When you fail to report your financial activity from outside the United States, it opens up the door for the Internal Revenue Service (IRS) to impose penalties, especially if you cannot prove that the action was non willful. The offshore disclosure process in Washington DC must be done carefully but you could secure your financial future with assistance from a diligent offshore disclosure attorney.

How Disclosure Works

The offshore disclosure process can alter slightly depending on which program someone uses. Some of the more common programs are the streamlined foreign offshore procedure for people living outside of the U.S., as well as one for people living inside the U.S.

A taxpayer just needs to prepare the amended returns and FBARs, with a calculation of the tax, related interest, and the offshore penalty. They also need to prepare a narrative explaining why were not willfully avoiding the disclosure. Once all of this is compiled, they must file it with the IRS and wait – typically four to six months. After the disclosure is complete, the IRS has up to three years to conduct an audit if they choose, but this is extremely rare. In the event that it does occur, the lawyer will have extensive documentation to prove that the taxpayer was in compliance.

What is the Importance of a Narrative?

Sometimes an audit takes place because the IRS claims “there was no narrative.” Narratives are crucial for explaining why someone was not willful. The offshore disclosure process for a DC resident is not a back-and-forth negotiation; it is a one-time disclosure, and the objective is to be as clean and accurate as possible in order to get significantly reduced penalties. If the taxpayer has a delinquent FBAR, they need to prepare a brief narrative to go with it, and then e-file it to the IRS.

The Process for Voluntary Disclosures

The voluntary disclosure process is a more serious situation since it involves exposure to criminal liability. This is for taxpayers who willfully fail to report foreign income and file forms about their accounts. For voluntary disclosures, the taxpayer sends a pre-clearance to criminal investigation and the Interrogatory Service in Philadelphia. If the IRS writes back and says that the person is not being criminally investigated, the taxpayer would then be eligible to make a full voluntary disclosure.

In addition to six years of tax returns that need to be filed with the Large Business and International field office in Austin, Texas, that tax return will be examined closely. Once the returns are filed, it would take months to be assigned. The whole voluntary disclosure process in Washington DC is much more in-depth and takes longer than the streamlined program but the benefit is that it would provide protection from criminal prosecution.

Who Processes the Offshore Disclosure?

If the program is streamlined, either domestic or foreign, the disclosure will be processed through the Austin, Texas campus. For the more serious voluntary disclosure, it goes to Philadelphia for the pre-clearance, then to Austin for sending the returns, and finally the tax returns are examined in a field office usually in the geographic area where the taxpayer resides. Delinquent FBARs are filed online through the Department of Treasury, specifically the Financial Criminal Enforcement Network (FINCEN).

Learn More About the Offshore Disclosure Process in Washington DC with an Attorney

An examination will be required for voluntary disclosure. There is no heightened risk or chance of the other disclosures being examined, but any tax return filed by any person at any time is, per the law, subject to an examination. It depends on the resources of the IRS and any type of red flag on the tax return that could increase the risk.

Ensure that you understand the entire offshore disclosure process in Washington DC by calling a legal professional and explaining your situation.

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John helped us with a DC tax audit and succeeded in getting us a "no change" final decision. The issues were related to two flow-through entities and the use of carry-forward operating losses -- something that the DC auditors struggled to understand and with which they did not have any...
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Mr. Pontius is extremely professional and was able to take care of my tax returns which includes international bank accounts quickly and at a very reasonable price. Would definitely recommend.
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I received a fee this past November from the IRS for over $800 because of an error I made on my 2016 taxes. I called my cousin, John Pontius, and he immediately knew what steps needed to be taken. Thanks to him, the fee was cleared. A 10 minute conversation...
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As an American citizen living in the Middle East my local banker informed me that I needed to file FBARs and report my worldwide income to the IRS. Through the recommendation of another attorney at an international law firm, I was introduced to John Pontius. Mr. Pontius efficiently and effectively...
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