Showing posts with label OVDI. Show all posts

FBAR Offshore Bank Accounts and Foreign Income Attacked by IRS - HG.org

IRS Reporting Rules for Foreign Bank Accounts (FBAR)

Don't miss the annual FBAR deadline for reporting foreign bank accounts for the IRS--the penalties can be severe.

An annual FBAR must be filed with the IRS whenever a taxpayer has an interest in, or signature authority over, a foreign financial account with a value over $10,000 any time during the calendar year. It makes no difference if the average amount in the account during the year is less than $10,000 or all the money is withdrawn by the end of the year. If the account held more than $10,000 any time during the year, the FBAR must be filed.

Moreover, the FBAR filing requirement is not limited to foreign accounts containing cash. You’re also supposed to file a FBAR if a foreign account has non-monetary assets of more than $10,000. For example, the cash surrender value of a life insurance policy is such a non-monetary asset.

There is a minimum $10,000 penalty if your failure to file was inadvertent. However, if you are found guilty of willfully not filing a FBAR, the minimum fine is $100,000 or half the value of the account, whichever is greater.

Lance Wallach, National Society of Accountants Speaker of the Year and Member of the AICPA faculty of teaching professionals, is a frequent Speaker on retirement plans, abusive tax shelters, financial, international tax and estate planning.

The information provided herein is not intended as legal, accounting, financial or any type of advice for any specific individual or other entity. You should contact an appropriate professional for any such advice.

Failure to file an FBAR carries the potential for huge civil penalties

There are tens of thousands of Americans with offshore accounts, many of them in Singapore. As the 4th largest banking center, Singapore has become a popular tax haven for people trying to hide money from the government. That is about to change. If you have a bank or other financial account there and haven’t been filing FBARs with the IRS, watch out!

According to a Reuters article, banks in Singapore face an internal deadline of July 1st to identify and report accounts where there is a strong suspicion of tax evasion. Singapore is taking this action in anticipation of new U.S. and European reporting measures.

Owning a foreign account is not illegal under U.S. law as long as the account is properly reported. The Bank Secrecy Act requires American taxpayers (including dual nationals and resident alien “green card” holders) to annually file a Report of Foreign Bank and Financial Accounts (or FBAR for short.) Failure to file an FBAR carries the potential for huge civil penalties and even a chance of criminal prosecution and prison.

Although taxpayers are required to file FBARs annually, many do not. Sometimes, it is simply ignorance of the law. That often happens with immigrants and dual nationals who think they do not need to report if simply sending money “home.” Other times, taxpayers intentionally use offshore accounts as a way of evading taxes or dodging creditors.

Beginning next year, the new Foreign Account Tax Compliance Act (FATCA) requires foreign banks to identify accounts with ties to the United States. While the new FATCA requirements are more onerous and comprehensive than Singapore’s internal examination for suspected tax evaders, the handwriting is on the wall. Foreign bankers are being pushed hard to clean up their acts.

So what is Singapore doing to identify accounts that may be tied to tax evasion? While every bank will develop its own review process, common identifiers include the existence of nominee accounts and people holding large sums of money in Singapore without any business purpose for doing so.

Nominee accounts are on everyone’s radar screen these days. In order to conceal one’s identity, some taxpayers create a foreign trust or international business companies so that the money is held in a third party name. Unless there is a valid purpose for doing so, the IRS considers nominee accounts to be an affirmative act of evasion. Particularly if no FBARs have been filed.

While some Singapore banks may lose a few high net worth clients as a result of the review, most banks are expected to comply. The new guidelines from the Monetary Authority of Singapore carry criminal penalties and the loss of banking licenses for banks that don’t comply. By targeting the banks themselves, Singapore is showing it is serious about not becoming a haven for laundered money and tax evasion.

If you have an account at Bank of Singapore, DBS Bank, Singapore Island Bank, Far Eastern Bank, Oversea Chinese Banking Corporation (OCBC), United Overseas Bank, Islamic Bank of Asia or one of dozens of foreign banks with branches in Singapore, time is running out. While the first phase of review doesn’t require the banks to notify the IRS, Singapore is in negotiations with the IRS concerning FATCA implementation. Beginning in 2014, foreign banks will be required to share information with the IRS.

As several Americans have recently learned, moving money from one tax haven to another is also considered an affirmative act of tax evasion. Trying to stay ahead of authorities by moving an account from Singapore to some other country may buy some time but ultimately, its a ticket to prison.

We suggest you file and then opt out to go to appeals and lower the tax.

IRS FBAR Voluntary Disclosure Initiative, opt out to reduce tax

by Lance Wallach

The 2012 OVDI, which is still open, is patterned after the 2011 OVDI, but increases the maximum Report of Foreign Bank and Financial Accounts (FBAR)-related penalty from 25 percent to 27.5 percent of the highest account value at any time between 2003 and 2010. The 2012 OVDI does not have a stated expiration date. In all, the IRS has seen 33,000 voluntary disclosures from the 2009 and 2011 offshore initiatives. Since the 2011 program closed last September, hundreds of taxpayers have come forward to make voluntary disclosures.

Under the Bank Secrecy Act, U.S. residents or a person in and doing business in the U.S. must file a report with the government if they have a financial account in a foreign country with a value exceeding $10,000 at any time during the calendar year. Taxpayers comply with this law by reporting the account on their income tax return and by filing Form 90–22.1, the FBAR. Willfully failing to file an FBAR can be subject to both criminal sanctions (i.e., imprisonment) and civil penalties equivalent to the greater of $100,000 or 50 percent of the balance in an unreported foreign account — for each year since 2004 for which an FBAR wasn't filed.

The 2009 OVDP brought in at least 14,700 U.S. taxpayers (disclosing accounts in more than 60 countries) through the front door of IRS Criminal Investigation and untold thousands through a process of quietly amending returns and filing delinquent FBARs with the government. For eligible taxpayers who applied the OVDP provided the certainty of no criminal prosecution and civil penalty relief — they were required to pay back-taxes from 2003 to 2008, interest and a 20-25 percent penalty on the delinquent taxes. The IRS also imposed a 20 percent FBAR-related penalty equal to the highest aggregate value of the financial account between 2003 and 2008. In limited situations, the FBAR-related penalty could be reduced to five percent of the account value or $10,000 per tax year. If they got a great CPA with experience to help them, the fine was a lot less.

The 2011 OVDI, brought in an additional 12,000 eligible taxpayers who filed original and amended tax returns and agreed to make payments (or good-faith arrangements to pay) for taxes, interest and accuracy-related penalties. The 2011 OVDI FBAR-related penalty framework required a 25 percent “FBAR-related” penalty equal to the highest value of the financial account between 2003 and 2010. Only one 25 percent offshore penalty is to be applied with respect to voluntary disclosures relating to the same financial account. The penalty may be allocated among the taxpayers with beneficial ownership making the voluntary disclosures in any way they choose. . Participants in the 2011 OVDI also had to pay back-taxes and interest for up to eight years as well as paying accuracy-related and/or delinquency penalties. Subject to certain limitations, financial transactions occurring before 2003 were generally irrelevant for those participating in the OVDI. With good advice many people paid a lot less.

There are many considerations before a taxpayer should determine whether to pursue a voluntary disclosure of prior tax indiscretions. When reviewing the OVDP and the OVDI, many made decisions based on whether they could be considered a realistic candidate for a criminal prosecution referral by the IRS or prosecution by the Department of Justice. (If so, the determination to participate was relatively quick and easy). In other cases, the questions included:

Was there a possibility of reducing that prospect by filing amended or delinquent returns and FBARs in lieu of a direct participation in the OVDP/OVDI?
What would be the potentially applicable penalties upon an examination of such returns and FBARs?
Could the government actually carry their burden of demonstrating that the taxpayer “willfully” violated the FBAR filing requirements?
What would be the cost to the taxpayer of voluntary disclosure through OVDI versus remaining outside the program? Should they apply and then opt out?

Since the OVDI asserted an offshore penalty based on foreign financial accounts and asset valuations, for many with smaller financial account values the aggregate offshore penalty determination, even for multiple years, was actually less outside the OVDI.

The ability of a U.S. taxpayer to maintain an undisclosed, “secret” foreign financial account is fast becoming nonexistent. Foreign account information is flowing into the IRS under tax treaties, through submissions by whistle blowers, and from other taxpayers who participated in the 2009 OVDP and the 2011 OVDI who have been required to identify their bankers and advisers. Additional information will become available as the Foreign Account Tax Compliance Act (FATCA) foreign financial asset reporting (Form 8938 and new IRC § 6038D) become effective.

It is likely that the U.S. will require foreign financial institutions doing business in the United States to disclose account holders having relatively small accounts and earnings. There have been rumors of discussions regarding accounts having a high balance of the equivalent of $50,000 at any time between 2002 and 2010. U.S. persons having interests in foreign financial accounts should not find comfort in a belief that their foreign financial institution will somehow refrain from disclosing very small accounts in the current enforcement environment.

Taxpayers having undisclosed interests in foreign financial accounts must consult competent tax professionals before deciding to participate in the 2012 OVDI. Others may decide to risk detection by the IRS and the imposition of substantial penalties, including the civil fraud penalty, numerous foreign information return penalties, and the potential risk of criminal prosecution. Although the 2012 OVDI penalty regime may seem overly harsh for many, the decision to participate should include an economic analysis of the taxpayer's projected future earnings from funds held offshore. Some people have left the U.S. to try to avoid the fines.

Another option is to apply for amnesty and then opt out and go to appeals. We think that for most people this will result in paying a lot less taxes. According to a CPA who was in management for 37 years with the IRS international division you may want to first apply for amnesty to avoid the criminal prosecution. Then you should compare the taxes that you owe with the deal that you usually get in appeals. You go to appeals as a result of opting out. In all of the situations that this ex IRS agent has seen, opting out gets you a much better IRS deal. If you want to reduce your taxes by using this strategy you need someone who is an expert in it with years of experience. I suggest you use a CPA who was in the international division of the IRS. If he also had experience with the appeals division you have the perfect professional to help you. The person that I interviewed for this article has this experience, and has been successful helping people.

Lance Wallach, National Society of Accountants Speaker of the Year and member of the AICPA faculty of teaching professionals, is a frequent speaker on retirement plans, abusive tax shelters, financial, international tax, and estate planning. He writes about 412(i), 419, Section79, FBAR, and captive insurance plans. He speaks at more than ten conventions annually, writes for over fifty publications, is quoted regularly in the press and has been featured on television and radio financial talk shows including NBC, National Public Radio’s All Things Considered, and others. Lance has written numerous books including Protecting Clients from Fraud, Incompetence and Scams published by John Wiley and Sons, Bisk Education’s CPA’s Guide to Life Insurance and Federal Estate and Gift Taxation, as well as the AICPA best-selling books, including Avoiding Circular 230 Malpractice Traps and Common Abusive Small Business Hot Spots. He does expert witness testimony and has never lost a case. Contact him at 516.938.5007, wallachinc@gmail.com or visit http://www.taxadvisorexpert.com.

If You Have or Had Money Overseas You Better File for Amnesty ASAP

by Lance Wallach

According to various reports the IRS is investigating the Israeli banks Bank Leumi, Bank Hapoalim and Mizrahi Tefahot Bank for conspiring with individuals to enter into a loan scheme intended to evade taxes on funds brought to the U.S. from undisclosed foreign bank accounts. The focus on the banks themselves is a notable departure from similar investigations in the past. In prior investigations, the bank or bankers had a passive relationship, whereas Bank Leumi allegedly took an active role in setting up the scheme to evade taxes. Bank Leumi has sent letters to various account holders suggesting clients enter into the IRS voluntary disclosure program otherwis

If You Have or Had Money Overseas You Better File for Amnesty ASAP

Known as the Offshore Voluntary Disclosure Program/Initiative (OVDP or OVDI).

To try to reduce the fines we suggest that you then opt out and take your case to the IRS appeals division. Our former IRS appeals officer has lots of experience in this. He was also a manager in the IRS international division. With large fines at stake you probably want the best.

FBAR/OVDI LANCE WALLACH: As an expert witness Lance Wallach side has never ...

FBAR/OVDI LANCE WALLACH: As an expert witness Lance Wallach side has never ...: As an expert witness Lance Wallach side has never lost a case: 419 Plan : 419 Plan

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FBAR/OVDI LANCE WALLACH: 419 412i plans IRS audits lawsuits | LinkedIn: 419 412i plans IRS audits lawsuits | LinkedIn

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FBAR_OVDI

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esday, March 12, 2013

Lance Wallach

IRS Reporting Rules for Foreign Bank Accounts (FBAR)

Don't miss the annual FBAR deadline for reporting foreign bank accounts for the IRS--the penalties can be severe.

Indian Business Man Prosecuted For Unreported HSBC India Account (FBAR Post)

by Brian M

Although all the media attention on unreported foreign accounts appears to focused on Switzerland, the Justice Department and IRS continue to look worldwide for U.S. taxpayers with undeclared offshore accounts. According to a press release from the United States Attorney’s Office, Sameer Gupta pleaded guilty last week to one count of tax evasion after the IRS discovered he had an unreported bank account at HSBC India. He faces 5 years in prison.

Possessing or having signature authority over an account in India is entirely legal if the account is reported annually to the IRS. Foreign bank and investment accounts must be reported each year on a Report of Foreign Bank and Financial Accounts, also known as an FBAR or form TD 90-22.1. Failure to file an FBAR is a felony.

Prosecutors say that in an effort to conceal his identity, Gupta had some 17 different bank accounts, several in nominee format. Opening an account in a false name or deliberately concealing one’s identity by opening an account in a third party name is considered an affirmative act of tax evasion.

Prosecutors say the tax loss caused by Gupta’s activities was somewhere between $200,000 and $400,000. As part of his plea deal, Gupta agreed to pay the IRS a $259,000 penalty. The judge can impose an additional fine of $250,000 or an amount of his twice the gain from his illegal activity at the time of sentencing.

There is no word on how Gupta was caught.

In recent years, the IRS has been targeting foreign banks and bankers to get the names of U.S. clients. As Gupta discovered, opening an account in a fake name doesn’t always work. Beginning next year, the new FATCA law will require foreign banks to investigate and report any account holder with ties to the United States.

The IRS’ whistleblower program has also resulted in many people getting caught. Disgruntled employees, unhappy vendors and often jilted lovers provide the information which leads to the discovery of unreported foreign accounts.

There is an amnesty that allows those with unreported accounts to come into compliance and avoid audit and criminal prosecution. (The Offshore Voluntary Disclosure Program often called “OVDI”) The program does have a catch; there are some fairly steep penalties and also the need to come into compliance beforegetting caught. If the IRS finds you first or gets your name from a foreign bank, amnesty is off the table.

For those whose noncompliance is truly one of mistake or ignorance of the law, other options may reduce or eliminate all penalties. Do nothing, however, and you could face criminal prosecution or civil penalties that are the greater of $100,000 per year or 50% of the highest account balance for each year the account was unreported.

That was a well written article. I do not agree with all of it. We have had hundreds of people from India phone us. We have never had a problem. We usually suggest that they file and then opt out. In that way they usually reduce the money that they owe to the IRS. They also have amnesty and have come forth into compliance and have avoided criminal prosecution. If you need help Google Lance Wallach or contact him. His associates have been with the IRS for years in the international division. They are also CPAs etc.

Friday, March 1, 2013

Failure to file an FBAR carries the potential for huge civil penalties

We suggest you file and then opt out to go to appeals and lower the tax.

FBAR/OVDI LANCE WALLACH: February 2014

Lance Wallach

If You Have or Had Money Overseas You Better File for Amnesty ASAP

Known as the Offshore Voluntary Disclosure Program/Initiative (OVDP or OVDI).

Lance Wallach, National Society of Accountants Speaker of the Year and member of the AICPA faculty of teaching professionals, is a frequent speaker on retirement plans, abusive tax shelters, financial, international tax, and estate planning. He writes about 412(i), 419, Section79, FBAR, and captive insurance plans. He speaks at more than ten conventions annually, writes for over fifty publications, is quoted regularly in the press and has been featured on television and radio financial talk shows including NBC, National Public Radio’s All Things Considered, and others. Lance has written numerous books including Protecting Clients from Fraud, Incompetence and Scams published by John Wiley and Sons, Bisk Education’s CPA’s Guide to Life Insurance and Federal Estate and Gift Taxation, as well as the AICPA best-selling books, including Avoiding Circular 230 Malpractice Traps and Common Abusive Small Business Hot Spots. He does expert witness testimony and has never lost a case. Contact him at 516.938.5007,wallachinc@gmail.com or visit http://www.taxadvisorexpert.com.

Monday, April 15, 2013

Why the Window May Be Closing to File for Offshore Voluntary Disclosure

FBAR/OVDI LANCE WALLACH: If You Have or Had Money Overseas You Better File ...

FBAR/OVDI LANCE WALLACH: If You Have or Had Money Overseas You Better File ...: Lance Wallach According to various reports the IRS is investigating the Israeli banks Bank Leumi, Bank Hapoalim and Mizrahi Tefahot ...

Monday, April 29, 2013

If You Have or Had Money Overseas You Better File for Amnesty ASAP

Lance Wallach

If You Have or Had Money Overseas You Better File for Amnesty ASAP

Known as the Offshore Voluntary Disclosure Program/Initiative (OVDP or OVDI).

Lance Wallach, National Society of Accountants Speaker of the Year and member of the AICPA faculty of teaching professionals, is a frequent speaker on retirement plans, abusive tax shelters, financial, international tax, and estate planning. He writes about 412(i), 419, Section79, FBAR, and captive insurance plans. He speaks at more than ten conventions annually, writes for over fifty publications, is quoted regularly in the press and has been featured on television and radio financial talk shows including NBC, National Public Radio’s All Things Considered, and others. Lance has written numerous books including Protecting Clients from Fraud, Incompetence and Scams published by John Wiley and Sons, Bisk Education’s CPA’s Guide to Life Insurance and Federal Estate and Gift Taxation, as well as the AICPA best-selling books, including Avoiding Circular 230 Malpractice Traps and Common Abusive Small Business Hot Spots. He does expert witness testimony and has never lost a case. Contact him at 516.938.5007,wallachinc@gmail.com or visit http://www.taxadvisorexpert.com.

Multi-National Taxes, FBAR OVDI

Fatca, Fbar, And Ovdi, Lance Wallach

FBAR Offshore Bank Accounts and Foreign Income Attacked by IRS - HG.org

IRS Reporting Rules for Foreign Bank Accounts (FBAR)

Don't miss the annual FBAR deadline for reporting foreign bank accounts for the IRS--the penalties can be severe.

Failure to file an FBAR carries the potential for huge civil penalties

IRS FBAR Voluntary Disclosure Initiative, opt out to reduce tax

If You Have or Had Money Overseas You Better File for Amnesty ASAP

If You Have or Had Money Overseas You Better File for Amnesty ASAP

FBAR, OVDP

International Taxes

Informaiton on International Taxes

FBAR, OVDI

FBAR/OVDI LANCE WALLACH: 419 Plan

FBAR/OVDI LANCE WALLACH: As an expert witness Lance Wallach side has never ...

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FBAR/OVDI LANCE WALLACH: FBAR/OVDI LANCE WALLACH: How to Market Your Busine...

FBAR/OVDI LANCE WALLACH: How to Market Your Business: Avoid IRS FINES, 8886...

Check out my #constantcontact newsletter

FBAR/OVDI LANCE WALLACH: FBAR- Is Your Bank Account A Secret

FBAR/OVDI LANCE WALLACH: The IRS has kicked out an undisclosed number of ta...

esday, March 12, 2013

Lance Wallach

IRS Reporting Rules for Foreign Bank Accounts (FBAR)

Don't miss the annual FBAR deadline for reporting foreign bank accounts for the IRS--the penalties can be severe.

Indian Business Man Prosecuted For Unreported HSBC India Account (FBAR Post)

Friday, March 1, 2013

Failure to file an FBAR carries the potential for huge civil penalties

FBAR/OVDI LANCE WALLACH: February 2014

Lance Wallach

If You Have or Had Money Overseas You Better File for Amnesty ASAP

Monday, April 15, 2013

Why the Window May Be Closing to File for Offshore Voluntary Disclosure

FBAR/OVDI LANCE WALLACH: If You Have or Had Money Overseas You Better File ...

Monday, April 29, 2013

If You Have or Had Money Overseas You Better File for Amnesty ASAP

Lance Wallach

If You Have or Had Money Overseas You Better File for Amnesty ASAP