Voluntary Disclosure – Selbstanzeige in den USA

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Dr. Günther Grewe, WP RA StB CPA
+49 89 2351 3218 (15 Uhr /9h ET)
+1 914 816 1115
Grewe@WP-RA-usa.com
Grewe@WP-RA-usa.com

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Antje Klaunig, WP StB CPA
+49 89 6151 5973 (15 Uhr/9h ET)
+1 914 205 6002
Klaunig@WP-RA-usa.com

Voluntary Disclosure – Selbstanzeige in den USA

Voluntary Disclosure, or Selbstanzeige in German, is a legal process that allows US taxpayers to come forward and disclose unreported income or assets without facing criminal prosecution. This process can be complex, and it is important to work with experienced Wirtschaftsprüfer und Steuerberater in den USA^® who can guide you through the process and minimize your financial exposure.

At our firm, we have extensive experience with Voluntary Disclosure, and we can provide you with a comprehensive assessment of your situation, identify any potential risks, and assist you with the preparation and submission of your disclosure. Our team can also negotiate with the IRS on your behalf and work to reduce your potential tax liability.

We understand that the decision to come forward can be difficult, but with our guidance, you can take control of your tax situation and avoid the risk of criminal prosecution. Contact us today to learn more about Voluntary Disclosure and how we can help you achieve compliance and peace of mind.

Navigating the US Voluntary Disclosure Process for Unreported Foreign Assets

Understanding Your Options After the Offshore Voluntary Disclosure Program (OVDP) Ended

US taxpayers with unreported foreign assets must be cautious, as the Offshore Voluntary Disclosure Program (2014 OVDP) that once helped taxpayers avoid criminal and reduce civil penalties for willful failure to report foreign assets ended on September 28, 2018. The IRS now provides alternative options for addressing noncompliance with US tax and information return obligations concerning foreign investments.

1. IRS Criminal Investigation Voluntary Disclosure Practice
   In April 2020, the IRS released an  updated voluntary disclosure practice form and instructions. The instructions offer answers to common questions regarding eligibility for the disclosure practice.
2. Streamlined Filing Compliance Procedures
3. Delinquent FBAR submission procedures
4. Delinquent international information return submission procedures

For further guidance on addressing your offshore tax noncompliance, please get in touch with us. We are one phone call away; +49 89 2351 3218 or +1 914 816 1115 after 15h (9 am ET). We, your Wirtschaftsprüfer und Steuerberater in den USA^®, will assist you in determining the most appropriate solution for your situation.

The Importance of Addressing Offshore Tax Noncompliance

The IRS continues to fight offshore tax avoidance and evasion through whistleblower leads, civil examinations, and criminal prosecutions. Since 2009, 1,545 taxpayers have faced indictments related to international activities due to IRS Criminal Investigations. Taxpayers with offshore tax noncompliance must take appropriate action, as the specific response may vary depending on individual circumstances.

Tax Penalties and the Importance of Professional Tax Advice

Many assume the IRS will not impose penalties if they were not intentionally cheating on their taxes. However, the burden falls on the taxpayer to demonstrate reasonable action. Relying on professional tax advice can be one way to show this. Failure to convince the IRS may result in penalties, often around 25%. Higher penalties and even criminal prosecution are possible in some cases. Remember, most criminal tax cases begin with civil audits, so addressing offshore tax noncompliance with the help of an experienced Wirtschaftsprüfer und Steuerberater in den USA^® is crucial. For advice, please contact us or give us a call at +49 89 2351 3218 or +1 914 816 1115 after 15h (9 am ET).

A Closer Look at the IRS Criminal Investigation Voluntary Disclosure Practice

IRS Criminal Investigation Voluntary Disclosure Practice Explained

The IRS Criminal Investigation Voluntary Disclosure Practice (CI VDP) serves as a pathway for taxpayers who might have committed criminal acts to voluntarily disclose their past actions and come into compliance with the tax system. This practice enables individuals to avoid criminal prosecution while addressing their tax obligations.

Key features of the CI VDP:

a. Eligibility: Taxpayers with legal source income who willfully failed to report their foreign assets can use the CI VDP. The practice does not apply to taxpayers under a civil examination or criminal investigation nor to those who have disclosed their noncompliance to the IRS.

b. Disclosure Process: To begin the disclosure process, taxpayers must submit a preclearance request to the IRS Criminal Investigation Division. Once preclearance is granted, taxpayers must provide detailed information on their foreign assets, financial institutions, and facilitators involved in non-compliance.

c. Penalties: Under the CI VDP, taxpayers will likely face civil penalties for noncompliance, including a penalty for failing to file a Report of Foreign Bank and Financial Accounts (FBAR) and penalties for failing to submit required information returns. However, by participating in the CI VDP, taxpayers can avoid criminal prosecution.

d. Timeliness: Taxpayers need to act promptly and voluntarily disclose their offshore tax noncompliance before the IRS initiates any investigation or examination.

By utilizing the IRS Criminal Investigation Voluntary Disclosure Practice, taxpayers can mitigate the risks associated with unreported foreign assets, ensuring compliance with US tax laws and avoiding potentially severe criminal penalties.

To learn more about Criminal Investigation Voluntary Disclosure Practice, please reach out to us or contact us by phone; +49 89 2351 3218 or +1 914 816 1115 after 15h (9 am ET). Our team of knowledgeable Wirtschaftsprüfer und Steuerberater in den USA^® will assist you.

Understanding the Streamlined Filing Compliance Procedures for US Taxpayers

Addressing Previous Failures to Comply with US Tax and Information Return Obligations

The Streamlined Filing Compliance Procedures help US taxpayers correct past failures to comply with US tax and information return obligations regarding foreign investments. Although returns submitted under these procedures are not automatically subject to an IRS audit, they may still undergo examination, additional civil penalties, or criminal liability if deemed appropriate.

1. Streamlined Filing Compliance Procedures Overview

The IRS offers two different Streamlined Filing Compliance Procedures:

• US Taxpayers Residing Outside the United States
• Required: Certification by US Person Residing Outside of the US
• US Taxpayers Residing in the United States
• Required: Certification by US Person Residing in the US

2. Additional Filing Procedures

Alongside the Streamlined Filing Compliance Procedures, the IRS provides other filing options:

• Delinquent FBAR submission procedures
• Delinquent international information return submission procedures

3. Forms Required for Streamlined Filing Compliance Procedures

• Form 14653 – Foreign Streamlined Certification
• Form 14654 – Domestic Streamlined Certification

The Risks of Quiet Disclosures and the Importance of Compliance

The IRS strongly discourages “Quiet Disclosures,” which involve filing amended returns, delinquent FBARs, and paying tax and interest for previously unreported income from offshore assets without notifying the IRS. Unlike voluntary disclosure, quiet disclosures do not protect taxpayers from criminal prosecution. The IRS reviews all quiet disclosures and may impose civil or criminal penalties as appropriate ( IRM 4.63.3).

FATCA Regime and Its Impact on US Taxpayers’ Compliance

The Foreign Account Tax Compliance Act (FATCA) requires US taxpayers to disclose specified foreign assets exceeding certain thresholds. It also mandates foreign institutions to disclose US account holders or face a 30% withholding tax on specific payments from the US. The US has entered into bilateral intergovernmental agreements (IGAs) to implement FATCA’s information reporting and withholding tax provisions, allowing US authorities to access information on accounts held abroad by US persons. Noncompliant US taxpayers should consider reporting their foreign assets instead of risking discovery by the IRS and potential criminal prosecution.

Beginning in 2020,  expatriate US persons must provide their US tax identification number (TIN) to their local banks, or risk having their bank accounts closed or frozen.

For more information on the Streamlined Filing Compliance Procedures or FATCA, please contact us or call +49 89 2351 3218 or +1 914 816 1115 after 15h (9 am ET). We are your Wirtschaftsprüfer und Steuerberater in den USA^®.