Our Virginia Tax Attorneys Explain the OVDP Streamlined Submissions Process
Did you fail to comply with IRS requirements to report your offshore financial accounts? Have you neglected to file a Report of Foreign Bank and Financial Account (FBAR) if you owned or were the signatory on foreign financial accounts with an aggregate balance exceeding $10,000?
If you did not fulfill your responsibilities to report your offshore accounts, you could face significant legal trouble and substantial financial loss. The IRS is cracking down on offshore investors who do not report their accounts to U.S. taxpayers as required by law. Many foreign banks are turning over information on U.S. affiliated accountholders so the banks can protect themselves from criminal prosecution for aiding in tax evasion and the IRS is going after individual taxpayers and obtaining large financial penalties.
You can reduce the risks of coming under investigation by the IRS, eliminate the possibility of being charged with tax crimes in connection with offshore accounts and minimize your penalties by participating in the IRS Offshore Voluntary Disclosure Program (OVDP). If you were a non-willful violator of reporting requirements, you could potentially even use a Streamlined Submission Procedure that significantly limits your penalties and makes resolving your problems with the IRS easier. .
However, there are risks associated with participating in OVDP, including with the streamlined submission process. You should consult with a Virginia tax attorney before submitting any forms to the IRS or deciding that OVDP participation is right for you.
Understanding the Streamlined Submission Process for OVDP
OVDP encourages taxpayers to come forward and tell the IRS about previously undeclared offshore funds. The Streamlined Process, which is open to non-willful violators, allows individual taxpayers to correct their past failure to comply with reporting requirements for foreign accounts, provided their violation of the rules was not intentional. This means you can participate in the Streamlined Submissions Process for OVDP only if your failure to report your foreign financial assets occurred because of negligence or because you did not understand what the law actually required of you.
If you meet the criteria for OVDP Streamlined Submissions, you'll have to submit amended tax returns and information forms to the IRS – including the FBARs you should have submitted when your accounts had a balance of $10,000 or higher in prior years. You will also have to pay the back taxes and interest associated with your offshore accounts that you did not declare and will have to pay a penalty equal to five percent of account balances for offshore accounts.
How a Virginia Tax Attorney Can Help You Understand Your Filing Options
Taxpayer penalties are much lower for Streamlined Submissions, but there is a risk that the IRS could decide you are not actually a non-willful violator, even though you must swear under penalty of perjury that you broke the rules as a result of negligence. A lot of money could be at stake, so it is important to talk with a Virginia tax attorney before you decide on the best course of action. You also need to make sure you are eligible, as taxpayers already under investigation with the IRS cannot participate in the Streamlined OVDP Procedure. To ensure you make the best choice for your particular situation, contact Kevin E. Thorn, Managing Partner of Thorn Law Group, today to schedule a confidential consultation.
