September 17, 2018
IRS Announces: Streamlined Amnesty May End and Foreign Bank Executive Convicted
The IRS has various amnesty programs which provide relief for U.S. persons (U.S. citizens, and U.S. residents including green card holders living outside of the U.S.) who are not in compliance with their international tax obligations. However, the IRS announced back in March 2018, that one of the programs, the Offshore Voluntary Disclosure Program (OVDP), would end on September 28, 2018. Over 65,000 taxpayers have taken advantage of the OVDP program, under which the IRS has collected more than $11.1 billion in back taxes, interest and penalties. On September 4, 2018, the IRS confirmed the OVDP will end on September 28, 2018.
Also on September 4, 2018, the IRS reminded taxpayers that another amnesty program, the Streamlined Filing Compliance Procedures may end at some point.
The IRS gave 6 months’ advance warning of the end of the OVDP so, hopefully, the same 6 months’ advance warning will be given for the end of the Streamlined Filing Compliance Procedures. But, in many cases, a U.S. taxpayer may need several months to obtain all the data and information required from up to six prior tax years to prepare the application for the Streamlined Filing Compliance Procedures. In addition, there may be a rush of many taxpayers to meet the deadline, which may overload the resources of the tax practitioners who practice in the international tax area.
FATCA
An entirely separate U.S. provision, the Foreign Account Tax Compliance Act (FATCA), generally requires non-U.S. banks, stock brokers, and other non-U.S. financial institutions, to enter into agreement with the IRS to determine which of their clients are U.S. persons, and to report certain financial information on those U.S. persons to the IRS. The failure to enter into such an agreement with the IRS can result in a financial institution being subject to special U.S. withholding tax rules on certain cross-border payments with which the institution is involved.
Lack of compliance can also result in trouble for the executives of the financial institution itself. Recently, Adrian Baron, the former CEO of Loyal Bank Ltd., with offices in Hungary and the Caribbean was extradited to the U.S. from Hungary, and pleaded guilty to conspiring to defraud the U.S. by failing to comply with FATCA.[1] He is presently in custody in the U.S. awaiting sentencing.
The tentacles of FATCA provide more reasons to ensure all your U.S. tax compliance is current.
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