Monthly Archives: September 2014

BLOOMBERG BNA SAMPLES ATTORNEY VIEWS ON STREAMLINED PROCESS

https://twitter.com/USCitizenAbroad/status/513434973958049792

The above tweet references the original article.

The Tax Wars Blog

Alison Bennett of Bloomberg BNA’s article “Questions surround Standard of Willful Path Conduct under Streamlined Version of OVDP” (9/17/14), summarizes some of her interviews with tax lawyers around the country concerning the Streamlined Filing Compliance Procedures announced by IRS on June 16, 2014.

I’ve questioned the usefulness of the Streamlined Process for U.S. persons in prior blog posts and my colleagues interviewed by Ms. Bennett have similar reservations. Some of the comments are summarized below, namely:

  • The government may take a stricter view of non-willfulness for those trying to transition out of the OVDP into the Streamlined Process under the transitional rules also announced on June 16, 2014.
  • One practitioner’s experience is that most transitional applications are being rejected by IRS.
    • Apparently, as I’ve discussed in earlier posts there is no appeal of this IRS decision.
  • The IRS seems to be interpreting non-willfulness using a stomach test: Did you know…

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Economic Patriotism is the Berlin Wall—Rebuilt

WHAT SHOULD YOU DO? YOU FAILED TO FILE AN FBAR BUT REPORTED ALL INCOME FROM AN OFFSHORE ACCOUNT

This is a very common situation. I have never heard of someone who didn’t about the FBAR to have filed the FBAR. (Unless it was some kind of accidental form filing).

The Tax Wars Blog

This predicament is not an uncommon occurrence.  Many taxpayers may have had a foreign bank or brokerage account and reported the income in their tax returns or earned no income but did not know they had to file an FBAR.  They are often panic-stricken over what they have heard are horrific consequences.  But, there is now light at the end of the tunnel thanks to a new IRS procedure aimed at these taxpayers.

Should these taxpayers with delinquent FBARS enter the OVDP?

Absolutely not.  The Offshore Voluntary Disclosure Program or OVDP is for tax criminals or those who fear imposition of a draconian civil FBAR penalty.  The OVDP is not for those who’ve reported all income from an offshore account but failed to file an FBAR or other foreign information return.

Should they elect the new Streamlined Compliance Procedures?

No, they should not.  The Streamlined Procedures (which are really two processes one for expats…

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WILL-O -HE WISP NON-WILLFULNESS IN THE STREAMLINED FILING COMPLIANCE PROCEDURE

Very nice post on “Streamlined” compliance and the willfulness issue.

The Tax Wars Blog

“A will-o’-the-wisp is an atmospheric ghost-light seen… at night, especially over bogs, swamps or marshes. It resembles a flickering lamp and is said to recede if approached, drawing (sojourners) from the safe paths.”(Wilkipedia).  Most clients with unreported offshore accounts who contact me these days want to enter the new IRS Streamlined Filing Compliance Program and insist that their conduct was and is non-willful. They are moved by the lower 5% penalty for U.S. persons, much less severe than the OVDP 27.5% penalty or 50% penalty for those having accounts with banks on the DOJ’s under investigation list.   But, non-willfulness like the will-o-the-wisp is a fickle fire.  You may see it but IRS may not, for non-willfulness or willfulness to a great extent is in the eyes of the beholder.  There is significant uncertainty about how IRS and the courts will apply the willfulness element of FBAR civil violations. Two court…

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