CFJ Tax Update: IRS Renews Offshore Voluntary Disclosure Program for 2012
The opening of Calvo Fisher & Jacob’s Dallas, Texas office on January 1, 2012 to handle domestic and international tax matters enables the firm to provide both tax planning and estate planning services, as well as tax controversy representation, to its clients. Our new Dallas-based tax team, including partner Bill Davis and associate BJ Ghatrehee, is available for consultation on tax issues at any time and will be providing regular updates on important tax issues to our clients.
The beginning of a new year always brings dramatic announcements from the U.S. Treasury Department (“IRS”) and year 2012 is no different. The most important news from the IRS for this new year is the emphasis that the IRS will continue to focus on the Offshore Voluntary Disclosure Program following the collection of more than $4.4 billion from 33,000 voluntary disclosures from the 2009 and 2011 Offshore Voluntary Disclosure Programs.
The IRS announced a third Offshore Voluntary Disclosure Program on January 9, 2012 to allow U.S. taxpayers, including green card holders (even if they do not live in the United States) who have undisclosed offshore financial accounts to bring their foreign income tax reporting and the reporting of offshore financial accounts on Form TDF 90-22.1, Report of Foreign Bank and Financial Accounts (“FBAR”) into compliance. A person who holds a foreign account may have a reporting obligation on an FBAR even though the account produces no taxable income.
If you have or think you might have had an undisclosed foreign financial account reporting requirement (at any time during the past 8 years), you should contact a Calvo Fisher & Jacob attorney immediately to set up a conference call or office visit to discuss your particular situation.
The IRS is going to be extremely aggressive in year 2012 in identifying taxpayers, including individuals and entities that are not in compliance with foreign reporting obligations, including not paying income taxes owned on foreign investments and not filing required FBARs. If you fail to timely file a required FBAR, with absence of reasonable cause, you will be subject to either willful or non-willful civil penalties, as well as the possibility of facing a criminal investigation and possible criminal prosecution.
In addition, a new U.S. law, effective December 19, 2011, known as the Foreign Account Tax Compliance Act (“FACTA”) requires U.S. taxpayers who have an interest in certain specified foreign assets (including any financial account maintained by a foreign financial institution and certain other foreign financial assets that are held in an account at a foreign financial institution, such as stock, securities, or other interests in a non-U.S. entity, with an aggregate value exceeding $50,000) to report those assets to the IRS annually. Reporting is to be done on IRS Form 8938, and it will be required beginning in year 2012 for the taxpayer’s 2011 tax return.
