IRS pressure and new Foreign Account Tax Compliance Act (FATCA) rules taking effect July 1, 2014 are intimidating Swiss banks into breaking their sworn legal promise of bank secrecy. Foreign banks are forcing American clients to turn themselves in to the IRS before the bank does so. Turning yourself in on time can lead to lower (but still very significant) penalties and no jail time.
After too many horror stories (see “Expatriate Americans Break Up With Uncle Sam to Escape Tax Rules”) about normal middle-class Americans getting caught up in this tax dragnet, the IRS changed its rules to catch and release the smaller fish. See the IRS news release “IRS Changing Offshore Programs to Ease Burdens, Increase Compliance” (IR-2014-73). Here’s the new IRS program.
“IRS Eases Up on Accidental Tax Cheats” says “The Internal Revenue Service is sharply increasing the penalties on U.S. taxpayers who hide assets abroad, while lowering or eliminating fines on taxpayers if their failure to disclose offshore accounts was unintentional, the agency said Wednesday.”
If you want to learn more about these IRS programs, consider a consultation with our tax attorney who is an expert in this area and has handled many cases successfully. Attorney-client privilege will apply.
Update about OVDI: Under transition rules, a taxpayer who entered OVDP before July 1 is entitled to use Streamlined even without opting out of OVDP. On or after July 1, a taxpayer must choose between Streamlined and OVDP and cannot opt out of one into the other. Therefore, a taxpayer who is unsure whether he would be considered negligent or willful should weigh entering OVDP before July 1. Non-willful conduct is conduct that is due to negligence, inadvertence, or mistake or conduct that is the result of a good faith misunderstanding of the requirements of the law.