Offshore Voluntary Disclosure Program

Prison Sentence for Quiet Disclosure: the Kaminsky Case

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On March 4, 2015, Gregg A. Kaminsky, a former UBS client, was sentenced for willfully failing to file a Foreign Bank Account Report (the “FBAR”) with the U.S. Department of Treasury in connection with his concealment of income and assets in accounts in Switzerland, Hong Kong, and Thailand over several years, as well as his failure to report certain income earned in the virtual world, “Second Life.”

“Federal tax revenue is crucial to protecting our borders; fighting terrorism, cybercrime, and other national security threats; providing disaster relief; and to performing other critical government functions,” said Acting U. S. Attorney John Horn. “This office is committed to investigating and prosecuting those who intentionally avoid paying their fair share, whether their schemes involve income earned or hidden offshore, here at home, or even in a virtual world.”

“U.S. citizens who seek to avoid their tax obligations by hiding income in undeclared bank accounts abroad should by now be fully on notice that they will be held accountable for their actions, both civilly and criminally,” stated IRS Criminal Investigation Special Agent in Charge, Veronica F. Hyman-Pillot. “Americans who file accurate, honest and timely returns can be assured that the government will hold accountable those who don’t.”

Facts of the Case

According to Acting U.S. Attorney Horn, the charges and other information presented in court:

Kaminsky was an Internet entrepreneur who served as the Chief Executive Officer of Circlenet LLC, based in Atlanta, Georgia. From 2000 through mid-2009, Kaminsky owned and controlled a foreign bank account with Union Bank of Switzerland AG (“UBS”). By 2006, Kaminsky’s UBS account held approximately $1.1 million. From time to time between 2002 and 2009, Kaminsky caused funds to be wire-transferred from his UBS account in Switzerland to other foreign bank accounts controlled by him in Thailand and Hong Kong. Also during that time, Kaminsky caused his income from at least two different U.S. companies to be direct-deposited into his UBS account in Switzerland.

Yet, over this period, Kaminsky did not disclose his UBS account or other foreign financial accounts to the U. S. Treasury Department as required, and thereby concealed several hundred thousand dollars in taxable income, interest, and dividends from the U.S. Internal Revenue Service (IRS).

In addition, in 2007 and 2008, Kaminsky omitted his UBS account and associated income from Free Applications for Federal Student Aid (FAFSA) that he electronically filed with the U.S. Department of Education in order to qualify for need-based federal financial aid to fund his tuition for an Executive MBA program at Emory University. At the time of the FAFSA applications, Kaminsky controlled over a half million dollars in his UBS account, which would have made him ineligible for federal student loan assistance.

On June 30, 2008, the U.S. Department of Justice sought court approval to compel UBS to disclose the identities of U.S. account holders who may be using UBS accounts to hide assets overseas and thereby evade U.S. taxes. The request and the order authorizing it were widely reported by the media throughout the United States, and this coverage continued throughout 2008 and 2009 as the U.S., UBS, and Switzerland negotiated a resolution and UBS began disclosing U.S. account holders to the IRS.

Following this news, Kaminsky closed his UBS account and transferred the balance of his UBS account to an account that he controlled at HSBC Bank in Hong Kong. Further, in spring 2010, Kaminsky filed FBARs for his Swiss and Hong Kong accounts for the very first time, also filing amended individual income tax returns for 2007 and 2008 that disclosed the previously unreported income in his UBS account. However, in his amended 2007 and 2008 returns, and in his subsequently filed returns for 2009 through 2012, Kaminsky still failed to report nearly $150,000 in taxable income earned from his business activities in the virtual world, “Second Life.”

Participants in Second Life, referred to as “residents,” can engage in a wide variety of business activities, including buying, renting, and sub-leasing virtual land and buying and selling other virtual goods, services, and experiences for their “avatars.” Transactions are conducted using a virtual currency, “Linden Dollars.” Linden Dollars can be bought and traded on the “Linden Exchange,” and are redeemable for cash.

Including his virtual world income, Kaminsky failed to report over $400,000 in income to the IRS between 2000 and 2012, resulting in a loss to the IRS of approximately $125,000.

Kaminsky’s Sentence

Kaminsky was sentenced to serve four months in federal prison to be followed by two years of supervised release, two months of home confinement, and 200 hours of community service. Kaminsky was also ordered to pay restitution to the IRS in the amount of $91,983. Kaminsky was convicted on these charges on December 18, 2014, after he pleaded guilty. As part of his plea agreement with the United States, Kaminsky was also required to pay a civil penalty to the IRS in the amount of $250,635.20, which is equivalent to fifty percent of the value of the balance in Kaminsky’s HSBC account in Hong Kong as of June 30, 2009.

Lesson from the Kaminsky’s Case – the Dangers of Attempting Incomplete Quiet Disclosure

Kaminsky’s case is a good illustration of my last year’s article on the how quiet disclosure in the current enforcement environment can be a very dangerous option. Kaminsky amended two tax returns and disclosed income from his UBS account for those two years and filed the FBARs for 2009. This was a fairly standard way of doing quiet disclosure, but it could not in any form qualify as a voluntary disclosure – and Kaminsky paid dearly for this attempt.

However, there is another important lesson of Kaminsky’s case for the persons who intend to engage in a voluntary disclosure – you cannot do a partial voluntary disclosure. Kaminsky failed to report his worldwide income on his amended tax returns – he only reported income that was directly relevant to the foreign accounts. Failure to submit complete and accurate amended tax returns undoubtedly contributed to the criminal sentence in this case.

Contact Sherayzen Law Office for Help with Conducting Proper Voluntary Disclosure

If you have undisclosed foreign accounts and foreign income, contact Sherayzen Law Office for professional legal and tax help. Our international tax lawyer, Mr. Eugene Sherayzen will thoroughly analyze your case and advise you on your voluntary disclosure options. Once you choose your voluntary disclosure path, our firm will prepare all of the necessary documents and legal forms, and conduct your voluntary disclosure in a proper and expeditious manner.

We have helped hundreds of US taxpayers around the globe, and we can help you. So, Call Us Now to Schedule Your Confidential Consultation!

IRS Form 14654 for Streamlined Domestic Offshore Procedures

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IRS Form 14654 is probably the most important part of the taxpayer’s voluntary disclosure under the Streamlined Domestic Offshore Procedures (“SDOP”). In this article, I would like to explore the various parts of IRS Form 14654 and explain why this form is so important.

Please, note that IRS Form 14654 was just revised in January of 2015. (Note: Latest update is September of 2017).

SDOP and IRS Form 14654

In June of 2014, the IRS announced the creation of a brand-new voluntary disclosure option for the taxpayers who reside in the United States – SDOP. As part of the disclosure package under SDOP, the IRS required U.S. taxpayers to submit a Certification of Non-Willfulness with respect to the taxpayers’ failure to timely disclose their foreign income and assets. At the end of August of 2014, this Certification became the new IRS Form 14654.

Purpose of IRS Form 14654

IRS Form 14654 constitutes an essential part of SDOP because this is the form used by the taxpayer to certify his non-willfulness with respect to his failure to timely and accurately report his foreign income and assets. Moreover, IRS Form 14654 also functions as a convenient summary of the calculation of the income tax liability as well as the SDOP Title 26 Miscellaneous Offshore Penalty (“Miscellaneous Offshore Penalty”). Finally, IRS Form 14654 allows the taxpayer to make a statement in support of his non-willfulness.

In order to accomplish these multiple tasks, IRS Form 14654 incorporates three different parts: income tax summary, Miscellaneous Offshore Penalty calculation, and the Certification with Explanation of Non-Willfulness.

Let’s take a closer look at each of these three parts of IRS Form 14654.

IRS Form 14654: Income Tax Summary

The very first part of the Certification is with respect to income tax liability. There is a pre-set language in IRS Form 14654 that requires the taxpayer to certify that: he is providing amended tax returns for each of the three most recent years, he filed the original tax returns previously, and he properly calculated his additional tax due with statutory interest on IRS Form 14654.

There is already a self-calculating table in the form that allows the taxpayer to quickly summarize his additional income tax liability with statutory interest per each covered year and the total amount due (which should be included on the checks written to the IRS).

IRS Form 14654: Miscellaneous Offshore Penalty Base

The second part of the certification is concerned with the taxpayer’s calculation of the Miscellaneous Offshore Penalty, or more precisely its penalty base. IRS Form 14654 provides a set of self-calculating tables to be completed by the taxpayer for all of the foreign accounts and other assets subject to the Miscellaneous Offshore Penalty. Each table requires the taxpayer to disclose the financial institution with address and description of the asset, the account number (where applicable), when the account was opened or asset acquired, and the end-of-year balance/asset value in U.S. dollars.

If additional space is needed, my experience has been that it would be best to attach to IRS Form 14654 a detailed statement disclosing all of this information. Note, the attachment should contain the taxpayer’s name, TIN and original signature.

In addition to the Miscellaneous Offshore Penalty’s penalty base calculation, IRS Form 14654 already contains the language which states that the taxpayer already filed his FBARs for the past six years and he met all of the eligibility requirements for SDOP.

IRS Form 14654: Calculation of Payments Due

The next part of the certification requires the taxpayer to summarize all of the payments due – the calculation of the Miscellaneous offshore Penalty, the total due and the total interest due. At the end of this section, the taxpayer should add all of these payments together to equal to the “Total Payment” due.

IRS Form 14654: “Comprehensive Certification” and Explanation of Non-Willfulness

Following the completion of the payment calculations section, IRS Form 14654 turns to the most important part of a SDOP case – the certification of non-willfulness with respect to income, tax payments and information returns.

The actual language for the certification of non-willfulness is already provided by the IRS on IRS Form 14654; this is a standard text that the taxpayer must agree to if he wishes to do a SDOP disclosure (i.e. this language cannot be modified). It is very important for international tax lawyers to discuss this language with their clients to make sure that they understand what they are agreeing to.

In addition to providing the standard certification text, IRS Form 14654 requires the taxpayer to provide a statement of facts and specific reasons for the original failure to report all income, pay all tax and submit all required information returns, including FBARs.

Please, note that the January of 2015 revision of IRS Form 14654 specifically allows the taxpayer to provide the explanation not only on the form itself, but also on a separate signed attachment (this clarified a previous confusion over the statement must be provided on the form only). Moreover, the new revision specifically states that the failure to provide a narrative statement of facts will result in the certification being deemed incomplete and the taxpayer will not qualify for the SDOP penalty relief.

The explanation of non-willfulness is undoubtedly the most important part of IRS Form 14654, because here the taxpayer has a unique opportunity to establish his legal case for non-willfulness. If this explanation is not deemed satisfactory to the IRS, the taxpayer may face willful FBAR penalties, civil fraud penalties and potentially even criminal penalties (see note below on the certification under the penalty of perjury).

In fact, the explanation of non-willfulness is so crucial to the taxpayer’s SDOP case, that I strongly recommend that the taxpayer refrains from completing the Streamlined certification himself or letting his accountant to do it. This is the job only for the taxpayer’s international tax attorney.

IRS Form 14654: Signature under the Penalties of Perjury

The last part of certification requires the taxpayer to sign the Form under the penalties of perjury. By signing IRS Form 14654, the taxpayer is certifying (1) that he is eligible for the Streamlined Domestic Offshore Procedures; (2) that all required FBARs have now been filed; (3) that the failure to report all income, pay all tax, and submit all required information returns, including FBARs, resulted from non-willful conduct; and (4) that the miscellaneous offshore penalty amount is accurate.

Contact Sherayzen Law Office for Help with IRS Form 14654 and Your Voluntary Disclosure Under the Streamlined Domestic Offshore Procedures

If you wish to do the voluntary disclosure of your foreign accounts under the Streamlined Domestic Offshore Procedures, contact Sherayzen Law Office for professional help. Despite the fact that SDOP only appeared last June and IRS Form 14654 was created at the end of August of 2014, our international tax law firm has already completed SDOP disclosures for a number of our clients, and we can also help you.

Contact Us to Schedule Your Initial Consultation! Remember, contact Sherayzen Law Office is Confidential!

OVDP lawyers: Recent News Regarding the DOJ Program for Swiss Banks

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For OVDP lawyers, one of the most significant recent developments in the US international tax law enforcement was the Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks (“Program”) announced by the US Department of Justice (“DOJ”) on August 29, 2013. Since the Program began functioning, more than a hundred Swiss banks (out of the approximate total of three hundred eligible banks) elected to enter the Program.

This article will briefly highlight some recent developments concerning Swiss banks participating in the Program, as well as the likely future focus of the DOJ efforts to locate the offshore accounts of US taxpayers (an important focus for OVDP lawyers and their clients). This article is not intended to convey tax or legal advice. If you have an offshore account, you should seek the advice of a tax attorney as significant penalties may be involved. Please contact the experienced OVDP International tax firm, Sherayzen Law Office, Ltd. for professional legal and tax assistance.

OVDP Lawyers: At Least Ten Swiss Banks Have Withdrawn From the Program

It appears that some of the Swiss banks entered the Program out of pure caution. According to a recent article in the Swiss newspaper, NZZ am Sonntag, at least ten Swiss banks have withdrawn their participation in the Program. The paper, citing anonymous sources, did not specify which banks withdrew. However, the banks reportedly determined that they had not broken applicable US laws, and according to various news reports, the DOJ had no objection to the banks withdrawing from the Program.

One Swiss bank that publicly announced that it was withdrawing last month is the Liechtenstein-based private bank, VP Bank. According to a news report citing an official statement, the bank noted, “Thorough internal investigations and external expert opinions showed that the conditions for continued participation did not exist…VP Bank therefore withdrew from the U.S. programme.”

For OVDP lawyers, this maybe an important fact that may affect the voluntary disclosure strategies of their clients.

OVDP Lawyers: Many Swiss Banks May Have to Wait Until 2015 to Resolve Disputes in the Program

An important issue for the Swiss Banks and OVDP lawyers is when the DOJ will reach the final resolution under the Program. In a recent article published in the Swiss financial newspaper, finews.ch, Shelby du Pasquier, a partner at the Geneva law firm Lenz & Staehelin representing more than twenty Swiss banks enrolled in the Program, gave the opinion that for most banks enrolled, settling disputes in the Program would last until spring of 2015. He noted that this was his “personal opinion” and not the official opinion of any of the twenty (unnamed) banks he represents. In a separate news report, Boris Collardi, CEO of Julius Baer, was quoted in July of this year as stating that he expects his bank to find a “fair and equitable solution” within the next few months. Du Pasquier seconded the opinion that Julius Baer will likely be one of the next large Swiss banks to settle, along with an unnamed “smaller bank.”

Du Pasquier also opined that the US DOJ is likely to increase scrutiny of accounts in other offshore jurisdictions, especially the Bahamas, Hong Kong and Singapore, and any Swiss bank subsidiaries operating in such countries.

At Sherayzen Law Office, Mr. Sherayzen already expressed his opinion that the IRS is already in the process of widening its scope of enforcement with the particular emphasis on the Carribean region, Central America, Hong Kong, India, Singapore in addition to its already deep involvement in Israel. Mr. Sherayzen also seconded the opinion that the resolution of the issues under the Program is unlikely to be reached for most of the participants in 2014; most likely, we are looking at 2015 and maybe even 2016 for the most difficult cases.

OVDP Lawyers: Several Swiss Banks Seek More US Customers for Offshore Accounts

While most Swiss banks no longer pursue US customers desiring offshore accounts and funds because of the recent increased IRS and DOJ efforts, several Swiss banks have actually increased marketing for this customer base. The new marketing efforts are legal if such offshore funds are properly registered with the US Securities and Exchange Commission (SEC), or other applicable authorities.

In a recent news article in swissinfo.ch, René Marty, CEO of UBS Swiss Financial Advisers (UBS-SFA) stated, “We only accept clients who have declared all their assets.” The Swiss Bank, Vontobel, not only registered with the SEC, but also established a branch in Texas to pursue US customers.

UBS-SFA, Vontobel, and Pictet North America Advisors are the Swiss leaders in this targeted market. Furthermore, from a practical perspective, these banks may provide the only option for US persons living overseas who have declared their offshore accounts, but are unable to open accounts in various Swiss banks that now view having US customers as a stigma.

For OVDP lawyers, it is important to advise their clients that these offshore banks are likely to be subject to additional US tax reporting requirements.

Contact Sherayzen Law Office for Help with Undisclosed Foreign Accounts and Other Foreign Assets

If you have undisclosed foreign accounts, you may be running a grave risk of IRS detection and investigation due to FATCA enforcement as well as the widening scope of IRS investigations as it goes through the piles of information it collected as a result of the voluntary disclosure programs and the Swiss Program for Banks. This is why you need the help of an experienced OVDP lawyer to properly advise you with respect to your voluntary disclosure options.

We can help you as we have helped hundreds of our clients around the world. Our international tax team is highly experienced in all voluntary disclosure options involving offshore accounts and other foreign assets. Our international tax compliance team will thoroughly review your case, identify the international tax issues involved, analyze the penalty exposure and the available voluntary disclosure options, and implement the preferred voluntary disclosure plan for you (including preparation of all legal documents and tax forms).

Contact US to Schedule Your Confidential Consultation.

Streamlined Foreign Offshore Procedure

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One of the most dramatic changes to the voluntary disclosure process made by the IRS on June 18, 2014, was the complete revamping of the Streamlined Foreign Offshore Procedure. As long as the taxpayer can honestly certify that his prior violations of U.S. tax laws were non-willful, the Streamlined Foreign Offshore Procedure offers a unique opportunity for such a taxpayer to bring his tax affairs with respect to foreign accounts and other offshore assets into complete compliance with the U.S. tax rules with potentially no penalties. In this article, I am going to outline the Streamlined Foreign Offshore Procedure and discuss why it is important to take advantage of it as soon as possible.

Old Streamlined Foreign Offshore Procedure

The Streamlined Foreign Offshore Procedure already existed prior to June 18 changes. However, while it offered a no penalty solution to U.S. taxpayers residing overseas, it also imposed severe limitations preventing the great majority of these taxpayers from qualifying to participate in the Streamlined Foreign Offshore Procedure.

The most difficult conditions were the $1,500 additional tax liability threshold and the risk assessment process (to comply with the “simple return” rule). Further complications would arise from the failure to timely file original tax returns.

2014 Changes to Streamlined Foreign Offshore Procedure

It is precisely these difficult requirements that were removed by the IRS in June of 2014, thereby opening up a tremendous opportunity to U.S. taxpayers residing overseas: the $1,500 tax limit was gone, the risk assessment process was gone, and the importance of timely filed U.S. tax returns was also downgraded. Instead, the IRS created a new advantageous (to U.S. taxpayers) Streamlined Foreign Offshore Procedure with simplified eligibility requirements.

If these requirements are met, a U.S. taxpayer residing overseas can now avoid the imposition of all FBAR penalties if he follows the Streamlined Foreign Offshore Procedure for filing amended tax returns and delinquent FBARs.  Moreover, as an additional bonus, the IRS is stating that it will waive all failure-to-file and failure-to-pay penalties, accuracy-related penalties, and information return penalties.

There are some limitations on this generous gift. Any previously assessed penalties with respect to those years, however, will not be abated. Furthermore, as with any U.S. tax return filed in the normal course, if the IRS determines an additional tax deficiency for a return submitted under these procedures, the IRS may assert applicable additions to tax and penalties relating to that additional deficiency.

Since Streamlined Foreign Offshore Procedure offers such tremendous benefits to U.S. taxpayers who reside outside of the United States, it is important to make sure that all of the eligibility and filing requirements are met.

Streamlined Foreign Offshore Procedure: Eligibility requirements

There are three main eligibility requirements for participation in the Streamlined Foreign Offshore Procedure. First, the taxpayer must meet the applicable non-residency requirement. Here is the first caveat, for joint return filers, both spouses must meet the applicable non-residency requirement. Different rules apply to taxpayers who are U.S. citizens and U.S. permanent residents than to those taxpayers who do not fall into these categories.

The second requirement of the Streamlined Foreign Offshore Procedure is that the taxpayer violated the applicable U.S. tax requirements non-willfully – i.e. the taxpayer failed to report the income from a foreign financial asset and pay tax as required by U.S. law, and may have failed to file an FBAR (FinCEN Form 114, previously Form TD F 90-22.1) with respect to a foreign financial account, and such failures resulted from non-willful conduct.

The third requirement of the Streamlined Foreign Offshore Procedure is that the participating taxpayer is not subject to an IRS civil examination or an IRS criminal investigation.  Two important points here – it does not matter whether the examination relates to undisclosed foreign financial assets and it does not matter whether the examination involves any of the years subject to the voluntary disclosure.  In either case,  the taxpayer will not be eligible to use the Streamlined Foreign Offshore Procedure.

In reality, there is a more obscure fourth requirement that there is a valid Taxpayer Identification Number (TIN), but this issue can be solved by enclosing a completed ITIN application with the disclosure package under the Streamlined Foreign Offshore Procedure.

Filing Requirements Under the Streamlined Foreign Offshore Procedure

There are five main filing requirements that must be met in order to comply with the Streamlined Foreign Offshore Procedure.

The first filing requirement under the Streamlined Foreign Offshore Procedure is that, for each of the most recent 3 years for which the U.S. tax return due date (or properly applied for extended due date) has passed, the taxpayer must file delinquent or amended tax returns, together with all required information returns (e.g., Forms 3520, 5471, and 8938). Specific procedures must be followed in the preparation of these returns.

The second filing requirement under the Streamlined Foreign Offshore Procedure is that, for each of the most recent 6 years for which the FBAR due date has passed, the taxpayer must file delinquent FBARs according to the FBAR instructions and include a statement explaining that the FBARs are being filed as part of the Streamlined Filing Compliance Procedures. The taxpayer is required to file these delinquent FBARs electronically at FinCen. Detailed instructions must be followed to file these FBARs properly.

The third filing requirement under the Streamlined Foreign Offshore Procedure is the submission of the payment of all tax due as reflected on the tax returns and all applicable statutory interest with respect to each of the late payment amounts. The taxpayer’s TIN must be included on the check.

The fourth filing requirement under the Streamlined Foreign Offshore Procedure is the submission of any requests for relief for failure to timely elect deferral of income from certain retirement or savings plans where deferral is permitted by an applicable treaty.  Specific additional requirements apply to this request (especially, in the Canadian RRSP context).

Finally, the fifth filing requirement under the Streamlined Foreign Offshore Procedure is the most important part of this application – completed and signed “Certification by U.S. Person Residing Outside of the U.S.” (as of July 4, 2014, this is still in draft format but the final version should appear soon).

This is the most important legal document in the Streamlined Foreign Offshore Procedure. This is the statement that certifies that the taxpayer: (1) is eligible for the Streamlined Foreign Offshore Procedures; (2) that all required FBARs have now been properly filed; and (3) that the failure to file tax returns, report all income, pay all tax, and submit all required information returns, including FBARs, resulted from non-willful conduct. I cannot emphasize enough the importance of contacting your international tax attorney prior to submitting this document to the IRS.

The taxpayer must submit the original signed statement as well as attach copies of the statement to each tax return and information return being submitted through these procedures.

Streamlined Foreign Offshore Procedure: Some Considerations

While participation in the Streamlined Foreign Offshore Procedure may offer tremendous benefits to U.S. taxpayers who reside outside of the United States, it is important to understand that this may not be a simple process and all considerations should be taken into account. From the legal determination of whether the residency requirements are met to the very complicated legal decision on whether the “non-willful” determination applies, Streamlined Foreign Offshore Procedure involves significant legal analysis.

Based on my extensive experience, I believe that the great majority of the U.S. taxpayers who are currently not in compliance with the FBAR requirements are non-willful at heart. However, it is important to make sure that the legal case supports this finding – i.e. the facts of the case should support the determination of legal non-wilfulness.

I strongly advise against making such determination without the help of an international tax lawyer. You need an attorney who can look at your case objectively and with a “cool head”, and make such determination based on his experience and knowledge of law.

Finally, it is essential to understand that there is no guarantee that Streamlined Foreign Offshore Procedure will be available even in half a year in the same format.  The IRS reserved the power to change the rules regarding  Streamlined Foreign Offshore Procedure at any point.  This is why it is so important to act fast to make sure that you are able to take advantage of this unique opportunity.

Contact Sherayzen Law Office for Professional Help with Your Participation in the Streamlined Foreign Offshore Procedure

If you have undisclosed foreign accounts, contact Sherayzen Law Office for a professional analysis of your voluntary disclosure options. Our international tax law firm has helped hundreds of U.S. taxpayers worldwide and we can help you.

Contact Us to Schedule Your Confidential Consultation!

New 2014 OVDP Update: Introduction

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On June 18, 2014, the IRS made a major upgrade to its existing Offshore Voluntary Disclosure Program (“OVDP”).  The new OVDP will now be called 2014 OVDP.  While the changes to the OVDP rules are significant, the new rules regarding the Streamlined Procedure are maybe even more important.

Here is a summary of the 2014 changes to the 2012 OVDP:

2014 OVDP Update: New Miscellaneous 50% Penalty

The IRS added a new FAQ 7.2 which imposes a 50% offshore penalty on taxpayers who participate in the OVDP if: either a foreign financial institution at which the taxpayer has or had an account or a facilitator who helped the taxpayer establish or maintain an offshore arrangement has been publicly identified as being under investigation or as cooperating with a government investigation.

I believe that this new penalty is a direct consequence of the successful IRS and DOJ efforts to enforce FATCA overseas, particularly the Swiss Program for Banks.  Read this article for more information.

2014 OVDP Update: Elimination of the Reduced Penalty Structure Under FAQ 52 and 53

The reduced 12.5% and 5% penalty structure under former FAQs 52 and 53 has been eliminated due to the expansion of the Streamlined Filing Compliance Procedures. Rather, the new Streamline Offshore Procedure will take over. Special procedures apply to the taxpayer who already entered the OVDP program. I will provide more details in a later article.

2014 OVDP Update: Elimination of FAQ 17 and 18; Procedure is Still Available

This change is just the clarification of the already existing rules. While technically both rules are eliminated, the taxpayer can still use both rules.  Read this article with respect to the Delinquent FBAR Submission Procedures (replacing FAQ 17). I will provide the FAQ 18 details in a later article.

2014 OVDP Update: New Streamline Procedure Rules – US Residents are Included

It finally happened – taxpayers residing in the United States now have the option to enter the streamline procedures which were first announced on September 1, 2012. Other major changes include the elimination of the $1,500 tax threshold and elimination of the risk assessment process. I will provide more details in a later article.

2014 OVDP Update: Updated Streamlined Foreign Offshore Procedures

The IRS greatly expanded the eligibility requirements for the U.S. taxpayers who reside overseas.  Read this article on the Streamlined Foreign Offshore Procedures.

2014 OVDP Update: Major Changes to FAQ 31-41

These are the important changes that the 2014 OVDP Update made to the calculation of the asset base to which the offshore penalty will apply.

2014 OVDP Update: New Pre-Clearance Procedural Change under FAQ 23

Now, the IRS wants to know more information about you before granting the pre-clearance to apply for the OVDP. The 2014 OVDP Update greatly expands the information required to be submitted under FAQ 23. I will provide more details in a later article.

2014 OVDP Update: Offshore Penalty Must Be Paid With Submission of the OVDP Package

This is a major 2014 OVDP Update to FAQ 7. Now the Offshore Penalty must be paid with the submission of the OVDP Package. Again, I will provide more details in a later article.

Other 2014 OVDP Updates: Procedural Changes

The rest of the 2014 OVDP Update changes are more procedural in nature, but may have real substantive impact. Among them, the changes in the FAQ 25 (requiring the submission of account statements irrespective of the size of the disclosure), new OVDP Letter, new OVDP Letter Attachment, and other technical changes. Once again, I will provide more details in a later article.

Contact Sherayzen Law Office for a Professional Advice Regarding Your Offshore Voluntary Options

The new 2014 OVDP Update presents new opportunities mixed with new traps. It is important to make sure that you get expert advice regarding your Offshore Voluntary Disclosure. Contact the experienced tax law firm of Sherayzen Law Office. We have helped clients throughout the world and we can help you.

Contact Us to Schedule Your Confidential Consultation!