INDIVIDUALS
In general, US persons and permanent residents (a.k.a “green-card” holders), even those living outside the United States, must report their worldwide income, and therefore are required to file certain US tax and other informational returns unless exempt under very limited circumstances. Non-US persons (a.k.a “non-resident aliens” or “NRAs”) may also be subject to US taxation based on certain US source income, investments, or business activities.
The Helm team will provide you with the highest quality of professional advice and US tax preparation, in order to complete and timely file your individual income tax returns and other tax-related documents.
If you are not a US person but have income arising in the US or US tax-related issues, Helm will help analyze your US tax situation. Please also ask us about how Helm deals with issues related to Switzerland’s Pillar 2 and Pillar 3 pensions and withholding tax.
OUR TAXATION SERVICES EXTEND TO
If you are not a US person and have US income or US tax related issues Helm will help analyze your US tax situation. Click here for more detailed on our page about US alien residents.
Helm can help you with reporting distributions from Foreign Trusts. Please consult our web page on distribution reporting by clicking here.
Helm will assist with the preparation of all the necessary documents in case of death of a US person.
US persons are required to report all their non-US bank accounts regardless of where they live in the world. Helm can prepare these annual Foreign Bank Account Reporting forms, commonly called FBARs.
Helm can advise you on the tax benefits and risks associated with deferred compensation and stock options as it relates to your specific tax situation.
Helm can answer your tax questions related to Switzerland’s Pillar 2 and Pillar 3 pensions and withholding tax.
DISCLOSURES + NON-COMPLIANT US PERSONS
US Persons have to report their worldwide income no matter where they live in the world, and thus have to file annual income tax returns, as well as other tax information returns and FBARs (Report of Foreign Bank and Financial Accounts).
The IRS is now able to identify US persons living outside the US and the Foreign Account Tax Compliance Act (FATCA) has started to facilitate this in 2014. FATCA requires foreign financial institutions as bank, stock brokers, hedge funds, etc. to report their US clients directly to the IRS. It is therefore very important for non-compliant US people to regularize their situations with the IRS as fast as possible.
There are four options for non-compliant US persons to regularize their US tax situation. Each option depends on the US person’s situation. However the source of the funds cannot be illegal.
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According to the IRS, the OVDP is principally intended for US persons with undisclosed bank accounts and unreported income who seek protection from criminal prosecution and is available for taxpayers residing in the US and outside the US
With this program the taxpayers have to go back six years and therefore file or amend (update) their tax returns (and other forms such as FBARs) to include all undeclared income for the past six years.
The IRS changed its procedures in 2018, which modified the old OVDP programs which changed substantially in 2009. For further advice on this OVDP, please contact us.
This program is for US persons that can certify that their non-compliance was due to non-willful conduct in exchange for a reduced, or no penalty. Non-willful conduct is conduct that is due to negligence, inadvertence, or mistake or conduct that is the result of a good faith misunderstanding of the requirements of the law.
With this program the taxpayer only has to file or amend tax returns for the past three years, FBARs for the past 6 years and certify non-willful conduct.
For people residing outside the US, there are no penalties and the taxpayer will only have to pay the taxes for the past three tax years.
For taxpayers residing in the US, there is a penalty of 5% of the maximum aggregated end of year value of all undeclared accounts to be paid in addition to the taxes for the past three years.
This program is open to US persons that reported all income for US tax purposes but did not file one or more information returns such as:
- the form disclosing non-US bank and financial accounts (commonly called the “FBAR”),
- the form disclosing a receipt of a distribution from a non-US trust or gift from a non-US person, or
- the form disclosing an interest in a non-US company or investment.
Failing to file those forms will carry significant penalties even if no tax is due. If a taxpayer is qualified and files delinquent FBARs and/or other information returns as provided under the delinquent report filing procedures, the IRS will not assert penalties for late filing.
When US persons have not previously filed tax returns or not previously declared all their worldwide income to the IRS, they can file tax returns for the first time or amend their old tax returns “quietly” with the IRS. For this procedure, taxpayers will have to prepare and file three to six years of returns and FBARs, pay the taxes and interest owed for each year, and may be required to provide a written or verbal statement to the IRS.
Upon notice from the IRS, the taxpayer could be required to pay additional late filing and other penalties after the tax returns have been evaluated. If the taxpayer chooses, they could then start another procedure to try to cancel or lower those penalties.
This type of disclosure will not provide the same protection as the IRS approved Offshore Voluntary Disclosure Programs and the IRS discourages taxpayers from making quiet disclosures.
COMPLIANCE FOR U.S. TAXPAYERS RESIDING OUTSIDE THE UNITED STATES
Streamlined Foreign Offshore Procedures (SFOP) is a compliance program offered by the Internal Revenue Service to US taxpayers who reside outside the United States and have undisclosed foreign accounts or assets. Under the streamlined procedures, taxpayers are required to file three years of amended tax returns, file six years of delinquent FBARs, complete a statement detailing why tax returns and FBARs were not filed or why all foreign income or assets were not reported, and pay all taxes and interest due.
Taxpayers must certify that their failure to comply with foreign account reporting requirements was due to non-willful conduct. This means the failure was due to negligence, inadvertence, or a mistake or was the result of a good faith misunderstanding of the requirements of the law. What particularly distinguishes the streamlined procedures from other IRS compliance programs, besides its more generous terms, is this requirement of non-willfulness.
The SFOP allows individuals abroad to become tax compliant without having to pay any penalties. For an individual to be eligible for the SFOP, the following must apply:
- Must have a valid Taxpayer Identification Number (TIN) or Individual Taxpayer Identification Number (ITIN). For U.S. Citizens and certain other individuals, the TIN would be a Social Security Number (SSN). For those not eligible for an SSN, they must have or must apply for an ITIN, which is an identification number assigned by the IRS for tax processing purposes.
- Meet the non-residency requirement, which is satisfied if in any one or more of the most recent three years for which the US tax return due date (or properly applied for extended due date) has passed, the individual did not have a US residence and the individual was physically outside the United States for at least 330 full days. If you are a US taxpayer residing in the US, you may be eligible to use the Streamlined Domestic Offshore Procedures (SDOP).
- Failed to report income from a foreign financial asset and pay applicable taxes as required by U.S. law or failed to file an FBAR (FinCEN Form 114), where such failure was due to ‘non-willful’ conduct as described above.
- The IRS has not opened a civil examination of your returns for any taxable year. Similarly, if you are under criminal investigation by the IRS, you are not eligible to use the streamlined procedures.
Read the full details of eligibility requirements for the streamlined foreign offshore procedure on the IRS website.
If you do not meet the eligibility requirements for the SFOP, there are other options for tax compliance.
US persons should be mindful of the Foreign Account Tax Compliance Act (FATCA). Under FATCA, the vast majority of foreign financial institutions (FFIs) are required to report information relating to accounts held by US persons. Accordingly, FATCA will expose US persons with undeclared non-US accounts and assets, whether or not they voluntarily choose to disclose.
Taxes are what we do. Our accountants know the ins and outs of taxes for US taxpayers residing in and outside the United States. The Helm team can assess your tax liabilities and help you choose the best options for you. For all of your tax-related services, you may contact Helm directly in our contact form or call us at our offices.
COMPLIANCE FOR U.S. TAXPAYERS RESIDING IN THE UNITED STATES
Streamlined Domestic Offshore Procedures (SDOP) is a compliance program offered by the Internal Revenue Service to U.S. taxpayers who reside in the United States and have undisclosed foreign accounts or assets. Under the streamlined procedures, taxpayers are required to file three years of amended tax returns, file six years of delinquent FBARs, complete a statement detailing why all foreign income or assets were not reported, and pay all taxes and interest due.
Additionally, US residents filing under the SDOP are required to pay a Title 26 Miscellaneous Offshore Penalty of 5% of the maximum aggregated year-end balance for the covered 3-year tax return period and the 6-year FBAR period.
Taxpayers must certify that their failure to comply with foreign account reporting requirements was due to non-willful conduct. This means the failure was due to negligence, inadvertence, or a mistake or was the result of a good faith misunderstanding of the requirements of the law. What particularly distinguishes the streamlined procedures from other IRS compliance programs, besides its more generous terms, is this requirement of non-willfulness.
To be eligible for the SDOP, the following must apply:
- Must have a valid Taxpayer Identification Number (TIN) or Individual Taxpayer Identification Number (ITIN). For U.S. Citizens and certain other individuals, the TIN would be a Social Security Number (SSN). For those not eligible for an SSN, they must have or must apply for an ITIN, which is an identification number assigned by the IRS for tax processing purposes.
- Fail to meet the non-residency requirement, which would be satisfied if in any one or more of the most recent three years for which the US tax return due date (or properly applied for extended due date) has passed, the individual did not have a US residence and the individual was physically outside the United States for at least 330 full days. If you are a US taxpayer residing outside the US, you may be eligible to use the Streamlined Foreign Offshore Procedures (SFOP).
- Have previously filed a US tax return (if required) for each of the most recent 3 years for which the US tax return due date (or properly applied for extended due date) has passed.
- Failed to report income from a foreign financial asset and pay applicable taxes as required by US law or failed to file an FBAR (FinCEN Form 114), where such failure was due to ‘non-willful’ conduct as described above.
- The IRS has not opened a civil examination of your returns for any taxable year. Similarly, if you are under criminal investigation by the IRS, you are not eligible to use the streamlined procedures.
Read the full details of eligibility requirements for the streamlined foreign offshore procedure on the IRS website.
If you do not meet the eligibility requirements for the SDOP, there are other options for tax compliance.
US persons should be mindful of the Foreign Account Tax Compliance Act (FATCA). Under FATCA, the vast majority of foreign financial institutions (FFIs) are required to report information relating to accounts held by US persons. Accordingly, FATCA will expose US persons with undeclared non-US accounts and assets, whether or not they voluntarily choose to disclose.
Taxes are what we do. Our accountants know the ins and outs of taxes for US taxpayers residing in and outside the United States. The Helm team can assess your tax liabilities and help you choose the best options for you. For all of your tax-related services, you may contact Helm on our contact form or call us at any of our offices.
FATCA
The Foreign Account Tax Compliance Act (“FATCA”) is US legislation aimed at combating tax evasion by US taxpayers through the use of non-US accounts and assets. To achieve this main, FATCA generally requires non-US financial institutions to identify and report certain information concerning their US account holders or else suffer a 30% withholding tax. Although FATCA is US law, many non-US jurisdictions have entered into so-called “intergovernmental agreements” (“IGAs”) with the US to facilitate the local implementation of FATCA and thereby require resident financial institutions to comply with FATCA. As a result, FATCA is now part of the tax and information reporting framework of many jurisdictions. In addition, FATCA has engendered other information reporting regimes, including the UK “FATCA” Agreements with the Crown Dependencies and Overseas Territories and the OECD Common Reporting Standard (“CRS”). These other reporting regimes are substantially based on FATCA Model 1 IGA.
WE PROVIDE A FULL ARRAY OF SERVICES
- DETERMINING FATCA STATUS OF ACCOUNTHOLDERS AND PAYEES
- ASSISTING WITH COMPLETION OF SELF-CERTIFICATION FORMS, E.G., IRS FORM W-8BEN-E AND IRS FORM W-8IMY, OR SUBSTITUTE THEREOF, AND WITHHOLDING STATEMENT
- IDENTIFYING US ACCOUNTS OR US REPORTABLE ACCOUNTS
- IDENTIFYING SUBSTANTIAL US OWNERS AND US CONTROLLING PERSONS
- ASSISTING WITH THE PREPARATION OF IRS FORM 8966 OR EQUIVALENT FATCA RETURN OR REPORT OF MODEL 1 IGA JURISDICTIONS AND TRANSMISSION VIA THE INTERNATIONAL DATA EXCHANGE SERVICE (“IDES”)
- DEVELOPING AND REVIEWING FATCA COMPLIANCE PROGRAMS
- TRAINING IN CORE FATCA CONCEPTS AS WELL AS PROVIDING RELEVANT UPDATES ON NEW FATCA DEVELOPMENTS AND CROSS-OVERS WITH UK AGREEMENTS AND OECD CRS
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