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IRS Changes to Offshore Voluntary Compliance Programs

August 2014 -- US taxpayers are required to pay US income tax on their wordwide income, regardless of where the income is earned.  This includes income generated from foreign assets and financial accounts held with foreign financial institutions.  Besides reporting foreign income on Form 1040, taxpayers must also file FinCEN Form 114 (formerly Form TD F 90-22.1) Report of Foreign Bank and Financial Accounts (commonly referred to as FBAR) annually by June 30 to report financial interests.  This form is required even if the account does not generate any taxable income and the value of the account exceeded $10,000 at any time during the calendar year.  Over the years, taxpayers that have not complied with this disclosure requirement could be subjected to substantial penalties, should the IRS discover the existence of an unreported foreign account.  Since 2009, the IRS has had a voluntary compliance program that allows taxpayers to come into compliance with current foreign disclosure procedures.

On June 18, 2014 the IRS announced major changes in its offshore voluntary disclosure programs .....

 

To read more of this Silver Advantage Tax Alert by John Hsiao, CPA, Tax Manager at Michael Silver & Co., our member firm in Chicago, please click here.

 

 

 

 

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