IRS Letter 5935 & Form 15023

IRS Letter 5935 & Form 15023

IRS Letter 5935 & Form 15023: Offshore Compliance Status Response. Over the past few years the IRS has been aggressively enforcing foreign accounts compliance. As a result, prudent taxpayers with unreported foreign assets and unreported offshore income may consider voluntary disclosure of offshore accounts, investments, assets, and income. If a person is rejected or does not complete the process, the IRS may remind them about their compliance requirements

IRS Letter 5935

The IRS Letter 5935 is a reminder that you have an offshore compliance requirement you may not have kept up with,

There are four (4) categories:

Paragraph A (Preclearance Rejection)

Our records show you made a preclearance request to IRS Criminal Investigation for an Offshore Voluntary Disclosure Program/Initiative (OVDP) or submitted a voluntary disclosure letter to IRS Criminal Investigation under the terms of an OVDP. After contacting IRS Criminal Investigation, you received a letter from the IRS stating you weren’t eligible to make a voluntary disclosure or that it was declined. S

Paragraph B (Preclearance Withdrawal to Streamlined)

Our records show you made a preclearance request to IRS Criminal Investigation for an Offshore Voluntary Disclosure Program/Initiative (OVDP) or submitted a voluntary disclosure letter to IRS Criminal Investigation under the terms of an OVDP. After contacting IRS Criminal Investigation, you withdrew your preclearance request or your voluntary disclosure letter and communicated an intention to participate in the Streamlined Filing Compliance Procedures

Paragraph C (Incomplete Disclosure)

Our records show you made a preclearance request to IRS Criminal Investigation for an Offshore Voluntary Disclosure Program/Initiative (OVDP) or submitted a voluntary disclosure letter to IRS Criminal Investigation under the terms of an OVDP. After contacting IRS Criminal Investigation, you failed to take necessary steps to complete your voluntary disclosure under the terms of an OVDP

*There is 4th catch-all category.

What Are Your Offshore Options?

When the IRS send you this letter, the IRS gives you two options

Option #1 (Streamlined Filing Compliance Procedures)

You can make a submission under the Streamlined Filing Compliance Procedures if you meet the eligibility requirements. See the “Streamlined Filing Compliance Procedures” at www.irs.gov for more information about eligibility criteria and how to make a submission. If you are eligible to use this option, you must write “RESPONSE TO LETTER 5935” in red across the top of your Form 14653, Certification by U.S. Person Residing Outside of the United States for Streamlined Foreign Offshore Procedures, or Form 14654, Certification by U.S. Person Residing in the United States for Streamlined Domestic Offshore Procedures.

Option #2 (Quasi-Voluntary Disclosure)

If you’re not eligible or you choose not to use Option 1, submit all required tax returns, information returns, and related filings to the address on the enclosed Form 15023, Offshore Compliance Status Response . (NOTE: FinCEN Form 114, Report of Foreign Bank and Financial Accounts (a.k.a. FBAR), must be filed electronically with FinCEN; additional information can be found at www.FinCEN.gov). Submissions under this option are subject to all applicable penalties unless you establish that your noncompliance was due to reasonable cause.

If you want to present reasonable cause, provide a statement explaining all the facts and circumstances. Returns submitted under this option won’t be subject to IRS audit automatically, but may be selected for audit under the existing audit selection processes applicable to any U.S. tax return and can also be checked against information received from banks, financial advisors, and other sources for accuracy.

Form 15023

The IRS provides taxpayers who receive a notice under IRS form 5935 to submit one of the option above.

Alternative #1: Streamlined

You may make a submission under the Streamlined Filing Compliance Procedures if you meet the eligibility requirements. See the “Streamlined Filing Compliance Procedures” at www.irs.gov  for more information about eligibility criteria and how to make a submission.If you are eligible to use this option, you must write “RESPONSE TO LETTER 5935” in red across the top of your Form 14653, Certification by U.S. Person Residing Outside of the United States for Streamlined Foreign Offshore Procedures, or Form 14654, Certification by U.S. Person Residing in the United States for Streamlined Domestic Offshore Procedures

Alternative #2: Voluntary Disclosure or Reasonable Cause

If you are not eligible or choose not to use Option 1, submit all required tax returns, information returns, and related filings to the address on the enclosed Form 15023, Offshore Compliance Status Response. (NOTE: FinCEN Form 114, Report of Foreign Bank and Financial Accounts (a.k.a. FBAR), must be filed electronically with FinCEN, additional information can be found at www.FinCEN.gov).

Submissions under this option will be subject to all applicable penalties unless you establish that your noncompliance was due to reasonable cause. If you want to present reasonable cause, provide a statement explaining all the facts and circumstances. Returns submitted under this option will not be subject to IRS audit automatically, but they may be selected for audit under the existing audit selection processes applicable to any U. S. tax return and can also be checked against information received from banks, financial advisors, and other sources for accuracy

Option #3 If you believe that you’re fully compliant with all U.S. reporting requirements relating to foreign income, foreign entities, and foreign financial accounts, then provide a narrative statement of facts explaining your position. You must provide a complete history of any previously unreported foreign income, foreign

Golding & Golding (Board-Certified Tax Law Specialist)

We specialize exclusively in international tax, and specifically IRS offshore disclosure.

We have successfully represented clients in more than 1,000 streamlined and voluntary offshore disclosure submissions nationwide and in over 70-different countries. We have represented thousands of individuals and businesses with international tax problems.

We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe.

We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants and Financial Professionals worldwide.

Less than 1% of Tax Attorneys Nationwide Are Certified Specialists

Sean M. Golding is one of less than 350 Attorneys (out of more than 200,000 practicing California Attorneys) to earn the Certified Tax Law Specialist credential. The credential is awarded to less than 1% of Attorneys.

Recent Golding & Golding Case Highlights

  • We represented a client in an 8-figure disclosure that spanned 7 countries.
  • We represented a high-net-worth client to facilitate a complex expatriation with offshore disclosure.
  • We represented an overseas family with bringing multiple businesses & personal investments into U.S. tax and offshore compliance.
  • We took over a case from a small firm that unsuccessfully submitted multiple clients to IRS Offshore Disclosure.
  • We successfully completed several recent disclosures for clients with assets ranging from $50,000 – $7,000,000+.
How to Hire Experienced Streamlined Counsel?

How to Hire Experienced Streamlined Counsel?

How to Hire Experienced Offshore Counsel?

Generally, experienced attorneys in this field will have the following credentials/experience:

  • Board Certified Tax Law Specialist credential
  • Master’s of Tax Law (LL.M.)
  • Dually Licensed as an EA (Enrolled Agent) or CPA
  • 20-years experience as a practicing attorney
  • Extensive litigation, high-stakes audit and trial experience

Beware of inexperienced counsel trying to mislead you about the Streamlined Procedures or Reasonable Cause.

Interested in Learning More about Golding & Golding?

No matter where in the world you reside, our international tax team can get you IRS offshore compliant. 

Golding & Golding specializes in FBAR and FATCA. Contact our firm today for assistance with getting compliant.

 

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