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Avoiding Tax Fraud? OVDP Closes September 28

On August 21, President Trump’s former campaign chairman, Paul Manafort, was convicted on 18 counts of tax evasion, bank fraud and hiding foreign bank accounts. Among the charges, Manafort was found guilty of filing a false tax return in each of tax years 2010 through 2014, as well as failing to file a Report of Foreign Bank and Financial Accounts (also known as the “FBAR” or “FinCEN Report 114”) in 2012.

The U.S. Department of Justice (“DOJ”) also announced this week that a US individual pled guilty to willfully failing to file an FBAR in 2010, despite having over USD $1 million in his bank accounts in Israel. In addition to failing to file the FBAR, the individual had taken steps to conceal the offshore funds/accounts.

Two remedial options that could have been considered in these scenarios are the IRS Offshore Voluntary Disclosure Program (“OVDP”) and the Streamlined Filing Compliance Procedures (“Streamlined Filing”). However, OVDP closes on September 28, 2018, so if this program fits your needs you will need to act fast. Streamlined Filing will remain an option for taxpayers to voluntarily come into compliance and certify that their failure to report foreign financial assets and pay all tax due in respect of those assets did not result from willful conduct on their part.

OVDP Closes

OVDP is designed for taxpayers with exposure to potential criminal liability and/or substantial civil penalties due to a willful failure to report foreign financial assets and failing to pay tax due in respect of those assets. OVDP is designed to provide such taxpayers with protection from criminal liability and allow them to resolve their civil tax and penalty obligations. This process includes completion of the Offshore Voluntary Disclosures Letter (Form 14457) and attachment (Form 14454).

Streamlined Filing

Streamlined Filing is available to taxpayers certifying their failure to report foreign financial assets and pay all tax due in respect of those assets did not result from willful conduct on their part. Streamlined Filing is designed to provide to taxpayers in such situations with:

  • A streamlined procedure for filing amended or delinquent returns;
  • Terms for resolving their tax and penalty procedure for filing amended or delinquent returns; and
  • Terms for resolving their tax and penalty obligations.

Streamlined Filing requires taxpayers to file U.S. tax returns for the three most recent years that the filing due date has passed (along with all required information returns), and FBARs for each of the six most recent years that the filing due date has passed. The full amount of the tax and interest due in connection with these filings must be remitted with the delinquent or amended returns.

If you have foreign assets or foreign bank accounts, then you may have tax reporting obligations to consider. Delinquent international filings can lead to significant IRS penalties.

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