{"id":1305,"date":"2012-08-13T19:34:33","date_gmt":"2012-08-14T00:34:33","guid":{"rendered":"http:\/\/www.patellawoffices.com\/blog\/?p=757"},"modified":"2012-08-13T19:34:33","modified_gmt":"2012-08-14T00:34:33","slug":"to-opt-out-or-not-opt-out-that-is-the-question","status":"publish","type":"post","link":"https:\/\/patellawoffices.com\/blog\/planning-for-tax-minimization\/to-opt-out-or-not-opt-out-that-is-the-question\/","title":{"rendered":"To Opt Out or Not Opt Out: That is the Question"},"content":{"rendered":"

When is it appropriate to make a quiet disclosure vs. making a disclosure through the Offshore Voluntary Disclosure Program?\u00a0 This question is not necessarily easy to answer.<\/p>\n

IRS agents handling OVDI\/OVDP cases do not have discretion regarding offshore-related information return penalty imposition and therefore many people may opt for quiet disclosure. In a quiet disclosure the taxpayer will not participate in the OVDI\/OVDP program because he or she does not want to guarantee penalty imposition. Instead, the taxpayer will just file their delinquent FBARs and amended (or original) U.S. tax returns showing the income regarding the offshore accounts, and let the IRS decide whether to impose the statutory FBAR penalties. As per the IRS FAQs website, \u201cTaxpayers who have already made \u201cquiet\u201d disclosures are eligible to take advantage of the penalty framework applicable to the OVDP program by submitting an application, along with copies of their previously filed returns (original and amended) to the IRS\u2019s Voluntary Disclosure Coordinator.\u201d<\/p>\n

By making a \u201cquiet\u201d disclosure, a taxpayer is at risk for being examined and potentially criminally prosecuted for all applicable years.\u00a0 The possibility of criminal prosecution may be likely if, following to the \u201cquiet\u201d disclosure, the taxpayer does not fully disclose all foreign financial interests and associated taxes. \u00a0For example, refer to\u00a0the case of Boston venture capitalist\u00a0Michael Schiavo<\/a>. \u00a0Some possible criminal charges include tax evasion and filing a false return.\u00a0 Willfully failing to file an FBAR is also a violation subject to criminal penalties.<\/p>\n

The OVDP provides certainty to taxpayers that they will not be criminally prosecuted and also certainty to a fine structure.\u00a0\u00a0 Quiet disclosures however provide no such guarantees, but sometimes still may make sense.<\/p>\n

To reiterate: a significant difference between the 2011 OVDI\/OVDP and a \u201cquiet\u201d disclosure is that while FBAR and offshore-related information return penalties are mandatory under the 2011 OVDI\/OVDP, these penalties are merely discretionary under a \u201cquiet\u201d disclosure.\u00a0 An examiner reviewing a \u201cquiet\u201d disclosure has the ability to assess penalties in excess of those under 2011 OVDI\/OVDP, but may instead assess penalties for a lower amount, if at all. \u00a0As you can see, although the penalties imposed on participants of the 2011 OVDI\/OVDP may be reasonably estimated, the same cannot be said for taxpayers making \u201cquiet\u201d disclosures.\u00a0 As with the quiet disclosure, one may be subject to criminal prosecution whereas there is absolute assurance this will not occur under the ODVI program.<\/p>\n

A taxpayer faced with the decision between making a \u201cnoisy\u201d or \u201cquiet\u201d disclosure should consult a tax professional to review all facts and circumstances.\u00a0\u00a0There is simply no \u201cone size fits all\u201d approach.<\/p>\n

Our law firm expects unabated aggressive enforcement of the US tax laws, including increased criminal prosecutions and civil audit examinations. We have been advising our clients to expect the unexpected (and the worst) in their tax treatment and disclosure of offshore assets.<\/p>\n

Patel Law Offices is a law firm dedicated to helping clients resolve complicated tax, criminal tax, and international tax problems. Our firm assists (and defends) clients and their advisors to legally disclose (and legitimize) foreign accounts.<\/p>\n","protected":false},"excerpt":{"rendered":"

When is it appropriate to make a quiet disclosure vs. making a disclosure through the Offshore Voluntary Disclosure Program?\u00a0 This question is not necessarily easy to answer. IRS agents handling OVDI\/OVDP cases do not have discretion regarding offshore-related information return penalty imposition and therefore many people may opt for quiet disclosure. In a quiet disclosure […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_daextam_enable_autolinks":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[1],"tags":[19,20,23,52,54,64,63,68,25,27],"class_list":["post-1305","post","type-post","status-publish","format-standard","hentry","category-planning-for-tax-minimization","tag-amnesty","tag-asset-protection","tag-fbar","tag-offshore","tag-offshore-accounts","tag-opt-out","tag-ovdi","tag-ovdp","tag-penalties-and-interest","tag-voluntary-disclosure"],"_links":{"self":[{"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/posts\/1305","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/comments?post=1305"}],"version-history":[{"count":0,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/posts\/1305\/revisions"}],"wp:attachment":[{"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/media?parent=1305"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/categories?post=1305"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/tags?post=1305"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}