Is there relief for Taxpayers who previously closed their offshore voluntary disclosure cases under the new streamlined procedure? Practitioners comment on the situation.
In an interesting article published in Taxanalysts – Tax Notes Today, “Practitioners Disagree on Fairness of Lack of OVDP Retroactivity” by Andrew Velarde, tax practitioners weigh in on the lack of access to the new streamlined procedures for taxpayers with closed cases from their previous offshore disclosure filings. In our previous blog post, “IRS Offshore Voluntary Compliance Programs Expanded and Modified,” we discussed the new streamlined procedures announced by the IRS on June 18, 2014. Generally, these new procedures afford eligible taxpayers the opportunity to pay a 5% asset based penalty (for residents) as opposed to the Offshore Voluntary Disclosure Program’s 27.5% penalty (assuming, of course, that the eligible taxpayer has met certain criteria and has signed a certification under penalties of perjury that the taxpayer did not act willfully in their non-filing).
Questions or concerns about how this potentially affects you? Consult with a tax professional on whether this is prudent for you.
To obtain a copy of “Practitioners Disagree on Fairness of Lack of OVDP Retroactivity” by Andrew Velarde, please contact Taxanalysts.
US Tax Law rewards U.S. corporations with substantial tax benefits when they buy foreign companies and declare that they are based overseas.
A tax inversion is a tax avoidance tool available under the Internal Revenue Code, whereby a US company acquires a foreign company and then claims that its base of operations is now located outside of the United States. By doing so, the US company can substantially reduce its US tax obligation. Treasury Secretary Jacob Lew noted in an opinion piece published in the Washington Post yesterday that since the last major overhaul of the US Tax Code in 1986, many foreign countries have reduced their corporate tax rates, effectively making it inviting for US companies to move many operations abroad. Tax inversions are one way to make that move and legally minimize their US tax obligation.
On Monday, July 7, Ashvin Desai, a medical device inventor from California, was sentenced to serve six months in prison and six months and one day of home confinement for concealing more than $8 million in foreign bank accounts in India and Dubai. Desai also faces a $14 million penalty for failing to report the foreign bank accounts to the government on tax returns and FBARs.
To read the full story, click here.
In this week’s REWIND of international business news, Canada gets tough on spam, China hammers down on M&A deals and shipping alliances, and in a curious spirit of bonhomie, Russia gives in on its bitcoin stance and offers tax amnesty for offshore companies.
On June 3 at the OECD International Tax Conference, the IRS Commissioner John Koskinen said the IRS expects to make modifications to its offshore voluntary disclosure program shortly that will likely lessen the penalties for those with unreported offshore accounts whose compliance failures have been non-willful.
This week in international business news, it is patent, trademark, and more patent. Could one small step for FindtheBest be a giant leap for patent law? Is Google making an extra effort to steer clear of lawsuit by FIFA over World Cup? EU investigates “patent box” tax breaks; could that spell trouble for Apple, Starbucks, and Fiat?
In her remarks to Congress this morning, Fed Chair Janet Yellen noted that while she is not overly concerned about the U.S. economy going forward, she is concerned that the U.S. housing market may be a drag on that continued recovery. She commented that while the U.S. economy was basically stagnant in the first quarter (a 0.1% annual growth rate), much of that stagnation can be attributable to the harsh winter in the U.S.
“I see that pause as mostly reflecting transitory factors, including the effects of the unusually cold and snowy winter weather.” Continuing her remarks, Yellen said “with the harsh winter behind us, many recent indicators suggest that a rebound in spending and production is already under way, putting the overall economy on track for solid growth in the current quarter.”
In this week’s REWIND of international business law news, a New York judge resuscitates a colonial law to allow a lawsuit against U.S. companies for doing business with the South African apartheid regime, India braces for a potential United States downgrade of its intellectual property rights classification, and New York authorities poise to charge area car dealerships in a scheme to export luxury cars to China.
It has been more than two years since the IRS launched the third official offshore voluntary disclosure program (“2012 OVDP”.) In its current form, 2012 OVDP has no set closing date. It is meant to bring U.S. taxpayers into compliance by offering them a fitted approach to filing informational returns and amending their tax returns for unreported offshore income without criminal proceedings.
The price tag? An asset based penalty in the amount of 27.5% of the highest aggregate balance in non-compliant accounts and an income based penalty in the amount of the underpaid tax on the unreported income, plus 20% of that tax plus interest.