What are the Options for Voluntarily Disclosing Offshore Assets in 2021?News, Offshore Account Update
Posted in on March 31, 2021
If you own foreign financial assets, you may have an obligation to disclose these assets to the IRS. Under the Foreign Account Tax Compliance Act (FATCA), U.S. taxpayers must report foreign financial assets that have an aggregate maximum value (AMV) of $50,000 or more at any point during the relevant tax year (this is in addition to the FBAR requirement for offshore accounts with an AMV of $10,000 or more). If you are subject to FATCA, what are your voluntary disclosure options in 2021? Virginia offshore tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, explains:
For Unreported Offshore Assets Owned in 2020
If you owned offshore assets that exceeded the $50,000 AMV threshold in 2020, you are not currently behind. You have until Tax Day 2021 (extended to May 17, 2021, for individual taxpayers) to report your foreign financial assets from 2020. In order to do so, you will need to complete IRS Form 8938 (for most taxpayers) and submit it with your federal return.
For Unreported Offshore Assets Owned Prior to 2020
If you owned foreign financial assets in any year prior to 2020 which you have not disclosed to the IRS, then you are behind on your federal reporting obligations. Simply disclosing these assets in your 2021 filings will not fix the issue. Instead, you must use either: (i) the IRS’ Streamlined Filing Compliance Procedures, or (ii) the IRS Criminal Investigation (IRS-CI) Voluntary Disclosure Practice.
Streamlined Filing Compliance Procedures – For Non-Willful Violations
The IRS’ Streamlined Filing Compliance Procedures are available to U.S. taxpayers who have unintentionally fallen short of meeting their obligations under FATCA. If you have only recently learned of the obligation to report foreign financial assets to the IRS, then you may be eligible to make a streamlined filing—as long as you are not currently facing an audit or investigation.
When making a streamlined filing, you must certify that your disclosure violation was non-willful, and you must also pay any outstanding taxes, interest and penalties you owe. In order to ensure that you comply with the streamlined filing requirements, it is best to work with an experienced Virginia offshore tax lawyer to submit your filing.
IRS-CI Voluntary Disclosure Practice – For Willful Violations
For taxpayers who willfully withheld information about their foreign financial assets from the IRS, the Streamlined Filing Compliance Procedures are not an option. Instead, it is necessary to consider the option of using the IRS-CI voluntary disclosure practice. This can be risky – as it does not guarantee immunity from prosecution – but when done correctly it can significantly mitigate the costs of a willful FATCA compliance failure.
Schedule an Appointment with Virginia Offshore Tax Lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group
If you need help with FATCA compliance, we encourage you to schedule a confidential consultation at Thorn Law Group. To schedule an appointment with Virginia offshore tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, please call 703-752-3752, email email@example.com or contact us confidentially online today.Share This Post