Anthony R. Parent, Esq. of Parent & Parent LLP warns taxpayers about soft disclosure and properly disclosing offshore accounts.WALLINGFORD, CONN. -
The Offshore Voluntary Disclosure Initiative (OVDI) is the Internal Revenue Service program offering a chance for taxpayers to declare foreign income and assets, pay a penalty, and avoid criminal prosecution. Since the announcement of the 2012 initiative, there have been two major developments:
-The IRS’ landmark indictment of three Swiss bankers and private banker, Wegelin & Co.
-The Supreme Court’s decision in Kawashima v. Holder, stating that tax evasion through offshore accounts is a deportable offense.
“None of this is surprising. The IRS has more information and more power. And it is going to get worse for those who think they can hide,” said Anthony Parent, Founder of Parent & Parent LLP.
The 2012 initiative is the third iteration of the program, this time with no deadline and a penalty increase from 25% to 27.5% of the highest account balance. The good news is that there is abundant opportunity to argue for lower penalties, as long as the soft disclosure is legal.
For many taxpayers, the large penalty amount and cost to comply is understandably alarming. Many CPAs and attorneys have recommended a supposed middle ground: a so-called “soft disclosure” or “quiet” disclosure. Instead of formally participating in the OVDI program as administered by the IRS, the taxpayer files the missing Reports of Foreign Bank Accounts (FBARs) and amends those returns to include income that was previously unreported. The rationale is that this solves the past compliance problem without incurring the 27.5% penalty.
If you have a tax matter that you need assistance with, contact us. We can help. Call us at 888-727-8796 or email email@example.com.