By Alan Olsen, CPA, MBA (tax)
Greenstein Rogoff Olsen & Co. LLP
You know that awful feeling you get when you have done something wrong and you just can’t wait to get it off your chest? It’s called guilt. Almost everyone has that guilty feeling at some time or another. When it comes to offshore accounts, it’s hard to feel guilty about keeping more for yourself and giving less to the IRS. However, for those who have been holding back for a while, or who have been hiding large sums of money, that feeling of guilt might have reached its peak.
Guilt vs. Anxiety
If that’s the case, then maybe you have decided that it’s finally time to come clean and reveal your discretions. Of course, that can bring about another uncomfortable human emotion known as anxiety. That anxiety most likely stems from the fear of the IRS and the retribution you might face for your non-compliant lifestyle. Because no one really wants to live with either guilt or anxiety, in the end coming clean to the IRS is probably the best decision.
How to Come Clean
Of course, for the IRS that decision is a no-brainer and to that end they want to do everything they can to help you clear things up regarding your offshore accounts. To help make this process easier for you, the IRS has even come up with several different forms for the many different possible scenarios that could apply to your situation. These forms include:
Form 14452 – Foreign Account or Asset Statement
Form 14453 – Penalty Computation Worksheet
Form 14454 – Attachment to Offshore Voluntary Disclosure Letter
Form 14457 – Offshore Voluntary Disclosure Letter
Form 14653 – Foreign Streamlined Certification
Form 14654 – Domestic Streamlined Certification
Which One Is Right for Me?
So now that you have decided to come clean and you are aware of these different options from the IRS, the question is: “Which form(s) is right for me? The first thing you need to do is to determine whether or not you are willful or non-willful. According to the IRS the distinction is defined this way: “Non-willful conduct is conduct that is due to negligence, inadvertence, or mistake or conduct that is the result of a good faith misunderstanding of the requirements of the law.” So there you have it. If you know you have been hiding or withholding money, then you are willful. If it’s an honest mistake, you are non-willful.
Be Aware of Changes
The IRS recently made some changes to its disclosure programs, including making the process for both foreign and domestic disclosure more streamlined. The biggest change to the IRS’s Streamlined Guidance Update is a clarification to taxpayer eligibility. While you cannot use both the Streamlined program and the OVDP program at the same time, being pre-cleared for the OVDP program does not stop you from using the Streamlined program. However, when you formally apply to use the OVDP program then you are no longer eligible for the Streamlined program.
GROCO Understands Disclosure
If you have decided to come clean on offshore accounts, then no doubt you have some questions and concerns. Don’t worry, GROCO can help you with the feelings of anxiety. We know which forms you need and how to fill them out properly. Plus, after you come clean you can push aside those feelings of guilt, as well. It’s a win-win. So click here to contact us or call us at 1-877-CPA-2006.