Can IRS Offshore Account Program Clean Up Domestic Tax Problems Too?
August 16, 2012
In a word, yes. In fact, you can’t be selective when amending tax returns. You can’t pick and choose what to correct. If you amend a tax return, you must fix all errors. As a corollary, if you’re coming clean in a voluntary disclosure you must clean up everythingin the tax years that are impacted.
Whether your unreported income is foreign or domestic, the IRS expects you to fully correct your mistakes. The OVDP is designed to let the thousands of people with undeclared accounts and unreported income to pay their taxes, interest and fixed penalties. The tradeoff? They’ll escape the far more draconian penalties and prosecution that staying quiet can entail.http://i.forbesimg.com tMove down
Domestic Tax Problems. The OVDP is a nice avenue for cleaning up domestic tax flubs at the same time. For foreign account disclosures, the IRS has a helpful set of FAQs. They were updated in late June 2012 in key respects. Notably, though, going beyond the subject of offshore account and income, the IRS has made it crystal clear that you can fix domestic tax problems at the same time you disclose your foreign income and accounts.
In fact, since you can’t be selective, you must make an accurate and complete voluntary disclosure. If you have undisclosed income tax liabilities from domestic sources in addition to those related to offshore accounts and assets, they must also be disclosed in the OVDP. See FAQ 24.
Different Examiners. One practical wrinkle this can invoke is the nature of the examination you’ll undergo. IRS OVDP cases are handled by dedicated Revenue Agents handling foreign account and income disclosures. If you have domestic tax issues too, you may end up with a different IRS examiner for those issues.
You’ll have one Revenue Agent handling the domestic issues and one handling the foreign issues. The domestic disclosure will be treated as a disclosure under the Voluntary Disclosure Practice and may be assigned to a different examiner.
If you have Unreported Foreign Bank Accounts, contact the Tax Lawyers at Marini & Associates, P.A. for a FREE Tax Consultation at www.TaxAid.us or www.TaxLaw.ms or Toll Free at 888-8TaxAid (888 882-9243).
Read more at: Tax Times blog