Hello and welcome to Sherayzen Law Office Video blog. My name is Eugene Sherayzen and I’m an international tax attorney and owner of Sherayzen Law Office, Ltd.
Today, I’m continuing my series of blogs from Chicago, Illinois in the United States and I’m actually in Grant Park, the park where Obama gave his famous speech. It is interesting because it was precisely under the Obama administration that FATCA was passed into law. So, this park has a very special significance for me as an international tax attorney because it was precisely FATCA the Foreign Account Tax Compliance Act, that completely changed the entire landscape of international tax compliance.
Why? Well, because FATCA provided that third party verification that the IRS needed to find out about people who were non-compliant with their FBARs as well as foreign income reporting. It was FATCA that forced foreign banks to affectively report on their US owners of foreign bank accounts. It was FATCA that gave the teeth that the IRS needed together with the US Department of Justice to enforce US international tax laws concerning foreign income and foreign account reporting in Switzerland. In fact, we can say that FATCA was the principle reason why there wasn’t Swiss bank tax compliance in 2013 and also ended Swiss Bank Secrecy as we know it.
In a future blog, I will continue talking about US international tax issues that concern Chicago and the people who live here.
Thank you for watching, until the next time.
http://sherayzenlaw.com/wp-content/uploads/2018/01/sherlawltd_logo.png00adminhttp://sherayzenlaw.com/wp-content/uploads/2018/01/sherlawltd_logo.pngadmin2022-04-28 19:29:072022-04-28 20:00:04FATCA and The End of Swiss Bank Secrecy | Chicago International Tax Lawyer & Attorney
What I would like to do in this blog is discuss Streamlined Domestic Offshore Procedures. What is it and why it is important. First of all Streamlined Domestic Offshore Procedures is an Offshore Voluntary Disclosure option. In the previous video, I discussed what an Offshore Voluntary Disclosure is. Briefly, let’s restate that an Offshore Voluntary Disclosure is basically an option that the IRS provided to US Taxpayers; I should say several options, that the IRS provided to US Taxpayers in order to come forward and resolve their prior non-compliance with US International Tax Laws in exchange for a more lenient treatment: a lower penalty, immunity from criminal prosecution, etc.
Where does Streamlined Domestic Offshore Procedures fit into this picture? Streamlined Domestic Offshore Procedures or SDOP is reserved for non-willful taxpayers. People who, for example, did not know about the fact that FBAR existed or that they didn’t know they needed to report their foreign income or there was something that happened that prevented them from learning about it or they were just negligent; not reckless, but just negligent in their compliance. That is they did not consult an attorney in time or there was something else or a another circumstance in their life that prevented them from complying with US International Tax Laws. For these taxpayers who are non-willful, the IRS gave this option and it’s a valuable option; it’s a good option.
First of all you cannot file a late return pursuant to Streamlined Domestic Offshore Procedures; you can only amend an already filed return. It can be a problem; especially for taxpayers, who for one reason or another couldn’t file all of their US tax returns on time. Second, you have to certify under the penalty of perjury, that you were in fact, non-willful. This subject is very sensitive and very important. Here, you must really talk to an attorney to figure out: are you non-willful according to the US legal standards or are you willful with respect to your noncompliance? There are a lot of facts and circumstances that go into that determination. You really need to talk to an attorney; I cannot stress this enough before you strive to do a voluntary disclosure. The IRS has expressly stated that they will go after the cases where they think people are abusing Streamlined Domestic Offshore Procedures because in reality they were not non-willful but they were willful.
Let’s begin with the fact that, US taxpayers must report their foreign income and foreign assets to the IRS. If they fail to do that, they face potentially multiple and very large IRS penalties. The IRS doesn’t have the resources to audit every single US taxpayer; so, what they prefer to do is to allow US taxpayers to voluntarily resolve their prior US international tax non-compliance.
How exactly they do that depends on the facts and circumstances of each person. The IRS created these Offshore Voluntary Disclosure options which are basically programs for US taxpayers to voluntarily come forward, disclose their prior non-compliance with US international tax laws in exchange for a more lenient tax treatment. How lenient? It depends on the facts and circumstances and it depends on the voluntary disclosure option that you are using.