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Los Angeles Tax Law Blog

IRS to end offshore voluntary disclosure program: 3 FAQs

The Internal Revenue Service (IRS) recently announced the Offshore Voluntary Disclosure Program (OVDP) is coming to a close. The program began in 2009 and modified versions have been used since its inception. It offers United States taxpayers the ability to voluntarily report foreign assets and come into compliance with applicable tax obligations.

When will the OVDP end? The IRS has scheduled the program to end September 28, 2018.

Few estate tax returns will be filed in 2018 but many reasons for estate planning

In 2018, the IRS Statistics of Income predicts that 2.71 million Americans will pass away, and 99.9% of them won't owe Federal estate taxes. In fact, less than 1-in-10,000 estates will have to pay estate taxes - all due to Trump's 2017 new tax law that increased the basic exclusion amount to $11.18 million for each individual. While fewer estate tax returns will be filed, it's expected that the new law will drive more and more wealthy persons to make lifetime transfers of property - thus increasing the need to file gift tax returns.

Have a high net worth estate? Make the most of the new tax law.

Changes to tax law can impact one's current and future tax obligations and financial planning strategies. As a result, it is wise to have a basic understanding of the impact of tax reform.

One particular area of interest for high net worth individuals involves changes to the gift, estate and generation-skipping transfer (GST) tax. President Donald Trump's new tax law increases this tax exemption for United States citizens and residents to $11.18 million. This is almost double the previous rate of $5.49 million for 2017.

The tax litigation process

When taxpayers receive notification from the IRS about a tax problem, their main goal is to resolve the issue and make the problem go away. In some cases, when the tax debts are significant or the taxpayer denies the alleged wrong-doing, litigation is the only course of action.

In tax litigation, unlike other forms of litigation, the opponent is always the IRS. The IRS is a daunting adversary, with their seemingly endless budget and legions of staff. While tax litigation presents a unique set of challenges, cases can be successfully litigated by attorneys defending their client's position.

The importance of tax planning

Whether it is a financial transaction, an investment or real estate purchase, nearly every transaction is taxed. Tax planning involves mitigating risk and liabilities to find the most economically viable business solution. Tax law is highly specialized and failing to consider tax consequences is detrimental to business growth and development.

 

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