LOS ANGELES, June 20, 2014 (GLOBE NEWSWIRE) -- Dennis Brager, founder of the Brager Tax Law Group, notes that a massive change is coming to the IRS Offshore Voluntary Disclosure Program (OVDP). "These changes will affect different groups of taxpayers differently," says Brager, "and it will be at least a few days before tax attorneys have had an opportunity to make sense of it all."
One group of FBAR non-filers that have a very short time frame to get into OVDP is those individuals who have offshore bank accounts with a foreign financial institution which has been publicly identified as being under investigation, or is cooperating with a government investigation. The same goes for taxpayers who worked with a "facilitator" who helped the taxpayer establish or maintain an offshore arrangement if the facilitator has been publicly identified as being under investigation or as cooperating with a government investigation.
Those individuals have until August 3, 2014 to enter the OVDP. If they do not enter the OVDP by that date then they will still be eligible to enter the OVDP, but they will be subject to a 50 percent offshore penalty rather than the existing 27.5 percent penalty. If the IRS already has a particular taxpayer's name, then that person will not be eligible to enter the OVDP, and could be subject to multiple FBAR penalties.
The IRS has published a list of those foreign financial institutions or facilitators. The IRS may add names to that list at any time, and entire groups of taxpayers will then be cut-off from OVDP without prior notice.
For those taxpayers whose conduct was non-willful, however, they may be able to escape with only a one-time five percent offshore penalty, or perhaps no penalty. The IRS will not assess any FBAR penalties, nor will it assess a 20 percent accuracy penalty under IRC Section 6661. "Taxpayers who enter the streamlined programs are not automatically subject to audit, but may be audited under existing IRS procedures," warns Brager. "Even the IRS warns that if the submissions are inaccurate, taxpayers could be subject to additional liabilities, and even criminal tax prosecution."
Those taxpayers who already signed closing agreements, and paid substantially greater penalties will not be able to reopen their cases and obtain refunds. Individuals who are currently in OVDP, but who have do not have countersigned closing agreements may be eligible to enter the streamlined programs if they otherwise qualify, but are subject to additional strictures under transitional rules announced by the IRS.
Based in Los Angeles with a worldwide client base, the Brager Tax Law Group is a tax litigation and tax controversy law firm, which represents clients with tax disputes with the IRS, the California Franchise Tax Board (FTB), the State Board of Equalization (SBE) and the Employment Development Department (EDD). All of the firm's tax lawyers were former trial attorneys with the IRS.
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Source:Brager Tax Law Group