Do you really need to be concerned with how you submit your application to the Offshore Voluntary Disclosure Program (OVDP) or the streamlined option within it? The IRS will simply accept a streamlined application and let you pay the minimum fee, right?
Let’s consider the recent case of Gregg Kaminsky, an Atlanta based entrepreneur in his forties and father of two young children. Mr. Kaminsky’s story was outlined in a Wall Street Journal story recently, and the lesson to be learned is clear: the IRS is not going to simply accept your updated tax forms and a request to be found non-wilfull in either OVDP or the streamlined program.
Mr. Kaminsky shouldn’t be judged harshly, as the numbers associated with his case are not that large, and his activities were fairly straight forward: He opened an account at Swiss Bank UBS in 2000, and moved the funds to a Hong Kong bank in 2009 when it became known that the US was investigating UBS for helping US citizens to hide money from the IRS. He also failed to disclose $140,000 of income from a “barter” type system known as “Second Life”.
The high water mark of his accounts was a fairly modest $1.1 Million. Earlier this year, Mr. Kaminsky was sentenced to spend time in jail, and to make substantial payments to the IRS. Yes, criminal tax exposure and ultimately facing a jail sentence as a result of offshore investments is a very real possibility. The IRS isn’t looking to provide US taxpayers with a hall pass simply because they filed through OVDP, or made a quiet disclosure.
If you have been advised to simply submit application through the streamlined OVDP option, or are still working to bring your FBAR reporting into compliance we invite you to contact us for a complimentary and substantive consultation at 866-631-3470. Does your tolerance and appetite for risk include jail time? The lesson we learn from Mr. Kaminsky is that jail is a very real possibility, and not just for the big fish.
