Under the US tax system, US persons – citizens, green card holders and residents – are required to file annual US income tax returns reporting worldwide income.
It is a legal obligation to ensure that “true and accurate” returns are filed with the IRS in a timely way to avoid risks of numerous penalties and, potentially, criminal prosecution.
Recently, the IRS has sent a strong message to US taxpayers residing abroad who may not yet have complied with their US income tax obligations.
Taking advantage of the recently announced IRS “Overseas Voluntary Disclosure” program can potentially help taxpayers reduce penalties and avoid prosecution.
Note that OVDI is not the best solution for all US persons and not all US persons are eligible for the program. As always in the past, FAWCO strongly recommends that you consult a tax professional but, given the August 31 deadline for OVDI, you should do so quickly!
WHAT IS OVDI?
The 2011 OVDI is the latest in a number of efforts by the United States Government to encourage US persons who have not complied with their various US tax and related reporting requirements to become compliant.
The IRS has stated that the 2011 program is the non-compliant taxpayer’s “last best chance” to come forward with an element of “certainty” on the amount owed to the US government. After this, the implications are that the IRS will use its full arsenal of penalties, and the possibility of criminal prosecution, to aggressively find and “punish” the non-compliant taxpayer.
What is required under OVDI?
· The taxpayer must file all delinquent or amended returns and additional reporting obligations for 2003 through 2010 calendar years.
· The taxpayer must pay all taxes, penalties and interest charges.
· The deadline for participation in OVDI is 31 August 2011. This may be extended by 90 days if a request is submitted by this date.
What are the benefits of OVDI?
Under OVDI, individuals accepted into the program can avoid criminal prosecution. Costs, penalties and interest charges are clear and the individual has the peace of mind of being fully up to date and compliant.
While there are alternative disclosure procedures, OVDI may provide the best opportunity for the lower fixed penalties for becoming compliant.
Click here for the full article on the FAWCO website, prepared with information for which we very much thank US Tax & Financial Services Ltd in London.
Please share this information with others around you and seriously consider getting professional advice as to whether OVDI is right for you. Many of your questions can be answered here at this link, where US Tax & Financial will answer questions (free of charge) to help you decide which plan and firm is best for you.