International Tax Compliance

IRS Continues Its Push Towards Enforcement Over Offshore Financial Assets

The IRS continues its push towards additional disclosure of foreign financial assets and hefty penalties for failing to disclosure. 

On January 9, 2012, the IRS reopened the Offshore Voluntary Disclosure Program (OVDP). The OVDP is an opportunity for taxpayers to correct past errors regarding unreported income and unfiled information statements. U.S. residents are required to report foreign financial assets that exceed certain thresholds. The maximum penalty rate under the OVDP is 27.5% of the highest account balance during the period covered by the program. There is no deadline but the government can impose a deadline or terminate the program at its discretion.

Common foreign financial reporting requirements include:

·        Form 8938 – filed with their tax return

·        Form TD F 90-22.1 (referred to as FBAR) – due by June 30^th each year

There is an increasing trend of taxpayers giving up their green cards or U.S. citizenship. For example, Facebook cofounder, Eduardo Saverin, renounced his U.S. citizenship last year ahead of Facebook’s IPO in 2012.  This may have saved him hundreds of millions of dollars in tax. Taxpayers that give up their green cards or U.S. citizenship may still be subject to an exit tax.

My Law, LLC                                
Immigration & Tax Law Firm

www.mylawllc.com

Phone: (630) 903-9625

1230 E. Diehl Rd. Suite 106

Naperville, IL 60563

E-mail: attorney@mylawllc.com