Offshore Voluntary Disclosure Program

Streamlined Disclosure Attorney Austin | FATCA OVDP Lawyer

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If you are a resident of Austin, Texas, and you have undisclosed foreign accounts, it is highly likely that you have searched for Streamlined Disclosure Attorney Austin. Let’s analyze this search term – Streamlined Disclosure Attorney Austin – to understand exactly what kind of an attorney fits this search.

Streamlined Disclosure Attorney Austin Search Applies to SDOP and SFOP

Let’s first look into the search for “Streamlined Disclosure”. In reality, this is a search for an attorney who offers legal help with respect to two types of Streamlined Filing Compliance Procedures: SDOP (Streamlined Domestic Offshore Procedures) and SFOP (Streamlined Foreign Offshore Procedures).

Streamlined Disclosure Attorney Austin Search Applies to Attorneys Who Offer Legal Services in Austin

Now, we need to analyze the geographical aspect of this search – i.e. Austin. What does it mean when one says that he is looking for an Austin attorney? Obviously, it applies to attorneys who reside in Austin and who offer streamlined disclosure services in Austin.

Furthermore, this search for a Streamlined Disclosure Attorney Austin also applies to attorneys who reside outside of Austin but offer their legal services to the residents of Austin. The reason for this conclusion lies in the federal nature of the Streamlined Filing Compliance Procedures – this is purely an IRS program and it has no local input from Austin (except the IRS office in the city). Since this is federal law, the actual residence of your Austin attorney does not matter.

What really matters is whether he offers legal services in Austin and whether he is competent in the matters concerning Streamlined Filing Compliance Procedures. This leads to the final part of the search for Streamlined Disclosure Attorney Austin – what kind of a specialized “attorney” are you searching for?

Streamlined Disclosure Attorney Austin Search Applies Only to International Tax Attorneys

By searching for Streamlined Disclosure Attorney Austin, you are really trying to find a very specific kind of an attorney – an international tax attorney. SFOP, SDOP, OVDP (now closed) and any other voluntary disclosure options are just IRS programs (though, important programs) within the framework of the much larger legal area of US international tax law practice.

Hence, a Streamlined Disclosure Attorney Austin search is an attempt to find an international tax attorney who not only understands Streamlined Filing Compliance Procedures, but who also possesses deep understanding of the US international tax system, its laws and regulations, and the place SDOP and SFOP occupies within this system. This understanding is crucial to an attorney’s ability to properly analyze the case and choose the best legal strategy for his client.

Sherayzen Law Office can be Your International Tax Attorney

Sherayzen Law Office, Ltd. is an international tax law firm that specializes in all types of offshore voluntary disclosures, including OVDP closed, SDOP and SFOP. Our professional tax team, led by attorney Eugene Sherayzen, is highly experienced in helping US clients around the globe with their US international tax issues, including offshore voluntary disclosure. This is why Sherayzen Law Office should be your top candidate when you search for Streamlined Disclosure Attorney Austin.

Contact Us Today to Schedule Your Confidential Consultation!

Offshore Voluntary Compliance Draws 100,000 Taxpayers and $10 Billion

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On October 21, 2016, the IRS announced that more than 100,000 US taxpayers participated in its Offshore Voluntary Compliance programs paying a total of more than $10 billion. Let’s explore these Offshore Voluntary Compliance numbers in more depth.

OVDP is Still the King of Offshore Voluntary Compliance but Its Impact is More Targeted

The IRS flagship Offshore Voluntary Disclosure Program (OVDP) is still the most profitable program for the IRS in terms of actual amount of dollars paid by the taxpayers. More than 55,800 taxpayers have come into the OVDP to resolve their past US tax noncompliance. They paid a total of more than $9.9 billion in taxes, interest and penalties since 2009.

These numbers are very impressive, but they also point to a more targeted influence of the OVDP compared to its past. In October of 2015, the IRS reported that more than 54,000 taxpayers entered into the OVDP and paid more than $8 billion. In other words, in the past year (November 2015 – October 2016), about 1,400 taxpayers entered into the OVDP and paid an additional $1.8 billion.

What this means is that the IRS was highly successful in properly addressing the basic original injustice of the OVDP program which was equally painful to small taxpayers and large taxpayers as well as non-willful taxpayers and willful taxpayers. The OVDP now draws a more limited number of people with substantial foreign assets who pay a higher penalty for their prior noncompliance.

The only danger that still remains is the issue of incompetent tax advisors who might be entering their wealthier clients into the OVDP irrespective of their willfulness or non-willfulness.

Streamlined Procedures is the Favorite Offshore Voluntary Compliance Option for “Smaller” Taxpayers

The IRS data also reflects the tremendous popularity of the Streamlined Procedures among the middle-class taxpayers with limited international asset exposure. According to the IRS, as of October of 2016, 48,000 taxpayers have made use of various Streamlined Procedures (SDOP and SFOP) to resolve their prior non-willful US international tax noncompliance. These taxpayers paid a total of about $450 million in taxes, interest and penalties.

In the prior report (October of 2015), the IRS stated that only 30,000 taxpayers used the Streamlined Procedures; 20,000 of them after June of 2014. This means that the Streamlined Procedures continues to attract the great majority of the taxpayers with smaller foreign assets.

Offshore Voluntary Compliance is One of he Key Strategies to Resolve Prior US International Tax Noncompliance

Undoubtedly, Offshore Voluntary Compliance options offer the key strategies to resolve prior US international tax noncompliance. The other options, such as Reasonable Cause Disclosure and Quiet Disclosure, are much more limited in scope and application. In fact, in the case of a Quiet Disclosure, this option may put the taxpayers into a position more dangerous than they were in before their quiet disclosure due to the increased danger of detection without any protection offered by the Offshore Voluntary Compliance options.

Doing nothing is also not a good option for noncompliant taxpayers, because of the increased risk that their prior noncompliance will be deemed willful once the IRS discovers their noncompliance.

The risk of the IRS detection of prior tax noncompliance is very high in today’s world. This detection may come not just from the IRS investigations of a specific taxpayer, the massive disclosures by the banks already being investigated by the IRS or even from the banks that provided information as a result of the Department of Justice’s Swiss Bank Program. Today, the primary danger of detection comes from the third-party reporting under the Foreign Account Tax Compliance Act (FATCA) and the network of inter-governmental agreements (IGAs) between the U.S. and partner jurisdictions.

Contact Sherayzen Law Office to Secure Professional Help With Your Offshore Voluntary Compliance Case

If you have undisclosed foreign accounts or any other foreign assets, contact Sherayzen Law Office as soon as possible for professional help with your voluntary disclosure.

Sherayzen Law Office is a leader in offshore voluntary disclosures which will help you with your entire case, including: the original determination of the best Offshore Voluntary Compliance option; the implementation of this option, including the preparation of all relevant legal documents and tax forms; the filing of the voluntary disclosure package; and the defense of your voluntary disclosure positions against the IRS.

We have helped hundreds of US taxpayers around the world to bring their US tax affairs into full compliance in the least painful and most beneficial way, and we can help you!

Contact Us Today to Schedule Your Confidential Initial Consultation!

IRS OVDPs Comparison For the Years 2009-2016

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Between the years 2009-2016, the IRS created three different Offshore Voluntary Disclosure Programs (IRS OVDPs) for U.S. taxpayers to voluntarily disclose their undeclared foreign accounts: 2009 Offshore Voluntary Disclosure Program (2009 OVDP), 2011 Offshore Voluntary Disclosure Initiative (2011 OVDI), and 2012 Offshore Voluntary Disclosure Program (2012 OVDP). 2012 OVDP was subsequently profoundly modified in the year 2014 in what, in essence, became the new 2014 Offshore Voluntary Disclosure Program (2014 OVDP). In this article, I will do a comparative analysis of the different IRS OVDPs based on five factors: application period, disclosure period, principal miscellaneous offshore penalty, reduced offshore penalty options and other penalties.

Application Period of the IRS OVDPs

Application period means the period of time during which the IRS must receive the application from the taxpayer in order for the taxpayer to be considered for acceptance into a voluntary disclosure program.

All of the IRS OVDPs until 2012 had a clearly defined application period. The 2009 OVDP application period ran from March 23, 2009 through October 15, 2009. The 2011 OVDI application period was from February 8, 2011 to September 9, 2011 (actually, the original period was supposed to end on August 30, 2011, but the IRS extended the deadline by 9 days during to an East Coast hurricane).

Since January 9, 2012, however, the 2012 OVDP and its 2014 version have operated without a set closing date. Instead, the IRS has reserved the right to end the 2014 OVDP at any time. While this is always a possibility, it is not likely that the IRS will make such a drastic decision for various administrative reasons as well as due to the fact that OVDP is very profitable.

Disclosure Period of the IRS OVDPs

The disclosure period means the number of tax years or specific tax years which are covered by (i.e. included in) the voluntary disclosure. The disclosure period determines the years for which FBARs and amended tax returns need to be submitted as well as the years involved in the calculation of the Offshore Penalty.

The disclosure period varied greatly among the IRS OVDPs. The 2009 OVDP disclosure period included the six-year period between 2003 and 2008 (which is equivalent to the extended statute of limitations). The 2011 OVDI expanded the disclosure period to eight years to cover the years 2003-2010.

The 2012 OVDP differed from the prior programs, because the program did not have a fixed closing date and, hence, no fixed voluntary disclosure years. Instead, the disclosure period for the 2012 OVDP and its 2014 version apply to the most recent eight years for which the due date has already passed – i.e. the last closed tax year plus the previous seven tax years.

This flexibility on the part of the 2012 and 2014 IRS OVDPs may allow for a certain degree of strategy planning where a decision has to be made with respect to which is the eighth year that is more beneficial to be included. The OVDP application is then submitted in accordance with this strategy.

Principal Miscellaneous Offshore Penalty (the Default Penalty of IRS OVDPs)

All of the IRS OVDPs contain the default or “principle” Miscellaneous Offshore Penalty (the “OVDP Penalty”). The OVDP Penalty is calculated based on the assets subject to penalty (so-called “OVDP penalty base”) as a percentage of these assets.

This percentage of the OVDP Penalty has been steadily going up with each program. The 2009 OVDP Penalty rate was 20%; it grew to 25% for 2011 OVDI and 27.5% to 2012 OVDP.

The 2014 version of the 2012 OVDP introduced a dual Principal OVDP Penalty. It kept the 27.5% penalty rate as a default rate, but it introduced a 50% penalty rate for taxpayers with an account in a foreign financial institution (“FFI”) that had or has been publicly identified by the DOJ as being under investigation or as an entity cooperating with a DOJ investigation. The same 50% penalty rate also applied to facilitators who helped the taxpayer establish or maintain an offshore arrangement.

All such FFIs and facilitators are listed separately by the IRS on the OVDP website.

Reduced Offshore Penalty Options under IRS OVDPs

In addition to the Principal OVDP Penalty, almost all IRS OVDPs (except the 2014 OVDP) contained various Reduced OVDP Penalty options.

Already the 2009 OVDP introduced a reduction to a 5% penalty for so-called “passive account holders”. However, the 2009 OVDP’s definition of the 5% penalty category was fairly primitive and this was the only option for a reduced penalty.

The 2011 OVDI was really the program that perfected the concept of the Reduced OVDP Penalty. It contained and expanded the 5% penalty option defining the “passive account holders” as the taxpayers who: (a) did not open the account or cause the account to be opened, (b) exercised minimal, infrequent contact with respect to the account, (c) did not withdraw more than $1,000 from the account in any year covered by the voluntary disclosure, except in the case of a withdrawal closing the account and transferring the funds to an account in the U.S., and (d) could establish that all applicable U.S. taxes had been paid on the funds deposited to the account (i.e., where only account earnings escaped U.S. taxation).

The 5% penalty option also applied to US citizens who resided overseas and did not know that they were US citizens until the 2011 OVDI.

Furthermore, the 2011 OVDI introduced a new Reduced OVDP Penalty of 12.5% available to taxpayers with the highest aggregate account balance (which was really expanded to more than just bank accounts and included various assets) in each of the eight years covered by the OVDI less than $75,000.

The 2012 OVDP was the last program so far to adopt the Reduced OVDP Penalty structure. It borrowed it completely unchanged from the 2011 OVDI with both 5% and 12.5% options available.

In 2014, the OVDP was modified to remove all Reduced OVDP Penalty options. The reason for such a drastic change was the introduction of the Streamlined Compliance Options (both SDOP and SFOP) which operated under the reduced (in the case of SFOP, reduced to zero) penalty structure for non-willful taxpayers.

Indeed, the non-willful taxpayers won more than anyone else from the changes introduced by 2014 OVDP. However, the willful taxpayers with small bank accounts were the biggest losers from these changes. The 2014 OVDP also marked the rise of the “willfulness vs. non-willfulness” concept to the dominant position in the world of offshore voluntary disclosures.

Other Penalties under the IRS OVDPs

With respect to other penalties (such as failure to file, failure to pay and accuracy related penalties), all of the IRS OVDPs were similar in their structure.

Contact Sherayzen Law Office for Help with Your Voluntary Disclosure of Offshore Accounts and Other Foreign Assets

If you have undisclosed accounts or other assets overseas, you are in grave danger of an IRS discovery and the imposition of draconian noncompliance penalties. This is why you need professional help to evaluate your voluntary disclosure options, including the 2014 OVDP and the Streamlined Compliance Procedures.

The highly experienced team of Sherayzen Law Office Ltd. can help you with your entire voluntary disclosure, including the initial evaluation of your case and your penalty exposure, identification of your voluntary disclosure options, preparation of the chosen voluntary disclosure option including the preparation of all legal and tax documents, and the final negotiations with the IRS.

We have helped hundreds of US taxpayers worldwide and we can help you. Contact Us Today to Schedule Your Confidential Consultation!

Secret Bank Accounts in Israel and Switzerland Result in a Guilty Plea

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The earlier IRS and DOJ (U.S. Department of Justice) investigations of secret bank accounts in Israel and Switzerland continue to produce new guilty pleas. On September 28, 2016, Mr. Markus Hager, a New York City resident, pleaded guilty to tax evasion for the tax years 2003-2005 and 2007-2010 with respect to his secret bank accounts in Israel and Switzerland.

Facts of the Case: Secret Bank Accounts in Israel and Switzerland

The facts of the Hager case are somewhat typical, but contain an exhilarating story of Mr. Hager’s attempts to conceal his ownership of the account – the fact that the IRS and the DOJ were able to uncover the entire history of these transfers of his funds under different names is impressive.

According to information presented in court, between 1987 through 2011, Mr. Hager utilized various secret bank accounts in Israel and Switzerland to hide his foreign funds and foreign income from the IRS. In order to do it, he opened a sham BVI (British Virgin Islands) entity which owned three accounts (two of them were numbered accounts) at UBS. It appears that, until 2008, Mr. Hager also owned some of his UBS accounts personally. By the end of 2004, the value of his undeclared UBS accounts exceeded $7.3 million.

With the IRS victory over UBS in 2008, Mr. Hager closed his UBS accounts and transferred all of his assets to a new opened account at Clariden Leu (which was already controlled at that time mostly by Credit Suisse; in 2012, the bank was integrated into the Credit Suisse corporate structure); the account was held in the name of his BVI entity.

Shortly thereafter, Mr. Hager closed the account at Clariden Leu and transferred the assets to a newly opened account held in the name of the BVI entity at a different Swiss bank. Mr. Hager caused that Swiss bank to falsely record Hager’s Belgian cousin as the owner of the assets on the account. Approximately six months later, he closed this account at the Swiss bank and transferred the assets to an account at a bank in Israel that Mr. Hager caused to be opened in the name of yet another Belgian cousin.

Between 2005 to 2011, Hager also controlled an undeclared bank account at Bank Leumi in Israel, which he falsely held under the name of a relative who was not a U.S. person and who resided outside the United States. In February of 2010, after obtaining an Israeli Identity Card, Hager opened an account in his own name at Bank Leumi in Israel but falsely reported that he lived in the United Kingdom and signed a document, under the penalty of perjury, declaring that he was not a U.S. citizen.

According to the information filed, Mr. Hager repatriated some of the funds from his secret bank accounts in Israel and Switzerland by having his attorney draft a sham loan agreement between himself and the BVI entity. The funds were wired from some of his undeclared bank accounts in Israel and Switzerland into the attorney’s escrow account.

During the relevant years, Mr. Hager filed false federal and New York State income tax returns on which he failed to report the income from his bank accounts in Israel and Switzerland and failed to pay tax on that income. It appears that Mr. Hager evaded approximately $652,580 in federal taxes for tax years 2003 through 2005 and 2007 through 2010. Hager also failed to file his FBAR even though an accounting firm had informed Hager of his obligation to do so and advised him of the civil and criminal penalties he could suffer for the failure to do so.

Sentencing for Failure to Disclose Assets and Income from Secret Bank Accounts in Israel and Switzerland

Sentencing has been set for January 4, 2017. Hager faces a statutory maximum sentence of five years in prison, as well as a term of supervised release and monetary penalties. According to the plea agreement, Hager agreed to pay restitution to the IRS. It is not clear if the FBAR penalty has been resolved by the plea.

Secret Bank Accounts in Israel and Switzerland: Lessons from the Hager Case

The Hager Case contains a full range of facts that lead to a criminal prosecution by the DOJ: the use of a sham foreign corporation in a tax shelter, the conscious and intentional effort to conceal the ownership of the funds by closing and opening bank accounts under different names, the failure to report the ownership of secret bank accounts in Israel and Switzerland even after Mr. Hager was advised by his accounting firms about the existence of the FBAR and its penalties, the failure to report the income from accounts, the filing of false tax returns and the repatriation of funds through a sham loan agreement and using his attorney’s escrow account. All of these items are a checklist of things that one should not do in order to avoid a DOJ criminal prosecution.

One interesting aspect of this case is the number of years for which Mr. Hager was charged with tax evasion. Apparently his especially egregious conduct had earned a total of seven years instead of the usual five years of counts of tax evasion. It is also interesting that the year 2006 was skipped in the plea; it is not clear from the plea why this was the case. My supposition is that the omission of the tax year 2006 was related to the statute of limitations concerns.

Contact Sherayzen Law Office for Professional Help with Disclosure of Your Bank accounts in Israel and Switzerland

If you have undisclosed bank account in Israel, Switzerland or any other country, please contact Sherayzen Law Office, Ltd. for help as soon as possible. Attorney Eugene Sherayzen and his highly-knowledgeable team of tax professionals have helped hundreds of U.S. taxpayers around the world to bring their tax affairs into compliance. You can also benefit from their knowledge, experience, creativity and devotion to their clients’ cases by scheduling a Confidential Consultation today!