1. The Offshore Voluntary Disclosure Initiative
Under this program, taxpayers who are found to be willful may submit their name to the IRS in advance of making any disclosures regarding their tax issues. The IRS will then notify the taxpayer that the taxpayer’s record is clean as far as the IRS is concerned and that the taxpayer is not under examination, nor have any foreign banks reported that the taxpayer has a bank account in that bank. If the I.R.S. has prior knowledge of the taxpayer’s failure to comply, the taxpayer will not be able to enter this relief program.Once the taxpayer has received this clearance from the IRS, the taxpayer will then be required to file eight years of amended tax returns, together with eight years of proper reports for the taxpayer’s foreign bank accounts.
The taxpayer will then be required to include in the amended tax returns any and all income not reported from the foreign bank accounts and pay the tax on such income. This tax will be subject to a 20% accuracy penalty and will, in addition, be charged with interest on unpaid taxes. The taxpayer will also be required to pay a bank deposit penalty equal to 27 ½% of the highest bank deposit balance over the eight year period.
2. The Streamlined Program – Nonresident Taxpayers
The Streamlined Program may apply to United States taxpayers who are resident outside of the United States. United States taxpayers who are tax residents outside of the United States may clear their record for their failure to file foreign bank reports in a much simpler fashion than those who are resident in the U.S. They must however be “non-willful” in their failure to file the foreign bank reports.Non-willful taxpayers who are nonresidents outside of the United States will be permitted to enter into the Streamlined Program for nonresident taxpayers. Pursuant to the Streamlined Program, they will be required only to file three years of tax returns that should be amended to include any and all unreported income and they will be required to file FBAR reports for the prior six years. There will be no penalty assessed on foreign bank deposits of those United States taxpayers who are residents abroad.
3. Streamlined Program for Resident Taxpayers
The Streamlined Program is also open for United States taxpayers who are U.S. residents. United States taxpayers who are tax residents within the United States and are “non-willful” may clear their record for their failure to file foreign bank reports.Non-willful taxpayers who are residents of the United States will be permitted to enter into the Streamlined Program for resident taxpayers. Pursuant to this Streamline Program, they will be required only to file three years of tax returns that should be amended to include any and all unreported income and they will be required to file FBAR reports for the prior six years. There will be a five percent penalty assessed on foreign bank deposits of those United States taxpayers.
Read the full article "The FATCA Team Approach; The Role of Lawyer and Accountant" by Richard S. Lehman, Esq. http://www.lehmantaxlaw.com/?p=1388
