2012 OVDI Updates

By this time of the year IRS has responded to all the taxpayers who have taken the self prepared approach and sent the OVDI letter by Sept 9th 2011

The standard letter which has been sent out to these taxpayers states that please submit the rest of the documents within 30 days.

At this point we strongly recommend these taxpayers to hire professional help and accomplish the disclosure requirements. Make sure the tax advisor you select has worked on OVDI cases. Penalties are substantial and relief available under OVDI is minimal so an experienced professional can save you thousands.

Ami Shah CPA is full service CPA firm who has helped several taxpayers around the world with OVDI, voluntary disclosures, foreign gift reporting, FATCA and foreign corporations. We have successfully handled various foreign reporting and offshore accounts problems. For more information, contact Ami Shah CPA, MST by email at [email protected] or by telephone at (408) 548-7179.

OVDI Submission Requirements


  1. All applicants: Copies of previously filed original (and, if applicable, previously filed amended) federal income tax returns for tax years covered by the voluntary disclosure.
  2. All applicants: Complete and accurate amended federal income tax returns (for individuals, Form 1040X, or original Form 1040 if delinquent) for all tax years covered by the voluntary disclosure, with applicable schedules detailing the amount and type of previously unreported income from the account or entity (e.g., Schedule B for interest and dividends, Schedule D for capital gains and losses, Schedule E for income from partnerships, S corporations, estates or trusts).
  3. All applicants: Copy of your completed and signed Offshore Voluntary Disclosures Letter.
  4. All applicants: A check made out to the U.S. Treasury. The check must include the amount of tax, interest, and accuracy-related penalty under IRC § 6662(a), and, if applicable, the failure to file and failure to pay penalties under IRC § 6651(a) (the suspension of interest provisions of IRC § 6404(g) do not apply to interest due in this initiative). If you cannot pay the total amount of tax, interest, and penalties as described above, submit your proposed payment arrangement and a completed Collection Information Statement ( Form 433-A, Collection Information Statement for Wage Earners and Self-employed Individuals, or Form 433-B, Collection Information Statement for Businesses, as appropriate).
  5. All applicants: Completed Foreign Account or Asset Statement.
  6. All applicants: Completed penalty computation worksheet showing the applicant’s determination of the aggregate highest account balance of his/her undisclosed offshore accounts, fair market value of foreign assets, and penalty computation signed by the applicant and the applicant’s representative if the applicant is represented.
  7. All applicants: Properly completed and signed agreements to extend the period of time to assess tax (including tax penalties) and to assess FBAR penalties.
  8. All applicants disclosing offshore financial accounts: For those applicants disclosing offshore financial accounts with an aggregate highest account balance in any year of $1 million or more, completed Foreign Financial Institution Statements as appropriate.
  9. All applicants disclosing offshore financial accounts: Complete and accurate Form TD F 90.22-1, Report of Foreign Bank and Financial Accounts, for foreign accounts maintained during calendar years covered by the voluntary disclosure and/or copies of previously filed FBARs.
  10. All applicants disclosing offshore financial accounts: For those applicants disclosing offshore financial accounts with an aggregate highest account balance in any year of $500,000 or more, copies of offshore financial account statements reflecting all account activity for each of the tax years covered by your voluntary disclosure. Explain any differences between the amounts reported on the account statements and the tax returns. For those applicants disclosing offshore financial accounts with an aggregate highest account balance of less than $500,000 copies of offshore financial account statements reflecting all account activity for each of the tax years covered by your voluntary disclosure must be available upon request.
  11. All applicants disclosing offshore entities: A statement identifying all offshore entities for the tax years covered by the voluntary disclosure, whether held directly or indirectly, and your ownership or control share of such entities.
  12. All applicants disclosing offshore entities: When accounts or assets were held in the name of a foreign entity, complete and accurate amended (or original, if delinquent) information returns required to be filed, including, but not limited to, Forms 3520, 3520-A, 5471, 5472, 926 and 8865 for all tax years covered by the voluntary disclosure. If the applicant is requesting that the Service waive the information reporting requirement, the applicant should submit a completed and signed Statement on Dissolved Entities. (See FAQ 29.)
  13. Estates and certain executors or advisors. If the applicant is a decedent’s estate, or is an individual who participated in the failure to report the foreign account, foreign asset, or foreign entity in a required gift or estate tax return, either as executor or advisor, provide complete and accurate amended estate or gift tax returns (original estate or gift tax returns, if not previously filed) for tax years covered by the voluntary disclosure necessary to correct the underreporting of assets held in or transferred through undisclosed foreign accounts or foreign entities.
  14. Returns involving Passive Foreign Investment Company (PFIC) issues. A statement whether the amended returns involve PFIC issues during the tax years covered by the 2011 OVDI period, and if so, whether the applicant chooses to elect the alternative to the statutory PFIC computation that resolves PFIC issues on a basis that is consistent with the mark to market (MTM) methodology authorized in IRC § 1296 but does not require complete reconstruction of historical data. A description of this alternative method is included in FAQ 10.

Effective tax planning requires a long term strategy, periodic reviews and frequent adjustments.

We can help you keep your taxes as low as the law allows.

Call now for a review of your tax situation.

Note: This newsletter is issued annually to provide you with information about minimizing your taxes. Do not apply this general information to your specific situation without additional details. Be aware that the tax laws contain varying effective dates and numerous limitations and exceptions that cannot be summarized easily.

For details and guidance in applying the tax rules to your individual circumstances, please contact us.

Tel: 408 548 7179 Fax: 408 890 4723 Web: www.amicpa.com Email: [email protected]

We are a full service CPA firm providing tax and accounting solutions to small businesses and individuals.