Streamlined Disclosure – 5 Common Questions About Filing
Making a Streamlined Disclosure to the IRS is a great alternative (for some clients) to traditional Voluntary Disclosure.
When it comes to reporting foreign accounts, there is a lot to know. But, there are always a few common questions that many clients ask — all good questions.
The Streamlined Program is always evolving.
Here are five (5) common questions we receive daily on Streamlined Disclosure related issues:
1. Am I Willful or Non-willful?
This has to be the most common question we receive, and the answer is relatively simple. If you knew you were required to report your foreign income or report your foreign accounts (even if you had never heard of FATCA but knowingly, intentionally or deliberately did not file IRS Tax forms, then there’s a good chance you are willful. Determining willful person not willful is a comprehensive analysis that should be done with an experienced offshore disclosure lawyers — no two cases are identical.
2. Can I waive or negotiate the 5% penalty?
No. If you decide to “go streamlined” the 5% penalty is firm and cannot be negotiated.
3. Is my Foreign Real Estate Penalized?
Maybe, but usually not.
Many of our clients have multiple foreign properties (residential and commercial) that they rent, and were unaware that they were required to report this rental income to the United States.
If you opt for streamlined instead of OVDP, the value of the real estate is not calculated into the penalty – unless the real estate is held in a foreign corporation and that foreign corporation cannot be disregarded (such as a Sociedad Anonima)
4. What About Foreign Gifts, Am I Taxed?
No. If you receive a foreign gift you may have to report the foreign gift depending on whether it is a gift from an individual, corporation, or trust distribution – but there is no tax liability for receiving a gift.
5. Do I include Tax-Free Earnings Abroad?
The United States is one of only a handful of countries on the planet that taxes individuals on their worldwide income. What does that mean? It means that whether or not you reside in the United States or in a foreign country, you are required to report all of your US income as well as foreign sourced income on your US tax return.
It also does not matter if the income you earn is tax exempt in a foreign country, or whether the income you earn in a foreign country was already taxed. While you may be able to obtain a credit or exemption for the taxes you paid or income you earned in a foreign country – you are still required to report the income on your US tax return.
Streamlined Disclosure Lawyers – Golding & Golding, A PLC
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.