IRS Offshore Amnesty
IRS Offshore Amnesty: When a U.S. person taxpayer learns that they are out of compliance with the IRS for offshore money, they understandably get concerned. Luckily, the IRS has developed various offshore amnesty programs to assist taxpayers with getting compliant. The term Offshore Amnesty Program is the general phrase that refers to the general concept of tax amnesty for unreported accounts, assets, income, and investments.
The goal of the offshore amnesty is to help U.S. persons report previously undisclosed offshore accounts, assets, investments and income to the IRS. In recent years, the Internal Revenue Service has introduced the domestic streamlined (U.S. residents) and foreign streamlined (foreign residents).
The IRS has significantly increased enforcement of offshore reporting.
By entering one of the IRS offshore amnesty programs, taxpayers can avoid FBAR penalties and other offshore penalties.
While the IRS has also closed OVDP (2018), they also expanded the traditional voluntary disclosure program. Some taxpayers may qualify for the delinquency procedures — which generally results in a penalty waiver.
We are here to help you get into offshore compliance.
Should I Make a Disclose to IRS?
The decision to make an offshore disclosure is a big decision. We have worked with thousands of clients, and submitted more than 1000 IRS Offshore Amnesty Disclosures to the IRS.
There are several benefits to making a disclosure, which include:
- Reduced Offshore Penalties
- Peace of Mind
- A Clean record with the IRS
- Avoiding Quiet or Silent Disclosures
Each and every client would tell you they were better off (mentally and emotionally) after successfully completing the different programs.
5 Common Questions
Here are some of the more common questions (and answers) about offshore amnesty:
Is There an IRS Amnesty Program?
Yes. There are multiple IRS Amnesty Programs, depending on the facts and circumstances of your situation – you may qualify for one or more programs.
What is the Offshore Voluntary Disclosure Program (OVDP)?
OVDP was a program used to disclose offshore (and domestic) assets, income, accounts and investments. OVDP has been discontinued, but the IRS did update and expand the “traditional” voluntary disclosure program.
What are the Streamlined Filing Compliance Procedures (SFCP)?
The Streamlined Filing Compliance Procedures is a form of IRS Amnesty used to assist taxpayers who were non-willful. SFCP can be broken down further into: Streamlined Domestic and Streamlined Foreign.
What is a Quiet Disclosure?
A Quiet Disclosure is an illegal submission to the IRS, outside of the accepted Amnesty Programs — in which a person either begins to “file forward,” or “mass file” previous years returns and FBARs.
If the IRS catches you, it may lead to significant fines, penalties, and even a criminal investigation.
What Happens if You File the FBAR Late?
If you file an FBAR Late, but use one of the approved Offshore Amnesty programs, you can reduce, minimize, or even avoid FBAR Penalties. If you do not use one of the programs, but instead file a quiet disclosure (and get caught), the IRS has let it be known that they will seek to enforce all penalties.
5 Benefits of Making an Offshore Disclosure
There are many benefits to making an IRS offshore disclosure for issues involving offshore (and domestic) non-compliance. Here are a few of the key benefitsL
Reduce the Risk of Criminal Investigation
For some highly risk averse non-willful clients, the fear and concern of an audit is too much to bear — and the client prefers to make a voluntary disclosure instead of a streamlined disclosure.
Unlike the Streamlined Program, with the traditional voluntary disclosure program, you will almost always avoid an IRS Audit, Examination or Investigation.
When an attorney tells you that IRS Offshore Amnesty is only for people who are “Willful” or need “Criminal Protection” – then they do not understand how offshore amnesty works (despite what they may market on their website).
It doesn’t matter if they “used to work for the IRS,” or are full of gray hair (or no hair) —
IRS Enforcement has Intensified
The IRS is limited on resources, and therefore has to allocate their resources accordingly. The IRS has increased enforcement of offshore penalties (and unlike other penalties, the penalties for offshore accounts & assets can be severe).
Some of the main enforcement initiatives, include:
- Offshore Compliance
- Domestic Tax Fraud
- Employment Tax
By entering the IRS Voluntary Disclosure Program, you can minimize any potential damaging issues in the future – which can impact your business and career prospects and nearly eliminate any chance of future examination (on these issues).
IRS Penalties Continue to Increase
In recent years, the IRS has increased penalties. Currently, under the new version (which is an updated “older version”), the baseline penalties have changed (and may possibly be negotiated).
- 50% Maximum Balance on accounts
- 75% on Highest Years’ tax liability
- Possible Waiver on Informational Returns
You Don’t Have to Guess at Willful vs. Non-Willful
You are non-willful if you were unaware of any reporting requirement and/or relied upon a CPA, Enrolled Agent, Accountant, or Tax Preparer who was unaware of any reporting requirement – but recent changes in the law may limit the ability to rely upon an “uninformed CPA.”
You are willful if you knew or should have known you were supposed to report and disclose your foreign income and assets but choose not to.
Willfulness does not require intent — it includes the lower standards of Reckless Disregard or “Willful” Blindness.
It is crucial that if you were willful, you do not submit to the Streamlined Program — even if some unethical, or junior attorneys try to get you do it anyway.
Avoid a Quiet Disclosure
While the penalties associated with some options (IRM Voluntary Disclosure aka Post-OVDP) are worse than other options (Streamlined or Reasonable Cause) – you should never quietly begin filing going forward (aka Filing Forward or Silent Disclosure).
That is always the worst option of all.
Filing forward is when you begin reporting your offshore and foreign accounts for prior years without first getting into offshore compliance using proper methods.
If you just begin to report your foreign accounts “going forward” instead of going back and making an Offshore Amnesty submission – you have committed a tax crime.
How is that a Crime?
Because you have intentionally omitted key information (prior year account information) instead of making an amnesty/voluntary disclosure. As a result, you have made false representations (via intentional omissions), which is a crime.
These crimes may include (but not limited to):
- Tax Fraud
- Tax Evasion
- Civil or Criminal Willfulness
- FBAR Crime
- FATCA Crime
Golding & Golding: About Our International Tax Law Firm
Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe. Our attorneys have worked with thousands of clients on offshore disclosure matters, including FATCA & FBAR.
Each case is led by a Board-Certified Tax Law Specialist with 20 years of experience, and the entire matter (tax and legal) is handled by our team, in-house.
*Please beware of copycat tax and law firms misleading the public about their credentials and experience.
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 Offshore Counsel?
Generally, experienced attorneys in this field will have the following credentials/experience:
- 20-years experience as a practicing attorney
- Extensive litigation, high-stakes audit and trial experience
- Board Certified Tax Law Specialist credential
- Master’s of Tax Law (LL.M.)
- Dually Licensed as an EA (Enrolled Agent) or CPA
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.