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Tax planning and foreign assets: Avoid hefty penalties

The United States government requires American taxpayers report foreign assets to the Internal Revenue Service (IRS). A failure to meet this obligation can result in hefty monetary penalties and fines as well as potential imprisonment. The severity of these penalties can increase as time passes without compliance. As such, any taxpayers that have yet to come into compliance are wise to do so promptly.

Another reason for prompt compliance: one of the programs that reduces the penalties is about to sunset. The IRS recently announced the end of the Offshore Voluntary Disclosure Program (OVDP). This agency has scheduled this program to close on September 28, 2018.

Are there other options for compliance? Yes, other options for compliance are available. One example is the Streamlined Filing Compliance Procedures. This option is available for those who can certify, “under penalties of perjury” that the failure to comply was non-willful.

Another is referred to as a quiet disclosure. This involves filing amended returns without making a voluntary disclosure. Although this may meet compliance requirements it can also result in further inquiry from the IRS and additional penalties.

Which option is best? These are just two available options. The right option for each situation will require a thorough review of each individual case. As such, it is wise for those who have yet to come into compliance with applicable reporting tax laws to seek legal counsel. An attorney experienced in tax planning and disclosure of offshore accounts can provide guidance and discuss the benefits and risks of available options for compliance.

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