Trump's former campaign chairman Paul Manafort was convicted of eight different financial crimes as part of Special Counsel Robert Mueller's investigation. They've also secured a guilty plea from Michael Cohen, a trump fixer who will serve up to five years for violating campaign finance laws. This political news holds some relevant tax lessons, including several actions to avoid.
Don't Rely on the Defunct Offshore Voluntary Disclosure Program
Starting in 2008, the IRS utilized the Offshore Voluntary Disclosure Program (OVDP), which provided tax amnesty for foreign-held investments and formally closed in September 2018. Instead, the IRS Streamlined program is now subject to audits. So, it's a bad idea to rely on that programs protection.
Don't Hide or Obfuscate Foreign Investments
FATCA, the Foreign Account Tax Compliance Act, applies a penalty on foreign banks who don't report Americans skirting tax obligations. Most countries and their banking systems already comply with the Act, so don't count on keeping your foreign accounts secret. The U.S. government also partners with 50,000 whistleblowers, voluntary disclosures, cooperative witnesses and banks under investigation. All in all, it's now an extremely bad idea to fail to disclose your investments.
To avoid the fate at Manafort and Cohen, don't obscure or cover up facts and try to pass them off as mistakes. You can certainly make mistakes, but the IRS often asks for a paper trail to show that the mistake was not intentional. If you use oversights and glitches to justify incorrect filings, you appear willful, and this changes your chances in court. Negligence and mistake are understandable once in a while, but if you do it too many times, you may be accused of intent to conceal taxes.
Other Things to Avoid
Here are a few other things to avoid:
- Don't set up trusts or corporations to cover up what you own.
- Avoid filing some tax forms and not others.
- Don't keep an extra set of books.
- Don't ask your bank to stop sending monthly statements.
- Don't make cash deposits or withdrawals.
Even if you can explain your action, repeated failures to comply with required documents can turn into accusations of reckless or deliberate disregard, which gave Manaford added things to worry about.
The IRS offers tips to ensure correct filing of foreign holdings. However, if you're worried you haven't been transparent enough, or previously relied on the Offshore Voluntary Disclosure Program to cover you, then it may be a good idea to consult with an expert. A CPA or tax attorney specializing in multinational holdings can provide the backup you need to show your intentions if the IRS takes an interest in your return. There are many different paths and roads to success. Staying compliant with the IRS is one of them. Learn how to radically improve your IRS situation by calling Travis W. Watkins Tax Resolution and Accounting Firm at 800-721-7054.
Get your appointment set today and be a success story tomorrow.