Offshore Business Disclosure Laws That You Should Knowby Rayanne M. Writer
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If you have investments and accounts overseas, you still need to inform the IRS of your business finances. You might keep your accounts and investments private and think that because your money is not in the U.S. the IRS cannot touch it. However, the IRS can still investigate your offshore accounts, and if you haven’t disclosed them, you risk paying thousands or millions of dollars in fees and penalties.
The Foreign Account Tax Compliance Act
The IRS has increased its efforts to shun tax evasion through foreign accounts. The Foreign Account Tax Compliance Act, FATCA, requires that any U.S. citizen with the responsibility to file taxes in the U.S. and has offshore accounts with at least $10,000 at any time should report to the IRS through a Foreign Bank Account Report, FBAR. You will not hide the account, seeing that the IRS requires foreign financial institutions to disclose account details for U.S. account holders.
If you fail to disclose your information, your bank will send your details to the IRS and you might lose more than a few hundred dollars. Most taxpayers know that, but they still fail to file their tax returns from offshore accounts. The Offshore Voluntary Disclosure Program, OVDP, helps taxpayers with offshore accounts stay compliant with the FATCA and FBAR. With OVDP, you can save money on fees and penalties if you do not know about FATCA and FBAR, and your bank has not sent your details to the IRS. However, the program is not for everyone, and you might be the unlucky few who end up paying millions of dollars in fees.
Getting FBAR Help
Instead of waiting to pay fees and penalties, you can ask for FBAR & Offshore Disclosure help. There are many services online to help you, but you need to reach out for assistance before you make any mistakes with the IRS. It is important that you provide all of the necessary information so that they can help you to the best of their ability. This will provide the best results for your business and keep you out of legal trouble.
How OVDP Works
1. Works Only for Non-Willful Tax Violators
If you did not deliberately hide your offshore accounts, OVDP can help you. If you misunderstand the requirements, get late on disclosing, haven’t been tracking your accounts, or you do not know the minimum amount required to disclose, you can use OVDP to avoid fines. The challenge comes in the aggregate value of the accounts and the minimum amount you should report. For instance, if you have two foreign accounts with $4,000 and $7,000, you might fail to disclose them since they both carry less than $10,000. However, the aggregate of the two accounts is more than $10,000 and you should disclose them to the IRS. If you ever miss a step in reporting, or you fail to understand what you need to do, you should seek help from the OVDP.
2. OVDP Lowers Penalties, but not Fees
OVDP helps you avoid criminal prosecution and severe tax penalties, but that doesn’t mean you do not pay fees. You will still pay back taxes and involved fees. The OVDP sets penalties for you to help you avoid criminal penalties from the IRS, but you can opt out of these OVDP penalties. If your account value exceeds $1million, you risk paying a lot through FBAR fees than you would through OVDP. Again, opting out of OVDP means your case might take longer.
3. Once IRS Starts Investigating Your Accounts, You Do Not Qualify For OVDP
Once the IRS gets wind of your accounts, you do not qualify for lower penalties through OVDP. According to the IRS, you will be declaring your accounts because you were caught. This is true for some or most taxpayers. However, some taxpayers non-willfully failed to report the offshore accounts. If you are caught up in the latter, you need to seek help from an experienced attorney. The attorney will negotiate lower penalties and keep you from going to jail.
If someone hacks the bank and discloses your account information, someone from the IRS might get wind of your accounts. If that happens, OVDP can help you avoid the repercussions from the hack. Do not wait for the IRS to see your accounts, make voluntary disclosure and save money on penalties. You need to disclose all your account information when disclosing through the OVDP. Once you provide all the required details, you will be good to go. If you are lost in filing the forms, seek help from a professional.
Created on Sep 23rd 2020 18:24. Viewed 131 times.