The extended deadline to participate in the IRS’ Offshore Voluntary Disclosure Initiative (OVDI) has just passed. This program was similar to the one held two years ago in which about 15,000 taxpayers stepped forward to declare their foreign taxable assets in exchange for a lightened punishment and waiver of criminal charges. If you have been hiding taxable money in overseas bank accounts or other forms of financial instruments, you should have declared them in the OVDI.
Failure to participate in the OVDI means one of two things. You hope the long arm of the law fails to reach you and you get away with it for another year. Alternatively, you get caught and the consequences are dire indeed. Getting caught does not necessarily mean you are intentionally evading taxes. Yours may be a case of a frivolous tax position. According to the tax code, if the IRS deems your tax position as frivolous, it may mean a 20% accuracy penalty and a 75% civil fraud penalty. If you take a position seen as frivolous on an amended return asking for money back, you may also be liable for a 20% erroneous claim for refund penalty. In addition, if you are late in filing your returns including frivolous positions, the usual penalties for fraudulent failure to timely file your income tax return can be increased threefold up to 75%.
Please see full article below for more information.
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