IRS Form 14654 is used when submitting documents for the Streamlined Offshore Voluntary Disclosure Program. The video below has been prepared by a tax attorney at The McGuire Law Firm to provide additional information regarding the Form. You can contact The McGuire Law Firm to speak with a tax attorney regarding your tax matters, including foreign tax accounts and assets.
For many individuals, the Streamlined Offshore Voluntary Disclosure Program provided welcome relief in comparison to the “initial” Offshore Voluntary Disclosure Program. Many taxpayers with foreign accounts and assets contact wonder what forms and documents must be filed to apply for the Streamlined Offshore Voluntary Disclosure Program. In general, taxpayer’s must file the necessary FBARs, amend the necessary 1040s (1040X) and Form 14654. Further, based upon the facts and circumstances, other forms may not be prepared and filed. You should always discuss your requirements with your tax attorney and/or other tax advisors. The video below has been prepared to provide additional information regarding the forms filed with the streamlined program. You can contact The McGuire Law Firm to discuss your issues directly with a tax attorney.
Non-willful conduct is required under the Streamlined Offshore Voluntary Disclosure Program (Streamlined OVDP). If the failure to report foreign bank accounts and/or foreign financial assets was non-willful, you may be subject to a lower penalty base. The key question is, what constitutes non-willful actions by a taxpayer? Generally, the IRS would consider non-willful to mean the conduct or failure to properly report was due to a mistake, negligence or based upon a good faith misunderstanding of the law. Perhaps an understandable lack of knowledge may lead to non-willful conduct.
The video below also provides a short explanation of non-willful conduct, which of course is based upon the facts and circumstances of each case. Please remember to consult with your tax attorney directly if you have questions relating to FATCA, FBAR filings and/or other foreign tax compliance issues.
You can contact The McGuire Law Firm to speak with a tax attorney regarding your issues.
A Denver tax attorney at The McGuire Law Firm can assist you regarding the FATCA provisions and application of these provisions. Below is information related to U.S. and foreign financial institutions.
U.S. Financial Institutions
United States financial institutions (USFIs) in addition to other United States withholding agents must withhold 30% of certain payments to foreign entities that have a United States source, if the USFI or withholding agent are unable to document an entity for purposes of FATCA. An additional requirement exists for USFIs and United States withholding agents to report information relating to certain non-financial foreign entities with substantial U.S. owners to the Internal Revenue Service.
FATCA Registration applications can be submitted by USFIs online at the FTACA Registration website.
Foreign Financial Institutions
To avoid being withheld upon, under FATCA, a Foreign Financial Institution (FFI) can register with the Internal Revenue Service. In registering, the FFI agrees to report to the IRS information regarding their United States accounts, which would include the accounts of certain foreign entities of which have substantial United States owners.
Foreign Financial Institutions that enter into an agreement with the Internal Revenue Service in regards to reporting account holders, may be required to withhold 30% on payments to foreign payees if the payees do not comply with FATCA.
Most government entities, non-profits, small financial institutions and retirement entities are likely to be exempt from the status of an FFI that would require registering and reporting. FFIs would include banks & depository institutions, mutual funds, hedge funds, private equity funds, and certain insurance companies. If an FFI is not exempt the failure to register could cause a 30% withholding tax on some United States source payments that are made to the FFI. FFIs that register receive a Global Intermediary Identification Number (GIN) from the Internal Revenue Sevice.
A Denver tax attorney at The McGuire Law Firm can assist clients in regards to the FATCA provisions and regulations, as well as through the IRS’ voluntary disclosure program.
Contact The McGuire Law Firm to schedule a free consultation with a tax attorney in Denver!
As a Denver tax attorney, John McGuire works with clients to ensure their compliance with the Foreign Account Tax Compliance Act. The article below outlines compliance issues and considerations.
The Foreign Account Tax Compliance Act and related provisions became law in 2010. The act targets United States taxpayer who may be using foreign accounts and not reporting income or gain from these foreign accounts and therefore not complying with the Internal Revenue Code. Under the Internal Revenue Code and federal law, United State citizens are taxed on world-wide income. Although, credits exist from foreign earned income, all income must be properly reported and accounted for on the 1040 Individual Income Tax Return.
The primary focus of FATCA is to encourage United States citizens to report certain foreign financial accounts and foreign assets. Further, FATCA focuses on reporting by foreign financial institutions to report financial accounts held by United States taxpayers and/or foreign entities in which United States taxpayers hold a substantial economic interest. Therefore, the provisions of FATCA impact individuals holding foreign accounts or assets, in addition to economic interest in certain foreign entities.
Individual taxpayers must report foreign accounts and other offshore assets on Form 8938, and attach Form 8938 to their 1040 Individual Income Tax Return. If a taxpayer’s total foreign assets are below a threshold, the individual does not need to file Form 8938. If an individual’s value of foreign assets is $50,000 or less at the end of the tax year, and never exceeded $75,000 during the tax year, the individual does not have to file Form 8938. This threshold may be higher for individuals who live outside the United States, and the threshold can change depending upon a taxpayer’s filing status. It is important to note that the reporting requirement for Form 8938 is different than the reporting requirement to comply with the FBAR rules (Report of Foreign Bank and Financial Accounts). The Internal Revenue Service is also expecting to issue regulations that would require an entity holding foreign financial assets above the threshold to file Form 8938. However, until these regulations are issued by the Internal Revenue Service, the reporting requirement under Form 8938 only applies to individuals.
The Internal Revenue Service has initiated voluntary disclosure programs for individuals to disclose foreign assets and accounts, whereby the penalties that can be assessed to the individual are significantly lessened.
Contact The McGuire Law Firm to discuss FATCA issues with a tax attorney.
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