Who Should Opt Out of the Offshore Voluntary Disclosure Program and Why.

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In this newsletter I will relate a story which is illustrative of some of the problems that I seen clients facing who are citizens of the United States and another country as well, (dual nationals). Dual nationals differ from each other in that they either are originally from another country and emigrated to the United States to become U.S. citizens or are United States citizens who emigrated to another country and became citizens and live there. In one case domicile is the United States in the other it is the new country. Regardless of whether domicile is in the United States or it is in the new country if the individual has offshore bank accounts which aggregate $10,000 or more in a calendar year a Report of Foreign Bank Account (FBAR) is due by June 30 of the subsequent year. Many dual nationals did not file FBAR's and are now trying to comply with current reporting obligations and past omissions.

In 2009 the IRS offered a Voluntary Disclosure program which concluded with over 14,500 participants. The 2009 program required, among other things, the payment of a civil penalty that was calculated based upon 20% of the "penalty assets". Penalty assets included foreign financial accounts for which FBAR's were due but unfiled, interests in foreign partnerships, trusts and corporations for which information returns were due but not filed and foreign income producing assets (like real property) for which no income was reported. In addition to the civil penalty income tax on the unreported income was assessed along with a 20% accuracy related penalty and interest.

Please see full article below for more information.

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Published In: Finance & Banking Updates, International Trade Updates, Tax Updates

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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