New Jersey Offshore Account Law – 2019 Update

The expiration of an important federal program at the end of 2018 means that U.S. taxpayers with offshore bank accounts have fewer options for avoiding steep penalties in 2019. While the steps for timely reporting foreign financial accounts remain largely unchanged, taxpayers who are delinquent on their foreign financial disclosures now have less choices available. In order to avoid the risk of Internal Revenue Service (IRS) penalties and the potential for civil examination or criminal prosecution, taxpayers who have questions or concerns about their reporting obligations should consult with a New Jersey offshore tax attorney promptly.

Offshore Financial Account Reporting in 2019: The OVDP is No More

Prior to 2019, taxpayers who had failed to previously report their foreign financial assets had the option to participate in the IRS’ Offshore Voluntary Disclosure Program (OVDP). The OVDP provided a way for U.S. taxpayers to mitigate the consequences of past filing mistakes and protect themselves against the risk of being prosecuted for tax fraud.

However, the OVDP expired on September 28, 2018, and, as a result, in 2019 taxpayers have just one primary option for reducing their liability for disclosure violations. This involves utilizing the IRS’s streamlined filing procedures. For New Jersey residents who are being on their offshore account reporting obligations, promptly submitting a streamlined filing could be critical to avoiding substantial penalties. If you need help with your submission, or if you have questions, do not hesitate to call New Jersey tax attorney Kevin E. Thorn.

Are You Eligible to Submit a Streamlined Filing?

The IRS’s streamlined filing procedures have different requirements than the OVDP. So, if you have used the OVDP in the past, it is critical to ensure that you have a clear understanding of the differences between the two programs. If this is your first time dealing with a delinquent offshore account disclosure, you must be clear on the streamlined filing program’s eligibility criteria as well, as submitting a filing when you are eligible could potentially trigger an audit or investigation.

The five primary eligibility criteria for submitting a streamlined filing to the IRS in 2019 are:

• Individual Filer – The IRS’ streamlined filing procedures are only available to individual U.S. taxpayers. Corporate taxpayers must disclose any past filing omissions through other means.
• Valid Tax ID Number – All individual filers must have a valid tax identification number. This can be either a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN).
• No Civil or Criminal Inquiry – In order to submit a streamlined filing, an individual taxpayer must not be subject to an ongoing civil examination or criminal investigation involving the IRS.
• No Outstanding Penalties – Any outstanding IRS penalties must be paid prior to submitting a streamlined filing.
• Non-Willful Failure – A critical aspect of the streamlined filing system is that it is only available to taxpayers who have committed “non-willful” disclosure violations. The IRS can deny streamlined protection if it determines that a failure was willful; and, as a result, New Jersey residents must consult with an offshore account attorney to confirm that they are eligible to file.

Speak with a New Jersey Offshore Account Attorney at Thorn Law Group

Are you a New Jersey resident who is behind on your offshore account disclosure obligations? To speak with Kevin E. Thorn, Managing Partner, Thorn Law Group about your situation in confidence, call us at 201-355-8202 or request a consultation online today.