To Disclose Or Not - Foreign Asset Issues

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The IRS recently extended the Offshore Voluntary Disclosure Initiative (OVDI) only this time without a deadline. The miscellaneous civil penalty was increase to 27.5% from 25% of the highest single year foreign financial account balance. That cost may have a chilling effect on participation, but it should not for some taxpayers.

One of the benefits of entering the OVDI program is that a taxpayer with unreported foreign gifts or bequests, unreported controlled foreign corporations or partnerships, or offshore trusts can file curative returns (late returns for those activities) and avoid the penalties for failing to file the forms timely.

Why is this a big deal? Example:

The penalties for not reporting receipt of a foreign gift or bequest range from 25% -35% of the value of the assets if the value exceeded $100,000 in a calendar year. The other returns have penalties that can run $10,000 per year per return. So, if these returns were not filed yet how will the IRS discover you?

Please see full article below for more information.

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Tax

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Sanford Millar, Law Offices of Sanford I. Millar | Attorney Advertising

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