unfortunately for many United States Citizens, sophisticate promoters have convinced them that money deposited in a extraneous bank history will not be taxed by the United States. This normally hold belief is just incorrect. A United States citizen is taxed on his cosmopolitan income. For exemplar, a United States citizen who deposits money in a Cayman Island depository financial institution account must pay United States tax on all interest payments that he receives from the Cayman Island deposit .
United States citizens who have a alien bank account broadly use a credit card or debit card to withdraw money from their extraneous bank account. many of these United States citizens have failed to pay United States taxes on the money deposited in the foreign bank score and the interest received from the bank .
The IRS is Investigating Offshore Bank Accounts
The IRS has obtained the names of many United States citizens who have money deposited in foreign bank accounts. Over the end several months the IRS has :
Convinced a United States Federal Judge to order American Express, MasterCard and Visa to provide lists for 1998 through 2001 containing the names of United States citizens who hold credit cards issued by banks from tax haven countries such as the Cayman Islands, Bahamas, and Antigua. now that the IRS has identified the names of the United States citizens who hold offshore recognition cards, it is alone a count of prison term until the IRS audits these individuals to determine if they have paid taxes on the money deposited in the extraneous bank .
The IRS’s New Voluntary Disclosure Policy
fortunately for United States citizens who have used offshore banks to avoid paying taxes, the IRS has a new program designed to bring United States citizens into submission with all United States tax laws. The new IRS course of study is called the “ IRS Voluntary Compliance Initiative for Offshore Credit Card Users and Accounts. ” however, the newfangled IRS program is not available after April 15, 2003. The function of the newly IRS broadcast is to : promptly bring United States citizens into conformity with all United States tax laws, permit United States citizens to avoid paying solid civil penalties relating to their offshore accounts, avoid being criminally prosecuted by the IRS, and to gather information to pursue the individuals who promoted the offshore banking arrangements.
For exemplar, a taxpayer who understated his income to avoid $ 100,000 in taxes in 1999 would wind up paying $ 149,319 to the government. This includes the tax indebtedness plus $ 29,319 in interest and an extra accuracy-related penalty of $ 20,000. If a taxpayer did not step ahead, his tax indebtedness generally would include the civil fraud punishment of $ 75,000, and therefore higher matter to of $ 42,758. The entire sum due would be $ 217,758, without considering probable extra civil penalties for failure to file certain information returns. The accuracy-related penalty, cited in the above examples, is adequate to 20 percentage of the tax underpayment. The civil imposter penalty is up to 75 percentage of the unpaid tax indebtedness attributable to fraud .
Requirements for Participating in the New IRS Voluntary Disclosure Policy
United States citizens who want to participate in the new IRS programs must comply with respective guidelines before the IRS will waive civil imposter and criminal penalties. For example, United States citizens must comply with the follow requirements to qualify for the program .
They must contact the IRS in writing by April 15, 2003, and ask to participate in the platform.
The IRS must receive the written request before it begins a civil or condemnable probe of the taxpayer.
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Taxpayers must provide specific information about all aspects of how the taxpayer used the offshore trust account and who promoted the offshore bank arrangements.
Taxpayers will not qualify for the program if they deposited any illegally obtained money in the offshore bank bill .
Taxpayers who qualify for the IRS Disclosure Program will avoid significant civil imposter and condemnable penalties. however, if the IRS determines that a taxpayer does not qualify for the program, he may be criminally prosecuted and forced to pay civil imposter penalties .
If you have deposited money in a foreign bank history, now is the time to consult with your tax lawyer and confirm with the IRS that you are in conformity with all United States tax laws .