APR 2011 – 2011 Offshore Voluntary Disclosure Program (Part II)

1. 2011 OFFSHORE VOLUNTARY DISCLOSURE PROGRAM (“OVDP”) – CONT’D 

境外资产主动申报特别规定最后期限 Aug 31, 2011

Filing Requirements

In order to participate 2011 OVDI all applicants must provide the following documents:

  • Copy of your completed and signed Offshore Voluntary Disclosures Letter
  • Copies of all previously filed relevant returns and their amendments for tax years covered by the voluntary disclosure
  • Completed Foreign Account or Asset Statement
  • Completed penalty computation worksheet
  • Complete and accurate Form TD F 90.22-1
  • A check in the amount of the taxes, interest and penalties due together with a calculation of the amount. 

There are also some other requirements depending upon the amount of disclosed offshore funds and the value of offshore assets. All the participants need to cooperate in the voluntary disclosure process, including providing information on offshore financial accounts, institutions and facilitators, and signing agreements to extend the period of time for assessing tax and penalties.

Penalty Regime

In addition to taxes and interest, OVDI participants must pay a penalty based upon the amount of funds and foreign assets acquired with such funds in their undisclosed foreign accounts. The penalty is calculated as a percentage of the highest aggregate value of such funds for a single year during the period. Most applicants will be subject to a 25 percent penalty. 

However, if applicants whose offshore accounts and assets did not exceed $75,000 in any year during the covered period, they will qualify for a lower 12.5 percent rate.

2. FORM 5471 PENALTY – FOREIGN INCOME AND TAXPAYERS

It is so important to file your federal income tax return on time that also includes Form 5471, Information Return of U.S. Persons with Respect to Certain Foreign Corporations, which needs to be filed by U.S. citizens or residents who are officers, directors, or shareholders of some certain foreign corporations.

Failing to comply with the reporting requirements will result in a penalty of $10,000 even if the income tax return shows no tax due. In addition to the penalty, IRS will also impose a 10% reduction of foreign tax credits.

In case that the taxpayers file the income tax late, IRS will automatically impose the penalty for each Form 5471 attached.

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