There are many different tax provisions that affect international financial transactions. The Internal Revenue Service (IRS) is beginning to pay far closer attention to these matters, leading to international litigation. In order to avoid costly audits and avoidable disputes with the IRS, it is important to take every precaution with regard to foreign income and offshore accounts. One of the common ways of doing this for United States taxpayers, including those referred to as expatriates (expats) and legal permanent residents is through the Offshore Voluntary Disclosure Program (OVDP).
By failing to report offshore and foreign accounts, and therefore assets and income, a United States taxpayer may face criminal prosecution and the possibility of hefty fines and significant jail time based on charges of tax fraud or tax evasion. The OVDP is a potential means of avoiding these serious penalties.
In order to take advantage of the OVDP, a taxpayer must not be actively being investigated by the IRS or is not in the midst of an audit. The reason for this is that this is supposed to be a voluntary program for those who are “coming clean” before they have been discovered by the IRS. The type of income and accounts that fall within the parameters of the OVDP include:
- Foreign income that would be reported on an 8938 form, Schedule B, or the report of Foreign Bank and Financial Accounts (FBAR);
- Foreign insurance; and
- Income-generating foreign assets.
It is important to have the right international tax attorney when attempting to become compliant under this program because there are many different requirements and failing to fulfill them all may lead to vulnerability for IRS enforcement actions. At Brunoro Law, our skilled team understands the complexities of this program and will work with you to get the results that you need. From the initial pre-clearance letter through the IRS evaluation, application submission, and calculation of tax payments overdue and associated penalties, we will work with you to ensure compliance and avoid prosecution.
Contact us for a free consultation.