Offshore Voluntary Disclosure and Foreign Bank Accounts

What is Offshore Voluntary Disclosure?

Since 2009, the IRS has been offering taxpayers who have undisclosed foreign financial accounts the opportunity to “come clean” under its Offshore Voluntary Disclosure Initiative (OVDI). The OVDI program has been slightly revised over the last three years, but it basically allows certain taxpayers the opportunity to gain clearance from criminal prosecution and civil penalties by paying a one-time FBAR (Report of Foreign Bank and Financial Accounts) penalty based on the foreign account balances, as well as penalties for accuracy and failure-to-file based on the tax underpayment for the prior 8 years. The tax lawyers can guide you through your filing requirements and the programs available to resolve past delinquencies.

What are the benefits of using the Offshore Voluntary Disclosure Program?

Taxpayers with undisclosed foreign accounts or with undisclosed entities should consider making a voluntary disclosure because it enables them to become compliant, avoid substantial civil penalties and generally eliminate the risk of criminal prosecution. Making a voluntary disclosure also provides the opportunity to calculate, with a reasonable degree of certainty, the total cost of resolving all offshore tax issues. Taxpayers who do not submit a voluntary disclosure run the risk of detection by the IRS and the imposition of substantial penalties, including the fraud penalty and foreign information return penalties, as well as an increased risk of criminal prosecution.  The IRS is actively engaged in discovering the identities of those with undisclosed foreign accounts. This information is increasingly available to the IRS under tax treaties and through submissions by whistleblowers, and this information will become more available as the Foreign Account Tax Compliance Act (FATCA) and Foreign Financial Asset Reporting (new IRC §6038D) become effective.

What Are the IRS Filing Requirements?

The IRS has recently increased the reporting requirements for taxpayers with foreign accounts and assets. The IRS requires a variety of disclosure forms, including FBARs, Form 5471, Form 3520 and, Form 8938.

Back Taxes in Utah? Consider the IRS Office of Appeals

Thousands of thousands of taxpayers choose to dispute their back taxes in Utah every year rather than go to Tax Court.  The IRS Office of Appeals is independent from the IRS examination department and its purpose is to resolve tax disputes in a fair, impartial manner for tax payers.

The IRS Office of Appeals Process

Tax lawyers can help you through the appeals process and help you understand your rights. If the IRS has chosen to audit your tax return and says you owe back taxes in Utah, you may disagree with the proposed changes to your tax return as well as their collection efforts. Tax attorneys can assess your case and help you determine whether to appeal any audit adjustments, penalties, liens, levies, and offers in compromise. They can also help you request a conference with a Settlement Officer or IRS Office of Appeals and prepare for your Appeals conference.

Receiving a 30-Day Letter

After your closing conference, you will receive a package from the IRS with a “30-day letter” that notifies you of your right to appeal the proposed changes, a waiver form for the agreement, and the examiner’s report that explains any proposed changes to your tax liability.  If you fail to respond to the 30-day letter, or fail to reach an agreement with the Appeals Officer, you will receive a “90-day letter” which is a Notice of Deficiency.

Writing a Protest Letter

In the event you disagree with the 30-day letter’s proposed changes, the tax attorney team can help you assess whether to send a Protest Letter to the IRS. They will draft the Protest Letter based on your individual needs and situation.

Negotiating a Settlement with the IRS Office of Appeals

An IRS Appeals Officer has some discretion in assessing whether to accept or deny a settlement offer from a taxpayer. The Appeals Officer will weigh the risk of litigation versus the merits of the taxpayer’s legal position.  The tax lawyer team helps with advocating and negotiating on behalf of our clients.

Free Consultation with Tax Lawyer

When it is time for you to resolve your tax case, call the IRS and state tax lawyers with Ascent Law at (801) 676-5506. You can come in or call in for your free initial consultation.