WASHINGTON, Sept. 4, 2012 /PRNewswire/ -- The Internal Revenue Service has just announced guidelines for a streamlined version of its 2012 Offshore Voluntary Disclosure Program for taxpayers with undeclared foreign accounts. The new program, announced on August 31, provides relief for certain U.S. taxpayers who reside outside the country, by eliminating civil monetary penalties and providing retroactive elections for certain retirement plans.
"The streamlined version of the 2012 program imposes no FBAR penalties and only requires the submission of three years of tax returns," said Jim Mastracchio, Co-Chair of BakerHostetler's National Tax Controversy Practice. "If you have an unreported offshore bank account, or unfiled FBARs, it is important to seek counsel as soon as possible. Whether the new streamlined program or the traditional offshore voluntary disclosure program is appropriate depends on the facts and circumstances of the taxpayer's case." He noted that taxpayers who do not report income from offshore accounts face stiff civil monetary penalties and possible criminal prosecution.
"We have seen cases where a taxpayer is now facing criminal charges after attempting to make voluntary disclosures, but were ineligible because the IRS was already in possession of their foreign account information," Mastracchio added.
Another important aspect of the streamlined program involves Canadian citizens. "The streamlined program offers needed relief for Canadian citizens who live in the U.S. and failed to properly report their Canadian Retirement Plan," said Jay Nanavati, BakerHostetler counsel and former DOJ Tax Division prosecutor. Unless Form 8891 is attached to a U.S. federal income tax return, the earnings in those plans are subject to tax in the U.S. "The new streamlined procedure allows a retroactive application for income tax deferral under the new rules," Nanavati added.
The streamlined procedure generally requires a submission of a questionnaire, filing of U.S. federal income tax returns for the 2009, 2010 and 2011 tax years and submission of FBARs for the last six years, if these forms were previously not filed. For questions regarding the IRS voluntary disclosure programs and other tax matters, please contact Jim Mastracchio at (202) 861-1650, email@example.com; and Jay Nanavati at (202) 861-1747, firstname.lastname@example.org.
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Contact: Tracy Hager