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A Look At IRS Tax Amnesty Programs 2015

Saturday, June 27th, 2015

The losses incurred by IRS on offshore asset program are over $200 billion per year. The IRS requires US citizen living abroad to report non-US bank accounts, receipts of gifts from non-US citizens and interests from foreign corporations. The IRS levies heavy penalties on non-disclosure of income information. IRS also collects information from non-US financial institutions on providing details about US account holders in adherence with the Foreign Account Tax Compliance Act (FATCA).

Though the penalties may be big, it often comes with generous IRS tax amnesty programs 2015. Americans with assets or income abroad can avail any of these amnesty programs and get relief from paying hefty penalties. Amnesty programs are not for everyone. There are certain prerequisites to follow and the requirements to qualify for the program varies from person to person. You have to act before IRS contacts you. If you have not filed FBAR or returns on offshore assets and if you do not have any undisclosed income, you can get a waiver for penalty. You have to include reasonable cause statement informing the IRS that the reason for not filing is not due to negligence but due to justifiable reasons. End of the day you should have no unreported income.

The Streamlined Filing Compliance Procedures is the most commonly used where the taxpayer who failed to file tax returns can get into compliance to get rid of penalties. In such cases, the taxpayer has to file amended returns for the period where the income was not disclosed. Taxpayers outside the country have to pay back taxes with interest, and those who live in the country have to pay taxes with interest and penalty of 5% of the offshore assets. The Offshore Voluntary disclosure program is for those who willingly have not disclosed their income. Here tax returns for the previous eight years have to be done and FBAR for the previous six years with interest and penalty equaling 27.5% of offshore assets.