IRS Announces Reduced Penalties to Come Clean for U.S. Taxpayers Living AbroadBy Baker Hostetler, PRNE
Sunday, June 5, 2011
WASHINGTON, June 6, 2011 -
In a bid to encourage U.S. taxpayers living abroad to file U.S. tax
returns and Report of Foreign Bank and Financial Accounts (FBARs), the IRS
has significantly reduced the civil penalties associated with the 2011
Offshore Voluntary Disclosure Initiative. On June 2, 2011, the IRS announced
new rules applicable to U.S. taxpayers who live outside the United States.
"This is a much needed development and a welcome relief for U.S.
taxpayers living abroad who want to come into compliance with U.S. filing
obligations," said Jim Mastracchio, Co-Chair of Baker Hostetler's nationwide
tax controversy practice and the head of the firm's Washington, D.C. tax
practice. "We have advised a number of U.S. taxpayers living outside of the
U.S., and we would expect many to take advantage of the settlement program
now that the civil penalties have been substantially reduced."
To qualify, taxpayers must have resided in a foreign country, complied
with the tax laws of the country of residence, and had less than $10,000 per
year in U.S. sourced income. Under the new rules, they can file delinquent
FBARs and other U.S. tax returns, paying a 5% penalty on financial assets
(such as bank accounts, savings accounts and investment accounts), and
avoiding all penalties associated with non-financial assets such as business
interests, real property and artwork. Under the initial settlement guidelines
a penalty of 25% would have been imposed. Taxpayers must take certain steps
before August 31, 2011 in order to qualify for the settlement initiative.
For questions regarding this announcement and other tax matters, you can
reach Mr. Mastracchio at +1-202-861-1650 or email@example.com.
About Baker Hostetler
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