Home - About - Contact Toll Free (888) 916-7070

TrustMakers

Foreign Bank Account Voluntary Disclosure
Take the Free Quiz
Change the Font-Size on this pageLargest Article Text SizeLarger Article Text SizeNormal Article Text Size

Email Article Print Article

Foreign Bank Account Voluntary Disclosure

By Michael B. Nelson, Esq. - Email Editor

Date : September 24, 2009

ONE MORE GO ON VOLUNTARY DISCLOSURE:

On September 21, 2009 the U.S. Treasury made the announcement that a one-time extension of time to October 15, 2009 for complying with the special voluntary disclosure requirements of the Internal Revenue Service for Americans with unreported income from bank accounts situated outside the United States, its territories and possessions.

The original deadline was September 23, 2009. However, tax attorneys, C.P.A.s and Enrolled Agents were frustrated with the short period of time given by the U.S. Treasury to allow for a full assessment in disclosing tax information and amounts to the I.R.S. that will put their clients into close scrutiny by the I.R.S. and subject them to possible liabilities.

PERJURY

Although filing for the voluntary disclosure program may seem like a quick fix for the layperson, there are other factors that will be quite relevant with potential for financial loss. Many Americans may have made declarations under penalty of perjury prior to this special voluntary disclosure program, which may involve the non-reporting of assets or income from outside the United States.

PERJURY IN BANKRUPTCY

The United States enacted statutory provisions referencing perjury, in general, such as the False Oath provisions and the False Declarations provisions of 18 United States Code (U.S.C.), and now includes the use of unsworn statements subscribed to under penalty of perjury, but not under oath. In Bankruptcy, the false oath or false declaration by the debtor carries a penalty of financial loss as well as incarceration. Debtors have a duty to produce honest, complete financial records. Bankruptcy law presupposes that one who seeks its protection will deal honestly and fairly with creditors by furnishing a complete and accurate schedule of assets to the Bankruptcy Trustee. Therefore, a debtor who knowingly and fraudulently makes a false declaration, certificate, verification, or statement of concealed or undisclosed assets may be charged by the United States Attorney’s Office for both the concealment of the asset and the false statement even though the same asset is involved.

The perjury laws of the Federal Bankruptcy proceedings exhibit a remarkable similarity in the various perjury statutes found in Family Law Courts throughout the United States. Evidence a spouse may provide opposing counsel as to assets and/or income will fall under a statutory perjury provision scrutiny and severely change how a judge may decide division of property even years after the final divorce decree.

PERJURY IN FAMILY LAW COURT

It is now being discussed within the U.S. Treasury for agents to either be in Family Law Courts or review court dissolution papers to alert the I.R.S. to claims or admission of unreported income or concealed assets that may be uttered by one spouse against another during the discovery stage of a divorce or separation. In the past, the Courts have a long history of finding accusations between spouses of falsely filed tax returns, non-reporting of income and/or attempts of one spouse to hide assets. Generally there will be agreements made between spouses that any information obtained in the course of discovery, such as depositions and interrogatories, that this discovery will not be used against the other spouse via disclosure to the I.R.S. Now the I.R.S. is discussing ways to investigate this type of accusation/information, whether or not the spouses have any signed agreement between themselves, since the I.R.S. will not be a party to the privity agreement.

PERJURY INFORMATION SHARED WITH ALL 50 STATES AND THE I.R.S.

Should an American decide to apply for the voluntary disclosure, a letter similar to the one below offered by the I.R.S. as a sample draft letter must be included in the disclosure, and this information will be ultimately forwarded on to the state in which the American resides. All 50 states participate in an exchange of information program. Currently, there are two programs in operation. Both programs involve significant information exchanges and, therefore, although the I.R.S. offers a type of tax amnesty, the states do not. Thus, even though you may avoid significant penalties and interest charges on the Federal level, you may subject yourself to state tax penalties involving monetary and/or incarceration, depending on a state-by-state basis of their existing laws. Currently, there are more than 900 joint efforts operating and sharing examination reports, abusive scheme data, and other information. Tax return information includes everything utilized by the I.R.S. that has anything to do with a person’s tax liability. Examples are any information extracted from a return like names of dependents, business location, or bank account information; the taxpayer's name, mailing address, or identification number; information on whether a return has been or will be examined or subject to any other investigation; information contained on transcripts of accounts or on IRS computer systems; the fact of filing a return; and whether a taxpayer has a balance due account. This system also operates in both directions, allowing the states to provide the I.R.S. with information that is obtained at the state level. The automatic computer dumps from the I.R.S. to the states and states to the I.R.S. happen on a monthly basis.

INTERNAL REVENUE SERVICE
SAMPLE LETTER FOR TAXPAYER TO SUBMIT

Internal Revenue Service
Criminal Investigation
ATTN: Voluntary Disclosure Coordinator
CITY Field Office
Address
CITY, ST ZIP CODE
Re: Taxpayer Name
Tax Identification Number
Taxpayer Date of Birth
Taxpayer Address

Dear Voluntary Disclosure Coordinator:

To assist in a timely determination of my acceptance into the Voluntary Disclosure Program, (for Voluntary Disclosures involving offshore accounts or assets) I have addressed all of the following items:

· Please include your:
o Complete name:
o Social Security Number:
o DOB:
o Address:
o Passport Number (and Country):
o Current Occupation
· Taxpayer Representative and his/her contact information.
· Explain the source of the funds.
· Disclose if you or any related entities are currently under audit or criminal investigation by the Internal Revenue Service or any other law enforcement authority.

o Has the IRS notified you that it intends to commence an examination or investigation? Yes No

o Are you under criminal investigation by any law enforcement authority? Yes No

o If yes, please explain. · Do you believe that the IRS has obtained information concerning your tax liability? Yes No

o If yes, please specify.

· Please check the box to estimate the annual range of the highest aggregate value of your offshore accounts/assets.
Highest Aggregate            
Account/Asset Value 2003 2004 2005 2006 2007 2008
$0 to $100,000            
$100,000 to $1,000,000            
$1,000,000 to $2,500,000            
$2,500,000 to $10,000,000            
Greater than $10,000,000            
Greater than $100,000,000            
• Please check the box to estimate the potential total unreported income from the offshore account(s) during each disclosure period. If known, please enter exact amounts/assets.
Estimated Total            
Unreported Income 2003 2004 2005 2006 2007 2008
$0 to $100,000            
$100,000 to $1,000,000            
$1,000,000 to $2,500,000            
$2,500,000 to $10,000,000            
Greater than $10,000,000            
· For accounts or assets where you have control or are a beneficial owner of the account or asset, list any and all financial institutions and the country where the institution is located. For accounts, please also list the dates the accounts were opened and/or closed. Provide your point of contact at each financial institution.
· Explain the purpose for establishing the offshore account or assets. For example: Holocaust Compensation or Restitution; inherited account; account established prior to World War II, etc.; if tax non-compliance – please explain.
· List each person or entity affiliated with the account, their formal structure (i.e., if a corporation, foundation, or trust), and the nature of their relationship to the account (i.e. owner, power of attorney, parent entity of corporate account holder, etc.).
· Explain all face to face meetings, and any other communications you had regarding the accounts or assets with the financial institution(s). Also include face to face meetings or communications regarding the accounts or assets with independent advisors/investment managers not from the financial institution(s) where the funds are held. Provide the names, locations and dates of these meetings and/or communications.

To be included with all letters:
By signing this document, I certify that I am willing to continue to cooperate with the Internal Revenue Service, including in assessing my income tax liabilities and making good faith arrangements to pay all taxes, interest, and penalties associated with this voluntary disclosure.

UNDER PENALTIES OF PERJURY, I declare that I have examined this document and accompanying statements, and to the best of my knowledge and belief, they are true, correct, and complete.

Signature of Taxpayer___________ Print Name_________ Date_______

IRS reserves the right to make further contacts with the taxpayer to clarify his/her submission.

CONCLUSION

Just when you thought you already have a heavy burden of deciding whether you had not reported income from an offshore bank account, not reported offshore bank account information, or have hidden assets overseas, a whole new plethora of potentially heavier and more complex considerations arise for the informed individual. In some ways, it reminds a person of a large plate of spaghetti, wondering where a strand of spaghetti begins and where it will end. Before you proceed to participate in this special voluntary disclosure program it is critical that you locate a qualified legal advisor who will be able to assist you in being compliant and mitigating exposure, damages, and future litigation. Don’t forget that perjury is a very serious crime and improperly completing the draft letter above may place you into lying to a federal agent and possibly defaming people and/or organizations you chose to disclose in the letter that may ultimately prove to be untrue or deemed designed to be true but said in a negligent manner.

If you have questions, please email us at info@trustmakers.com.

By Michael B. Nelson
TrustMakers.com

 

 

RELATED ARTICLES:

ABOUT THIS EDITOR:

Michael Nelson is an international tax attorney licensed to practice before the United States Tax Court in Washington, D.C. as well as before the U.S. Treasury and the Internal Revenue Service

Full Bio - Email Michael B. Nelson, Esq.