If you are a US citizen, did you know that failure to report the existence of offshore accounts or pay taxes on these accounts can lead to civil and criminal penalties?
The Foreign Account Tax Compliance Act (FATCA) is a United States federal law that requires US citizens who live outside the US to report any financial accounts-not just bank accounts-held outside of the country and it requires foreign financial institutions, i.e. Canadian Banks, to report to the IRS about their U.S. clients. Congress enacted FATCA to make it more difficult for U.S. taxpayers to conceal assets held in offshore accounts and shell corporations, and thus to recoup millions of dollars in federal tax revenues.
On June 18th, 2014 the IRS introduced significant changes in its offshore voluntary disclosure programs (OVDP). This means thousands of Canadian resident US citizens and Green Card holders will be able to avoid costly penalties previously levied through the OVDP. These changes are welcome news to taxpayers and professionals.
These recent changes expand the streamlined filing compliance procedures from September 2012 and modify the 2012 OVDP. If you are a US citizen living and or working in Canada, now is the time to carefully analyze all the relevant facts and information regarding these changes.
Like it or not, the IRS continues to close in on those who have chosen to continue to either flagrantly or innocently ignore United States reporting and filing requirements in two basic tax and financial reporting areas: on IRS Forms 1040 and on Form 114 (Foreign Bank Account Report-FBAR). Taxpayers who are willing to certify that their past non-compliance was not willful may avoid the offshore penalty altogether if they live outside of the United States.
There is no time like the present to consult with experienced advisors on these matters. The cross border tax professionals at Hall & Company, Chartered Accountants, can get you into compliance with these rules and let you get on with your life! If you have questions or need tax help, reach out for a free consultation.