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ALERT – Paradise Papers Release

By Staff | November 14th, 2017 | Tags: , , , | 0 Comments.

Teeple Hall, LLP. – Paradise Papers Release

Since 2009, the IRS and DOJ have aggressively pursued U.S. persons who may have failed to report foreign assets on tax and information returns, particularly in “tax haven” jurisdictions. The IRS’s 2009 Offshore Voluntary Disclosure Program (“OVDP”), the 2011 Offshore Voluntary Disclosure Initiative (“OVDI”), and the 2012 OVDP depict the IRS’s unrelenting efforts to find and unveil previously undisclosed foreign assets of U.S. persons. Under these programs, the taxpayer discloses all foreign account(s) and the taxpayer’s identity to the IRS Criminal Investigation Division. These programs may afford the taxpayer with protection from criminal prosecution by providing penalty structures for taxpayers who come forward voluntarily and report their previously undisclosed foreign accounts and assets.
The Panama Papers release in 2016, where over 11.5 million documents related to financial/tax planning were leaked to the public and government agencies, reinvigorated the efforts of the IRS and DOJ. In early November 2017, an additional 13.4 million confidential documents related to offshore investments (referred to as the “Paradise Papers”) were revealed, and while only limited information has been released to date, more information is expected to be released in the next few days. Among the release are records obtained from the international law firm Appleby, offshore fiduciary Estera, and international trust and corporate services company Asiaciti Trust. Clients who are U.S. persons with foreign assets, held either individually or through structures, should be aware and sensitive to these developments, and clients who have engaged with Estera, Asiaciti Trust, or Appleby should be extra diligent to ensure that their reporting and compliance positions are in order.

U.S. citizens and residents (including green card holders) are subject to taxation on their worldwide income, regardless of whether it is earned and/or held outside U.S. borders, and also have reporting obligations on worldwide assets. The omission of income, or failure to file required information returns, could be a criminal tax offense. Even inadvertent, non-willful, or negligent non-compliance may subject a taxpayer to the assessment of tax, interest and penalties. Many U.S. persons who have foreign assets and/or income whichSince 2009, the IRS and DOJ have aggressively pursued U.S. persons who may have failed to report foreign assets on tax and information returns, particularly in “tax haven” jurisdictions. The IRS’s 2009 Offshore Voluntary Disclosure Program (“OVDP”), the 2011 Offshore Voluntary Disclosure Initiative (“OVDI”), and the 2012 OVDP depict the IRS’s unrelenting efforts to find and unveil previously undisclosed foreign assets of U.S. persons. Under these programs, the taxpayer discloses all foreign account(s) and the taxpayer’s identity to the IRS Criminal Investigation Division. These programs may afford the taxpayer with protection from criminal prosecution by providing penalty structures for taxpayers who come forward voluntarily and report their previously undisclosed foreign accounts and assets.
The Panama Papers release in 2016, where over 11.5 million documents related to financial/tax planning were leaked to the public and government agencies, reinvigorated the efforts of the IRS and DOJ. In early November 2017, an additional 13.4 million confidential documents related to offshore investments (referred to as the “Paradise Papers”) were revealed, and while only limited information has been released to date, more information is expected to be released in the next few days. Among the release are records obtained from the international law firm Appleby, offshore fiduciary Estera, and international trust and corporate services company Asiaciti Trust. Clients who are U.S. persons with foreign assets, held either individually or through structures, should be aware and sensitive to these developments, and clients who have engaged with Estera, Asiaciti Trust, or Appleby should be extra diligent to ensure that their reporting and compliance positions are in order.

U.S. citizens and residents (including green card holders) are subject to taxation on their worldwide income, regardless of whether it is earned and/or held outside U.S. borders, and also have reporting obligations on worldwide assets. The omission of income, or failure to file required information returns, could be a criminal tax offense. Even inadvertent, non-willful, or negligent non-compliance may subject a taxpayer to the assessment of tax, interest and penalties. Many U.S. persons who have foreign assets and/or income which was not properly disclosed may qualify for the Streamlined Filing Compliance Procedures (“SFCP”) introduced in June of 2014. If your failure to disclose foreign assets or income was non-willful, the SFCP provides for substantially reduced penalties (or no penalty in certain circumstances). U.S. persons and companies with offshore holdings, whether affected by the data breach at this time or not, could benefit immensely from having a current review and assessment of their U.S. tax reporting positions. Programs such as the OVDP, OVDI and SFCP are only available to taxpayers prior to the IRS initiating audit procedures.

For further information, please contact Todd Douglas Hall, Esq., Partner, or B. Roland Freasier, Jr., Esq., at Teeple Hall, LLP.

 

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