Failing to report a foreign bank account or file US tax returns could result in severe penalties and require voluntary disclosure.
We are experienced in helping clients go through their voluntary disclosure options including the streamlined compliance procedures and offshore voluntary disclosure program (OVDP).
In the last six years, there has been an ever increasing focus by the IRS, on ensuring that US citizens overseas are filing tax returns, information returns and accurately declaring all their foreign accounts and assets. Many people are now finding out that they are not up to date and considering a voluntary disclosure. With the implementation of information sharing legislation around the world (e.g. FATCA – this involves financial institutions providing information on US account holders to the IRS) having your tax affairs both up to date and correct has never been more important.
In essence if:
- you are a US person, including citizens, greencard holders (lawful permanent residents) and those who meet the substantial presence test;
- you have a foreign (non-US) bank account either in the UK or another country; and
- you have not filed a Report of Foreign Bank and Financial Accounts (FBAR) or filed a US tax return
Then, it is very likely you have filing requirements that have been missed. Additional reporting requirements also exist for companies and trusts.
Here at Ingleton Partners, we are specialised in helping those individuals who have never filed the necessary US tax returns and / or information returns. We understand the potential anxiety and stress associated with finding out about inadvertent mistakes and the penalties that can be assessed for late filings, so let us help you. We are always happy to have an introductory call on the matter of disclosure, to discuss your situation and the solutions available to you, with no obligation.
We can go through all the options available to you for disclosure, two of which we highlight below, and assess your exposure to penalties. As UK based, dual UK and US practitioners we understand the interaction with your UK taxes and the disclosure you need to make.
Streamlined Filing Compliance Procedure
This is the route we would expect to apply for the majority of individuals contacting us. The IRS streamlined filing compliance procedure (the ‘streamlined procedure’) provides a great opportunity for those who qualify, to enter an IRS sanctioned procedure, which could result in no penalties being assessed. The program announced by the IRS in June 2014 only came into operation on 1 July 2014 and is broadly available to all taxpayers provided they have not been the subject of a current or prior civil/criminal investigation by the IRS and they can certify that their actions were non-wilful.
We are happy to discuss your case with you and establish where possible whether you can enter the streamlined procedure, whether you can qualify for the most favourable terms with respect to penalties and tell you what filings are likely to be required.
In our opinion the streamlined procedure is going to provide a great opportunity for many honest taxpayers living in the UK or elsewhere outside the US, to correct their affairs in a fair and proportionate manner.
Offshore Voluntary Disclosure Program
For those taxpayers who are unsure whether their omissions are non-wilful there is also the Offshore Voluntary Disclosure Program (OVDP) to consider.
The OVDP was also modified as of 1 July 2014 to bring it up to date and so that it neatly sits alongside the new streamlined procedure. The OVDP offers criminal protection to those who have or may have been wilful in their omissions to file returns or report foreign income, assets or accounts.
Participation in the program generally involves the submission of eight years of tax returns, entity returns, information returns and FBARs, a 20% accuracy penalty on any tax due, late payment interest and finally, the kicker, a miscellaneous foreign offshore account penalty of 27.5% assessed on the value of the undisclosed assets and accounts. In certain, specific cases lower penalties are available however for instances involving a financial institution that is publicly identified as being under investigation already the penalty is 50%.
Call, email or fill out our call back form if you would like to discuss your penalty exposure and options for a voluntary disclosure.