The Four Options For OVDI India You Must Know Now

The Four Options For OVDI India You Must Know Now

The Internal Revenue Service has power to impose a tax on income from around the globe. The Internal Revenue Service has universal jurisdiction to tax income anywhere it is earned --- even it was earned on the moon! Not only that, it is a crime not to tell the Internal Revenue Service about foreign accounts if their value exceeds $10,000.00 by filing an FBAR form every June. For those citizens in non-compliance, the IRS ran two offshore voluntary disclosure initiatives (OVDI). The last one passed on August 31, 2011. For those taxpayers wondering what to do, this article talks about their four remaining options.

The first option available is to roll the dice and pray for a miracle. The benefit is that it costs nothing to do, and there is certainly a likelihood of greater than zero, no matter how slight, that the taxpayer can get away with the crime. The disadvantages are that if discovered, the penalties are harsh. In both financial cost and in emotional drain of being charged with a federal crime. Even if found not guilty, a criminal trial is still incredibly costly.


Here's the thing - every global banking and financial institution must be in the US market or it would become such a small time player that the foreign bank's corporate board would revolt and replace management --- immediately. Despite everything you may have heard, the US is still by far the largest economy in the world and every global bank must be on the good side of the Internal Revenue Service - otherwise that foreign bank will be shut out of getting American capital or customers! Part of being on the good side of the Internal revenue service is to cough up what the Internal Revenue Service says to cough up. As a result the foreign bank is really at the mercy of the Internal Revenue Service-.meaning so are the banks' account holders. So you see, hiding behind the shadows becomes a more dangerous and dangerous. And once the IRS starts seeking a criminal indictment, there is only one option left-pay outrageous taxes and the highest penalties and face the significant possibility of real jail time.

Option 2: Renounce citizenship; Leave the country. Do you want to say goodbye to the Internal Revenue Service? There is only one way to do it. That is, to renounce one's citizenship and no longer be a American citizen. The process is not as easy as you may think. Also, a requirement of proper expatriation is that a citizen has to be in compliance with all tax laws and pay an expatriation tax in order to make it official. If you fail to expatriate properly, you would still be subject to the jurisdiction of the US, meaning nothing was accomplished and you are still subject to all the requirements of the tax code. Renouncing your citizenship only gets rid of future tax liabilities, but you have to report the existence of unreported financial accounts first.

The third option is to quietly filed amended 1040X's and not explicitedly tell the Internal Revenue Service that you are seeking to come clean. This is known as a "quiet" or "soft" disclosure. The advantage is that there is little upfront cost to this. But the horrible possibilities are that you may give the IRS a very handy clue to charge you criminally, and if caught, you are see high penalties and a nasty and real possibility of criminal charges.

The Internal revenue service says that these 1040X's are "red flags." Even though the tax returns are amended and back taxes paid, the Internal revenue service tells says that foreign account holders will still face penalties and criminal charges. In addition to charging and prosecuting people with undeclared foreign income, the DOJ claims that it has also begun prosecution of people whose "Quiet Disclosures" were discovered by the IRS.

The "soft" disclosure option is incredibly risky for several reasons. One massive failing is that they do not remedy the matter of the taxpayer's non-compliance in FBAR filing; failing to filing an FBAR can be a criminal charge just by itself. So simply filing a quiet disclosure 't go far enough to eradicate any likelihood of criminal investigations. In fact, the 1040X may --- well here's the massive problem with this alternative --- the soft disclosure does nothing about the failure to FBAR forms. There are still criminal and civil charges that may be pending for failing to file an FBAR, but simply give the Internal revenue service a very handy to locate you.

Option 4: Pre-emptive Disclosure and Negotiation (" Offshore Voluntary Disclosure Initiative") If enjoying the rest of your life is chief importance, there can be no doubt that this is the best option. Yes, the 2011 initiative expired, but that does not mean a voluntary disclosure can not be filed. The IRS always welcomes offshore disclosures. The only deadline that was missed was the particular provisions of the 2011 OVDI which capped certain penalties.

There are only two requirements. First, the taxpayer can not be under examination. In addition, the source of the funds in the foreign bank accounts can not be from an illegal source. Think drug trafficking or money laundering.

If someone is still questioning what the appropriate course of action is, it is imperative that they only talk to a experienced offshore tax law firm. The attorney-client privilege only applies in communications to an lawyer. The IRS can subpoena a CPA or nearly anyone else to testify against a taxpayer.

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