Pre-IRS Disclosure Offshore/Foreign Penalties are on the Rise
A few months back, the Internal Revenue Service (IRS) made good on its promise to discontinue the Offshore Voluntary Disclosure Program (OVDP).
Even though the IRS has ended the OVDP program there are still other voluntary disclosure/amnesty programs that a person can use in order to get into IRS offshore (and domestic) compliance.
Why is this important? Because, over the last 6-to-12 months we have seen a significant rise in the number clients approaching us, who have already been penalized on their undisclosed offshore foreign accounts, assets, income and investments, before they have a chance to disclose.
At Golding & Golding, we refer to this as “Forced IRS Disclosures.”
- 1 Forced (Involuntary) IRS Disclosure
- 2 The IRS has More Access to Your Information Than You Think
- 3 Why Does the IRS Focus on Offshore and Foreign Money?
- 4 Pre-IRS Disclosure Penalty Example
- 5 What if I am Out of IRS Compliance?
- 6 We Specialize in Safely Disclosing Foreign Money
- 7 Be Careful of the IRS
- 8 Golding & Golding, A PLC
Forced (Involuntary) IRS Disclosure
With an IRS forced disclosure, a person is “involuntarily” brought out of the shadows and into the crosshairs of the IRS.
In our practice, which is dedicated exclusively IRS Offshore/vVoluntary disclosure, a forced disclose typically results from:
- Eggshell Audit/Reverse Eggshell Audit
- IRS Special Investigation
- Feuding Businesses or Families
The IRS has More Access to Your Information Than You Think
With the introduction of FATCA, and renewed interest in FBAR, the IRS literally has hundreds of thousands of foreign financial institutions feeding it gobbles of information about U.S. account holders. When coupled with the information the IRS receives from non-prosecution agreements, whistleblower cases, and quiet disclosures gone awry – U.S. taxpayers with foreign and offshore money are getting the brunt of it.
Why Does the IRS Focus on Offshore and Foreign Money?
It’s a numbers game. The size of the penalties the IRS can issue are monstrous relative to the violation and evidence needed to substantiate the penalties.
Pre-IRS Disclosure Penalty Example
Here is an Example: Michelle has $3 million in Peru. Michelle is a legal-permanent resident/green card holder and had these Peruvian accounts before she ever came to the United States. At first, she was unaware of the reporting form. A few years after she began filing, she learned about FBAR, FATCA, etc.
As a result of all the fear mongering, she buried her head in the sand and was too scared to come into compliance. Unfortunately, after she updated her foreign financial institution about her U.S status, the institution reported her to the IRS. The IRS got wind of her situation before she had a chance to disclose — and initiated an examination.
The IRS determined her actions were willful — which may result in an annual 50% penalty on the maximum balance (or $100,000, whichever is greater) up 100% value of the account in a multi-year audit situation.
What if I am Out of IRS Compliance?
When you have not met your prior year IRS foreign bank account compliance obligations, your best options are either the traditional IRS Voluntary Disclosure Program, or one of the Streamlined Offshore Disclosure Programs.
We Specialize in Safely Disclosing Foreign Money
We have successfully handled a diverse range of IRS Voluntary Disclosure and International Tax Investigation/Examination cases involving FBAR, FATCA, and high-stakes matters for clients around the globe (In over 65 countries!)
Whether it is a simple or complex case, safely getting clients into compliance is our passion, and we take it very seriously.
Be Careful of the IRS
With the introduction and enforcement of FATCA for both Civil and Criminal Penalties, renewed interest in the IRS issuing FBAR Penalties, crackdown on Cryptocurrency (and IRS joining J5), the termination of OVDP, and recent foreign bank settlements with the IRS…there are not many places left to hide.
Golding & Golding, A PLC
We have successfully represented clients in more than 1000 streamlined and voluntary disclosure submissions nationwide, and in over 70-different countries.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe.