The provisions commonly known as the Foreign Account Tax Compliance Act (FATCA) became law in March 2010. In January 2013, the United States Treasury Department released the final FATCA regulations and various intergovernmental agreements have been signed or are being negotiated.
June 18th 2014
Today, June 18th 2014, the IRS took an important step in assisting the estimated 10 million U.S. taxpayers who have undisclosed, offshore accounts which will be subject to IRS reporting by the implementation of FATCA (Foreign Account Tax Compliance Act).
The IRS previously had a procedure in place to assist U.S. Citizens who were residing abroad and had not filed tax returns or Reports of Foreign Bank Accounts (FBARS) for the last 4-5 years. However, the procedure had very strict requirements in place that limited its application to only a small population of U.S. citizens residing abroad.
We are happy to report that the streamlined filing procedures have been expanded and modified to accommodate a much broader group of U.S. taxpayers. Major changes to the streamlined procedures include:
(1) extension of eligibility to U.S. taxpayers residing in and outside the United States,
(2) no maximum tax liability threshold, which opens up the program to the largest of clients,
(3) elimination of the risk assessment process associated with procedures of past programs, and
(4) penalty reduced from 27.5 % of highest balance to 5% for U.S. taxpayers residing in the United States. No penalty for U.S. taxpayers residing abroad.
Under the new procedures, U.S. citizens residing abroad for the last 3 years will be able to come into compliance without the fear of failure-to-file and failure-to-pay penalties, accuracy-related penalties, information return penalties, or FBAR penalties, regardless of their U.S. income tax liability (previously limited to only $1,500 per year) and regardless of their risk profile (offshore entities, accounts outside their country of residence, etc).
Perhaps the most important addition, is a streamlined procedure available to U.S. citizens residing in the U.S.. Individuals residing in the U.S., who were unaware of their filing obligations, or mistakenly or inadvertently did not comply, are now eligible for a greatly reduced penalty of only 5% of the highest aggregate balance over the time period in question.
Help your U.S. clients participate in this new program and avoid the imposition of civil tax fraud and criminal tax evasion civil and criminal penalties, which may include: wire fraud, mail fraud, money laundering, failure to file FBAR forms (now known as FinCen Form 1114). Total penalties may be millions of dollars with jail sentences imposed for a maximum of over 80 years for all tax-related felonies.
We can assist your U.S. taxpayer clients, residing inside or outside of the U.S., with this new program announced by the IRS on June 18th, 2014 as well as through a traditional Offshore Voluntary Disclosure Program (OVDP).
Please contact us to discuss a specific situation, a copy of our intake form, and for a free consultation and analysis for your client.