hold undisclosed foreign bank accounts.

Swiss government issued a statement expressing its concern over Germany’s decision to buy stolen information but IRS may make similar decision in light of the billions of dollars which the IRS may realize from its recent FBAR Voluntary Disclosure program.

Any offshore or foreign banks with complex operation will eventually realize that in the digital age, it would be nearly impossible to maintain banking secrecy as it existed in previous generations. The source for the stolen Swiss Bank data is from a computer specialist at the Swiss bank.

Foreign Bank Account Tax Amnesty Attorney:

Failure to file FBAR can have devastating consequences to a taxpayer. We attached a summary of potential penalties and criminal tax exposure related to an unfiled FBAR- FBAR Tax Penalty Summary.

We've been receiving calls from stressed taxpayers regarding their unfiled FBAR- IRS Form TDF 90-22.1. We can't offer psychiatric help but you can reach me this weekend on my cell (310) 968 9820 if you have few questions which may help ease your mind.

FBAR Tax Attorney:

Internal Revenue Service IRS issued a statement this week stating that they will be pursuing foreign bank accounts held by US taxpayers in other countries including South Korea, Hong Kong, Singapore and several European countries.

US Senate also introduced a new tax and banking legislation which will further frustrate US taxpayers seeking tax shelters through foreign bank accounts.

Foreign Bank Account Tax Attorney:

If you are participating in the IRS Voluntary Disclosure program, you will be contacted by the IRS to review your case and conduct an interview so that the IRS may determine whether you qualify for the Voluntary Disclosure Program. In the upcoming posts, we'll go through some of the issues and strategies which may be of help in your case.

Make sure that you also have a copy of IRS Foreign Bank Account Report which you will need to submit to the IRS as part of the Voluntary Discloure Program. If you haven't already filed the FBAR, we'll file a post with the FAQ regarding the FBAR.

FBAR- IRS Voluntary Disclosure Attorneys

Even if the taxpayer has missed the October 15, 2009, deadline, IRS voluntary disclosure program may still be available to those with delinquent FBAR, unreported income or undisclosed foreign bank accounts. However, taxpayers need to proceed with caution if they are considering filing their voluntary disclosure post October 15, 2009. We recommend that you seek a competent FBAR- IRS Voluntary Disclosure Attorneys to navigate through these proceedings. A thorough risk analysis with your tax attorney must be performed before implementing any FBAR Voluntary Disclosure after 10/15/09.

Voluntary disclosure allows IRS taxpayers to resolve their tax debt or compliance issues with the IRS and reduce the probability of IRS criminal prosecution. Foreign Bank Account Report or FBAR which many US taxpayers have failed to file falls in the ambit of the Voluntary Disclosure program. Whether the foreign bank account is located at UBS or any other banks, the failure to file FBAR may result in criminal prosecution by the IRS.

Internal Revenue Service IRS Voluntary Disclosure is a program implemented by IRS Criminal Investigation Division which involves taking timely, accurate, and complete voluntary disclosures by IRS taxpayer in deciding whether to recommend to the Department of Justice that a taxpayer be criminally prosecuted.

Los Angeles Tax Attorney:

If you are looking for information on the IRS voluntary disclosure or the IRS FBAR program you can visit here FBAR - Why file IRS Voluntary Disclosure or here IRS Voluntary Disclosure for FBAR

If you owe a debt to a bank or any other creditor and they agree to forgive or reduce the balance of the debt, the canceled amount of the debt may be taxed by the Internal Revenue Service.

The Mortgage Debt Relief Act of 2007 generally allows IRS taxpayers to exclude income from the reduced debt on their principal place of residence. IRS taxpayers who were able to reduce debt owed their home through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, may not be taxed on the amount of the canceled debt.

Up to $2 million of forgiven debt is eligible for this IRS income tax exclusion ($1 million if married filing separately). The tax exclusion does not apply if the debt forgiveness is due to services performed, trades or offsets with the lender or any other reason which is not directly related to a decline in real estate value of the taxpayer's home or their changed financial circumstance.

If you have any questions regarding the Internal Revenue Service Rules or Procedures (IRS) you may contact us here.

Los Angeles Tax Attorney:

Based on the numerous last minute IRS Voluntary Disclosures most tax attorneys expect a surge of US TAX COURT filings against the Internal Revenue Service to challenge the IRS tax and penalty assessments which may be proposed in the next several months. We'll update you with any new procedures or news concerning IRS audits which may be initiated through the IRS Voluntary Disclosure application submission.

Internal Revenue Service IRS Voluntary Disclosure Program

One of the most common questions we received from taxpayers regarding the IRS voluntary disclosure program was: "why should I make IRS voluntary disclosure?"

IRS Taxpayers with unreported offshore or foreign bank accounts or entities should make a voluntary disclosure because it allows them to become compliant, avoid large IRS civil penalties and generally reduce or eliminate the risk of IRS criminal prosecution.

Making a IRS voluntary disclosure also provides the opportunity to resolve all offshore tax issues at a reasonable settlement amount.

Taxpayers who do not submit an IRS voluntary disclosure may face IRS assessment of substantial penalties, including the fraud penalty and foreign information return penalties, and high risk of IRS criminal prosecution.