Streamline Offshore Disclosure Tax Attorney Atlanta

Streamline Offshore Disclosure Tax Attorney Atlanta
Streamlined domestic offshore procedures: an alternative to 2014 OVDI/OVDP
Under the 2014 OVDI Streamlined procedure, U.S. residents who meet certain requirements have the option of using the Streamlined Domestic Offshore Procedures to address their unreported income and/or undisclosed foreign bank accounts. Taxpayers who qualify for, and take advantage of, these procedures simply have to pay any tax due on any unreported income they had in the past three years, plus interest on the tax, and an offshore penalty equal to 5% of their maximum aggregate balance in their unreported foreign accounts over the past six years. This 5% penalty works much differently from the penalties that are part of the offshore voluntary disclosure program. Under the standard OVDI program, the base amount for calculating the penalty is computed on the value of many classes of foreign assets that are not subject to the various international reporting requirements (i.e. directly-held real estate). Under the new streamlined OVDP program, only assets that were supposed to be reported are included in the penalty computation. Since you are not required to disclose the value of offshore real estate you own directly, these properties are excluded from the penalty computation.
Streamlined Domestic Offshore Procedure qualification requirements
In order to qualify under the new Streamlined Domestic Offshore Procedure, 4 eligibility requirements must be met:
1. Fail to meet the non-residency requirements for the Foreign Domestic Offshore Procedure. If you otherwise qualify for the Streamlined Domestic Offshore Procedures, but were a non-resident of the U.S. for any of the three most recent years, then you will qualify for the Streamlined Foreign Offshore Procedures. Under the foreign program, there are no offshore penalties. Therefore, taxpayers who meet the non-residency requirements of the Streamlined Foreign Offshore Procedures are far better off entering that program than the Domestic Procedures because they will be able to avoid paying the 5% penalty.
2. Have previously filed all required U.S. tax returns for each of the last three years. This requirement is pretty self-explanatory. The only nuance is the way the 3 year period is determined. The years in issue are the three most recent years for which the due date for filing a return has already passed. Therefore, taxpayers who have filed an extension for their prior year return, and the extended due date (generally October 15th) has not already passed, then the years in question are the three years prior to the return for which the extension applies.
3. Have failed to report income from a foreign financial asset and pay tax on that income. This requirement needs a little context in order to make sense. On its face, it appears odd that the IRS requires you to have unreported income in order to qualify for this favorable 5% offshore penalty. However, the reason for this requirement is that taxpayers who properly reported all of their income and paid all the tax that was due on that income have a better option available to them. If you reported all your income, and paid all your tax, yet failed to file your FBARs or other international information returns, all you need to do is file all of the delinquent forms, amending your last three tax returns if necessary, and you will not be penalized for failing to report your accounts on time.
4. Your failure to pay tax on your foreign income and report your foreign assets must have resulted from non-willful conduct. In this context, the word “willful” refers only to a “conscious disregard of a known legal duty.” Under this definition, if your failure to meet your tax obligations was due to a mistake, a misunderstanding of the law, inadvertence, or negligence, then your conduct meets this requirement.
Streamline Offshore Disclosure Tax Attorney Atlanta