This is a reminder that the 2011 Offshore Voluntary Disclosure Initiative (OVDI) will expire on August 31, 2011. The 2011 OVDI was announced on February 8, 2011, and follows the 2009 Offshore Disclosure Program (OVDP). The 2011 initiative offers clear benefits to certain taxpayers who currently face far higher penalties along with potential criminal charges if their hidden offshore assets are detected by the IRS. Whether your case falls within this category of taxpayers should be determined by an international tax attorney who is familiar with the FBAR penalty structure.
Those taxpayers who have not disclosed their foreign accounts and income are unlikely to sustain this for much longer without violating additional tax reporting requirements. This is because the new foreign account reporting requirements are being phased in over the next few years, making it ever tougher to hide income offshore. Moreover, the IRS continues its focus on banks and bankers worldwide that assist U.S. taxpayers with hiding assets overseas, putting the pressure on the foreign financial institutions to report noncompliant taxpayers.
The 2011 OVDI program is designed to bring taxpayers back into compliance with the U.S. tax system. Under the initiative, there is a new penalty framework that requires individuals to pay a penalty of 25 percent of the amount in the foreign bank accounts in the year with the highest aggregate account balance covering the 2003 to 2010 time period. Some taxpayers will be eligible for 5 or 12.5 percent penalties in certain narrow circumstances. It is likely that your foreign assets, such as rental real estate the income from which has not been disclosed or which was purchased with illegal funds, will be included in the 25-percent penalty calculation.
Participants also must pay back-taxes and interest for up to eight years as well as paying accuracy-related and/or delinquency penalties. All original and amended tax returns must be filed by the deadline.
If a taxpayer is interested in going through the 2011 OVDI, he must hurry. He has to be accepted into the program before he can take advantage of it. Therefore, these last few weeks left before the August 31, 2011 deadline is the last opportunity to apply to the program.
Contact Sherayzen Law Office NOW to Discuss Your Voluntary Disclosure Case
If you have undisclosed foreign financial accounts and have not reported your foreign income to the IRS, call Sherayzen Law Office immediately to discuss your case. Our experienced voluntary disclosure tax firm will determine whether the 2011 OVDI program fits well your particular case, discuss with you the alternatives, and guide you through this highly complex voluntary disclosure process.
Remember, it does not matter whether you are located in another state or outside of the United States – we can help!