On February 8, 2011, the Internal Revenue Service announced a new voluntary disclosure initiative designed to bring noncompliant US taxpayers with unreported offshore income and assets back into the fold. The 2011 Offshore Voluntary Disclosure Initiative (OVDI) follows on the heels of the 2009 Offshore Voluntary Disclosure Program (OVDP), which ran from March 23, 2009, to October 15, 2009, and brought in 15,000 voluntary disclosures. Since that time, more than 3,000 taxpayers have come forward with undisclosed bank accounts. These taxpayers will also be eligible to take advantage of the 2011 OVDI.
Not surprisingly, the 2011 OVDI penalty structure is higher than that of the 2009 OVDP. Individuals are required to pay a penalty of 25 percent of the amount in the foreign bank accounts in the year with the highest aggregate account balance over the past eight years, plus back taxes and interest for the past eight years and accuracy-related and/or delinquency penalties. (The 2009 OVDP required six years of back taxes and a 20 percent penalty of the highest account balance in the foreign bank account.) In return, the IRS will forgo criminal prosecution and will not assert other civil penalties, including the FBAR penalty (which alone could exceed the value of the account).
As under the 2009 OVDP, some taxpayers may be eligible for a reduced 5 percent penalty for inherited accounts that they have never accessed. In addition, the 2011 OVDI creates a new penalty category of 12.5 percent for offshore accounts or assets that did not surpass $75,000 in any calendar year.
Taxpayers who wish to participate must file all original and amended tax returns and pay all taxes, interest and accuracy-related penalties by August 31, 2011, in order to take advantage of the new initiative. The IRS cautions that this is a hard-and-fast deadline that will not be extended. It will be challenging for some taxpayers to obtain all information from offshore banks by this date, so they need to act promptly.
It is always preferable for taxpayers to come forward before the IRS finds them. Discovery by the IRS has become increasingly likely in view of expanded US information reporting obligations for offshore assets, cooperation among countries under tax information exchange treaties, the sale and exchange of stolen lists of clients of offshore banks, and aggressive IRS pursuit of hidden assets offshore.
On October 24, Aaron Kriss will be speaking on a panel, entitled "Onboarding a New International Client," at the 13th Annual Delaware Trust Conference, presented by the Delaware Bankers Association and the Delaware Financial Education Alliance.
On April 26, Von Sanborn will be giving a presentation at "Cross Border Wealth, Estate and Tax Planning – What You Don't Know May Surprise You," a seminar being presented by the Estate and Business Planning Council of Hartford.
Von Sanborn will be chairing a panel, “As the Art World Turns: Current Trends and Considerations for Families with Art Collections,” at the Family Office Association Palm Beach Investment Forum.
Von Sanborn served as a panelist at the 23rd Annual International Wealth Transfer Practice Conference, presented by the International Bar Association and held in London, England.
Von Sanborn, Darren Wallace and Stephen Ziobrowski authored an article, "Key Tax Considerations For High Net Worth Family Offices," published in Law360.
Day Pitney Press Release
Von Sanborn and David Silvian were quoted in an article, "You, Taxes and 2018: What to Expect from the Tax Bill," published in Private Asset Management magazine (PAM).
Peter Bilfield and Steven Gold were mentioned in an article, "Day Pitney Expands Investment Management and Private Equity Practices," published inThe Hedge Fund Law Report.
Peter Bilfield and Steven Gold were quoted in an article, "Day Pitney Lands 2 Corporate Finance Partners," published in Law360.
Von Sanborn was featured in an article, "Five Questions: Von Sanborn on Art Law, Insurance and the IRS," published in the Connecticut Law Tribune.