Occasionally, taxpayers use undisclosed foreign accounts and assets, including those held in undisclosed foreign entities, in an attempt to avoid or evade tax. The IRS, as a method of bringing these taxpayers into compliance with United States tax and related laws, developed the Offshore Voluntary Disclosure Program. This program was developed for the benefit of those individuals who knew that they were supposed to be reporting their foreign income or assets, but failed to do so. Although these individuals acted intentionally, the IRS offers this program as an option for people in this situation to make the right decision. In order to qualify to partake in the Offshore Voluntary Disclosure Program ( www.EsquireGroup.com/Offshore-Voluntary-Disclosure-Program ), there are certain eligibility requirements that each individual must meet. These include, but are not limited to: the funds contained within the undisclosed assets must not be derived from criminal activity, and the individual requesting the program must not be under civil or criminal investigation by the IRS.
Filing Your Taxes with Voluntary Disclosures
When choosing to partake in the Offshore Voluntary Disclosure Program, one individual is able to file or amend up to eight years of tax returns and FBARs at the same time. Foreign Bank and Financial Accounts (FBARs) are financial interests over which an individual has signature authority over, which can include bank accounts, mutual funds, trust funds, and many other accounts that exceed certain thresholds. By voluntarily taking part in the Offshore Voluntary Disclosure Program, an individual who has previously evaded taxes can prove to the IRS that they can once again become trustworthy people, at least when it comes to yearly income tax ( www.EsquireGroup.com/About ) times. These individuals will have the chance to pay back all of the taxes, interest, and penalties that may be outstanding on their foreign assets. Most penalties, when given, range between 27.5% to 50% on the highest value of unreported assets, and often depend on the bank that the undisclosed account is with. Lastly, there may be various questionnaires that must be filled out, as part of the Offshore Voluntary Disclosure Program.
Benefits of Completing the Offshore Voluntary Disclosure Program
Intentionally evading taxes by choosing not to disclose foreign income or assets is a criminal offence, and one that the IRS is unlikely to take lightly when discovered. By choosing to voluntarily participate in the Offshore Voluntary Disclosure Program, individuals who were previously at risk of jail time or hefty fines have the opportunity to right their wrongs, and start fresh. Not only can these individuals take a step in the right direction by participating, but they lessen the likelihood of seeing the harsh consequences of their previous inactions, primarily concerning the choice to shield their foreign income and assets from the IRS. In exchange for taking part in the Offshore Voluntary Disclosure Program, individuals will not be able to be criminally prosecuted, and any non-compliance older than eight years will be entirely forgiven. When it comes to reporting foreign income and assets, honesty will reward those who abide by the rules of the IRS.