The IRS has created the Offshore Voluntary Disclosure Initiative for all taxpayers who have offshore accounts. It allows them to report to the Internal Revenue Service (IRS) financial activity and pay the appropriate fees without having to face high penalties and criminal charges. If you have any offshore activity, then you are asked to participate in the Offshore Voluntary Disclosure Initiative. Not participating and falling under the examination of the IRS will result in $100,000s of penalties and possible jail time. Participating is much easier on you as a taxpayer.
How do you participate in the Offshore Voluntary Disclosure Initiative?
Step 1 – Know Your Offshore Financial Activity
When you complete you regular IRS reporting for your personal and business activities, you have to know the details of your financial life. You usually end up with piles of paperwork showing income, another showing expenses, and others showing deductions. The same is to be said for your offshore financial activity. You need to have all your paperwork in order and ready to report. This includes all balances, income, expenses, and other transactions that the IRS forms will ask for.
Never guess! This can lead you to more trouble in the end as it can be viewed as criminal activity. Be completely honest and accurate. Have paperwork to support everything you declare in the Offshore Voluntary Disclosure Initiative. Never face the IRS with guesses. They frown upon that. If you do have to make an estimate, have documentation on how you came up with it. If it is acceptable to the IRS, you are fine.
Step 2 – Fill Out Appropriate IRS Reporting Forms
When the Offshore Voluntary Disclosure Initiative was developed, the IRS created forms specifically for those that stepped forward for voluntary disclosure. These include an amended 1040 return (1040X) and a TD F 90-22. The 1040X return might include various schedules such as B, C, or D that will have to be amended and filed, also.
These need to be filed by the Offshore Voluntary Disclosure Initiative deadline set by the IRS at the start of each tax season. Failure to meet this deadline will eliminate your participation in the Initiative which means more penalties and a higher chance of criminal charges being filed against you.
If you know that you are eligible for the Offshore Voluntary Disclosure Initiative, don’t wait until the deadline to get everything together and filed. Do it as early as you can.
Step 3 – Pay Fees and/or Penalties
You will not be able to avoid paying the IRS even by participating in the Offshore Voluntary Disclosure Initiative. Why? Because reporting of the offshore income was not done throughout the year as your other activity is done. Also, you will have filed your regular tax return without this information which means that taxes were not paid on it.
Don’t be surprised that you will owe money to the IRS. It is just a matter of how much.
Step 4 – Sign Voluntary Disclosure Agreement
When all is said and done, the Offshore Voluntary Disclosure Initiative ends with you signing a voluntary disclosure agreement which both sides are in agreement to the results of the Initiative and that all fees and penalties have been paid.
What to Do When Faced With Problems
Overall, the Offshore Voluntary Disclosure Initiative appears to be an easy process though it is time consuming. Yet, not everything is as easy as it appears and problems do arise. It was designed to help the taxpayer, but that did not mean that it was always clear to understand and follow.
Yes, voluntary disclosure makes it easier. But you might not understand the whole process of the Offshore Voluntary Disclosure Initiative, questions the IRS is asking, or why your IRS bill is so high. That is when you need help, and you need experienced help.
www.tax-relief-debt.com is a great place to help clear up those problems that you face when you go through the Offshore Voluntary Disclosure Initiative. With tax experts behind every consultation, you find answers to your questions, support for the process, ability to negotiate with the IRS, understand the voluntary disclosure agreement, and people who know what they are talking about.
Don’t let the Offshore Voluntary Disclosure Initiative scare you. It is there to help you report correctly to the IRS your offshore activity. Let www.tax-relief-debt.com help you through it with their experienced staff.