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Title: Few Basic Queries Across Voluntary Disclosure & Their Answers
Content: Placing money in offshore accounts with intent to evade taxes is nothing new for most people.
It has been in the news and the movies and was especially a favorite of businesspersons who do not want
to report all of their earnings to the IRS. The problem, however, is that the IRS has enforced more
stringent laws on people who hold offshore accounts. Failure to report them could attract severe penalties
as well as criminal charges, which opens us to the topic of our discussion.
What is voluntary disclosure?
The voluntary disclosure describes a situation where an offshore account holder reports these accounts to
the IRS at their free will. To have a better grasp, you will have to understand that the IRS does not
prohibit offshore accounts. However, it requires that the owners report them at the end of every financial
year so that they meet their obligation to taxpayers. Unlike what most people perceive, having an offshore
account is not a crime. The crime is failing to report such an account or rather, hiding it because it will be
assumed that you are trying to evade taxes.
When You Should Consider a Voluntary Disclosure
Of course, they are a few things you need to understand about voluntary disclosure and the best time to go
with it. One of the important ones is the minimal amount of money an offshore account should have to
arouse the IRS’s interest. In its guidelines, the Internal Revenue Service makes it clear that the total of
one individual’s offshore accounts needs to have reached $ 10,000 in a year before the owner can make a
disclosure. This is to say that an offshore account holder whose accounts stayed at a total of let’s say $
7000 all year long should not worry about reporting. In other words, the IRS does not tax accounts that
have less than $ 10000 and consequently, such would not attract penalties or criminal charges even if they
Are people who opt for voluntary disclosure penalized?
The Internal Revenue Service assumes that people who do not report on their accounts in foreign
countries either do not have a good understanding of tax laws. If you voluntarily disclosed your accounts
today, the IRS will begin charging them if they have a total beyond $ 10000. However, the tax charges on
accounts you voluntarily disclosed will be much lower than what the Internal Revenue Service would
charge if you continued ‘hiding’ them.
To be through with voluntary disclosure, you have to fill in an FBAR. One should be filled if:
You have a financial interest, or you are a signature authority in an account or more in foreign
These accounts had or reached a total of more than $ 10,000 at any point of the year.
People who are not conversant with tax laws should seek the counsel of a professional and especially if
they are not sure if they should file an FBAR.
What benefits are there to be gained from voluntary disclosure?
People who opt for voluntary disclosure are at an advantage. Below are some of the benefits they enjoy.
They eliminate any chances of getting into unnecessary trouble with the IRS
They will not be charged as much as they would have been if the IRS discovered the accounts
Through the disclosure process, they learn the laws involved and will, therefore, have an easier
time dealing with offshore accounts in the future.
Remember that if you are going to file an FBAR, it should be done before June 30. You cannot file an
FBAR if the IRS has an investigation on your accounts underway so keep safe while the opportunity
exists. Moving ahead undercover of professional advice is the best thing that you can do for preventing
complications. Here, we want to mention Chicago Tax Lawyer Firm, which is an ideal one to choose.