IRS Announces Offshore Voluntary Disclosure Initiative

IRS Announces Offshore Voluntary Disclosure Initiative

You must have heard about the FBAR reporting last year.  Sanjiv has talked about it on radio and TV.  We have discussed it on our blog and reminded customers in our office.  Last year, Govt. started a volunteer disclosure program that reduces the penalties for those who have not disclosed their foreign income and assets.

But some of you may have missed the deadline simply thinking if you should disclose your assets or not.  By now, you may have figured out that disclosures are not going away. IRS is really after those who are not disclosing their foreign income.  Government is using all the tools,Financial Penalties and Criminal Charges, they got to deal with this issue.  It is our recommendation to take this issue very seriously and properly report all worldwide income and assets.

If you missed the last year relif program than you are not out of luck.  You can take advantage of it this year.  IRS Commissioner Douglas H. Shulman announced on February 8, 2011 that the Internal Revenue Service has begun a second offshore voluntary compliance initiative (“OVCI”).

Program is similar to the 2009 program whereby the IRS is offering taxpayers the opportunity to fully disclose all unreported offshore accounts in exchange for reduced penalties.    Our office can help you file the proper returns and statements to bring you in compliance and help you reduce the penalties.

Disclosing your information will require you to amend your federal and state income tax returns from 2003 forward and will be required to pay interest and  penalties.  I know its lots of work but that is what we are here for.  Our office will work with you to make it as easy as possible.

Also, please note that IRS will also charge you the interest. The interest is calculated at IRs published rates, and penalties are assessed at a rate of up to 25% of the highest balance in the account during that time period.

The initiative is open to individuals and entities, such as corporations, trusts and partnerships.  Individuals currently under examination or under criminal investigation cannot participate.

Now, you have another chance to come out clean with IRS and put this headache to rest.

Sanjiv subscriber

  • Guest

    It is very hard to get last years details on a/c from an INDIAN bank how we can be assure, the details we are providing are correct or not for previous years. What details we have to provide -Taxes which are already charged as TDS? Do we have a sample to report?

    • Are you saying, you do not have any bank statement ?  Most Banks now offer online banking in India these days ?  I am sure Sanjiv will have a better answer. Call him at 510-825-7563

  • Anand

    Hi,
    I am in US on H1B since Oct 2008 and  have a salary account in India which was started long before I came to US. If I declare it now, can IRS slap a penalty on me even though the account has nothing to do with my US income?

    • IRS has amnesty program currently going on, you can take advantage of that.  This is a serious issue because there are jail time penalties in addition to fine.  You should consult with CPA asap. 

      • Anand

        Thanks, what’s the last date of the amnesty program?
        Anand

        • As of today – there is not end date but that is a problem because congress can cancel this amnesty at any time. So take advantage of this while you can.

  • Guest

    Hi,
    I had opened a PPF account when I worked in India. Now as a US resident alien, do I need to pay taxes on the interest in that account every year. or Do I pay when the account matures? 

  • patelgc

    :I listen to your redio program. Yesterday you
    gave lots of advice on – Disclosure of foreign accts. I am looking forward to
    get advice from you on very specific question. There is need to file a Form #
    8938 & Form TD F 90 22.1.  My questio
    : – Do we need to disclose a retirement account hold in foreign country eg.
    Superannuation account – it was opend when I was working in foreign county
    where employer and employee both contributed. I can not withdraw from that
    account untill I am 60. Now I am in California. 
    So do I need to disclose this account in any one OR both the forms? I
    would highly appreciate your help and guidance.