Surrey’s Premier Lifestyle Magazine

Don’t get caught out…IRS tax amnesty ends in September 2018

Gillian Everall of Everfair Tax warns of the impending closure of a US government tax amnesty programme and advises how to avoid potential penalties.
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Estimates show that the US government loses almost $200 billion in tax revenue per year and improving on avoidance is a high priority. However, one of the main amnesty programmes is due to close on September 28 2018 and to avoid potential penalties action must be taken now by those affected. US citizens and residents, including ‘green card’ holders, are required to report and pay tax on their worldwide income and declare their ownership of certain foreign financial assets and accounts. Failure to do so can result in significant penalties.

The current Offshore Voluntary Disclosure Program (OVDP) provides the opportunity for US taxpayers to disclose noncompliance associated with foreign accounts.
The requirements are that:
• Information regarding undeclared foreign financial assets, financial institutions and intermediaries associated with such assets is submitted.
• Amended (or complete original) tax returns and Reports of Foreign Bank and Financial Accounts (FBARs) are submitted for the past eight tax years.
• All tax, interest and applicable penalties due are paid.
• Payment of an Offshore Miscellaneous
Penalty equal to either 5% or 50% of the highest aggregate value of the taxpayer’s previously undeclared foreign financial assets.
According to the IRS, 56,000 taxpayers have used OVDPs and paid $11.1 billion in back taxes, interest and penalties. This peaked in 2011 with 18,000 people, but had reduced to 600 in 2017.

Key difference between the OVDP and Streamlined Provisions
The OVDP is for taxpayers with exposure to potential criminal liability due to wilful failure to report foreign financial assets. Streamlined procedures are for taxpayers that certify their failure to report foreign financial assets which
did not result from wilful conduct.
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Streamlined Filing
The Streamlined Filing programme will remain and is an ideal way to bring tax affairs up to date. Provided it can be proved disclosure and filing was not wilfully delayed, three years of back tax returns and six years of FBAR forms can be filed without incurring a penalty. This includes any previously reported foreign-owned income or assets. Taxpayers are also let off the 5% penalty needed to cover should they reside in the US.

What should I do now?
To take advantage of these programmes, you must actively seek and participate in them as they are not granted if the IRS contacts you first. And, if assistance is needed, please call our friendly team at Everfair Tax to see how we can help.
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essence info
Gillian Everall is Managing Director and Head of Private Client Tax Services for Everfair Tax based in Weybridge. Everfair Tax specialises in UK, US and Expatriate Tax and provides a unique tax advisory and compliance service to help manage personal or international complexities and the changing of family or business circumstances.
Telephone: 01932 428536