Resolve Tax Issues with Overseas Voluntary Disclosure Programs

Tax relief programs are meant to help the public servant, business enterprises and every working individual pay their taxes  to the government without fail.  Taxpayers irrespective of them being an individual or a business enterprise,  in their busy schedule fail to follow  according to the norms of filing their tax returns. The income tax departments have designed and developed various amnesty and  voluntary disclosure programs allow these tax defaulters  to come forward to pay their taxes in full.

Effective tax planning on the part of the of the taxpayer will help them avoid the penalties that come with  delayed filing of taxes .  Today's  globalized  work environment has led to a large number of distantly distributed and offshore teams. With such a  mobile workspace, it becomes quite easy for individuals to avoid tax payments. However, Internal Revenue Service and U.S. Government organizations have  engaged themselves through various practices to  bring the taxpayer with  undisclosed foreign bank accounts meet the  tax regulations in compliance with the U.S requirements. This is so because under the U.S. Department of Treasury and FBAR policies, any  citizen of the United States  needs to file an annual FBAR if he has any  financial account that is situated outside U.S or the value of the account surpasses $10,000 during the financial year.

The Overseas Voluntary Disclosure Program developed by the IRS is meant to  assist people  who have unintentionally or intentionally failed to pay and report the taxes on their foreign income and instead tend to cancel their offshore accounts. With  less penalty added,  this program aims to help those individuals or business enterprises to  willingly admit their missing tax dues and report voluntary disclosures.  Similar   IRS amnesty programs implemented earlier helped the government generate more than $4.4 billion.

In the era of globalization, the US IRS tax code requires every US citizen irrespective of presently residing or being a non-resident to declare their global income,  failure of which may lead to penalties. The penalties however depend on the tax evasion activities. However, the OVDP penalty framework  for the present year requires defaulters  too

Pay a penalty up to the maximum of 27.5% of the highest aggregate balance in any undisclosed  foreign accounts for  eight full tax years prior to the disclosure

File all tax returns including  payment of  back-taxes and interest for up to eight years, as well as any penalties incurred.

Though effective  tax planning by efficient service providers and tax professionals will  help the tax payers, the defaulters who file their tax returns under the Overseas voluntary disclosure Program  are also benefited. The voluntary disclosure provides them total compliance with US tax laws, analysis and planning to reduce FBAR penalty,  AMT strategies and foreign tax credit besides other benefits.