International Tax–Offshore Compliance

The Bank Secrecy Act of 1970 includes a requirement to report foreign financial accounts. This requirement is fulfilled by filing a FBAR. For many years this legal requirement was ignored by the government and practitioners with the result being many uniformed taxpayers. The IRS was delegated authority to enforce the FBAR requirement and aggressively started enforcement around 2003. The Foreign Account Tax Compliance Act (FATCA) enacted in March 2010 substantially increased awareness of the FBAR requirement and brought the realization to many taxpayers that they may not be able to keep foreign financial accounts secret much longer. The IRS has implemented the Offshore Voluntary Disclosure Program, now in its fourth revision, in order for U.S. taxpayers to come into compliance with their delinquent filings while minimizing penalties and the potential for criminal investigations.

  • 2009, 2011 and 2012 Voluntary Disclosures The IRS implemented offshore voluntary disclosure programs aimed at bringing taxpayers with offshore income from offshore accounts into compliance. These programs are a hybrid of the IRS’ longstanding voluntary disclosure procedures. The IRS in June 2014 announced that the 2012 the Offshore Voluntary Disclosure Program (OVDP) would remain open, as modified, with no end date to the program.
  • Streamlined Filing Compliance Procedures In June of 2014, the IRS announced changes to its Streamlined Filing Compliance Procedures significantly expanding the scope of individuals eligible to make a “Streamlined Disclosure.” The advantage of the Streamlined Disclosure, for those who can certify that their non-compliance with tax and FBAR rules was non-willful, is a lower penalty percentage than that under the OVDP, a shorter disclosure period requiring fewer amended returns and FBARs. Determining whether to enter OVDP or file a streamlined disclosure can be a difficult evaluation and the international tax attorneys at Mopsick Tax Law, LLP can assist with this evaluation and advise on disclosure strategy.
  • Post-Offshore Voluntary Disclosure Taxpayers may face a number of issues subsequent to filing a voluntary disclosure whether it is through the 2009, 2011 or 2012 programs, or a voluntary disclosure outside of those programs. Our international tax attorneys at Mopsick Tax Law, LLP are available to assist in navigating those difficult issues.