Voluntary Disclosure & Failure to File Returns November 2014

Voluntary Disclosure &
Failure to File Returns
November 2014
Ron Mazurik, Senior Tax Manager
Rasha Hanania, Tax Manager
Agenda
• US Voluntary Disclosure &
Reporting
• Timeline
• Practicalities
• OVDI
• 2014 Highlights
• Israeli Voluntary Disclosure &
Reporting
• Overview
• 2014 Program
U.S. Tax Seminar
PwC Israel
November 2014
2
U.S. Voluntary Disclosure &
Reporting
U.S. Tax Seminar
PwC Israel
November 2014
Slide 3
From the News
U.S. Tax Seminar
PwC Israel
November 2014
4
US Voluntary Disclosure & Reporting Timeline
Voluntary Disclosure Progression
2009
2012
2014
U.S. Tax Seminar
PwC Israel
November 2014
5
US Voluntary Disclosure & Reporting
Offshore Voluntary Disclosure Initiative (“OVDI”)
Form 5472 –
(25% Foreign
Owned US
Corps /Foreign
Corps Engaged
in US Business)
Form 3520 –
to Transactions
with Foreign
Trusts
Form 926 –
US Transferor to
a Foreign
Corporation
U.S. Tax Seminar
PwC Israel
FinCen 114
Form 8938 –
Foreign
Financial Assets
Forms
Form 8865 –
for Certain
Foreign
Partnerships
Form 5471 –
Controlled
Foreign Corps /
Form 8865 –
Certain Foreign
Partnerships /
and others
Form 3520-A
–US Owners of
Property to
Foreign Corps
November 2014
6
US Voluntary Disclosure & Reporting
FBAR (foreign bank account report)
$10,000 or
more
A US tax
resident
U.S. Tax Seminar
PwC Israel
November 2014
7
US Voluntary Disclosure & Reporting
2014 Highlights
OVDP
Streamlined
Disclosure
U.S. Tax Seminar
PwC Israel
• 8 years filing history
• Possibility of removing
criminal liability
• Penalty: 27.5% / 50%
• 3/6 years filing history
• Penalty: US tax resident – 5%;
US tax nonresident – no
penalty
November 2014
8
US Perspective
Reporting Requirements
FinCEN 114/114a
8621
3520 / 3520-A
8621 /5471 / 8865 /
8938
8858
926
Form
U.S. Tax Seminar
PwC Israel
$10,000 $100,000
Excess
distribution tax
35% / 5% assets
transferred / in trust
$10.000 - $50,000
$10.000 & FTC
reduction
10% of & up to
$100K
Penalty
November 2014
9
Israeli Voluntary Disclosure &
Reporting
U.S. Tax Seminar
PwC Israel
November 2014
Slide 10
Israeli Perspective
Timeline – Voluntary Disclosure Progression
1993
Introduction of
Israeli
voluntary
disclosure –
limited to
specific timeframe
U.S. Tax Seminar
PwC Israel
2005
Introduction
acceptance of
Israeli
voluntary
disclosure
procedure
2011/2
Voluntary
disclosure for
Israeli tax
residents
holding nonIsraeli assets
2014
New voluntary
disclosure
program
November 2014
11
Israeli Perspective
From the News
Until 2018 –
Israel to
implement
OECD
Automatic
Exchange of
Information
$53 billion of
unreported
income in Israel
(World Bank Study)
Swiss bank
accounts
U.S. Tax Seminar
PwC Israel
November 2014
12
2014 Voluntary Disclosure – Key Topics
Relevant of
September 7,
2014 until
December
31, 2016
Israeli
Voluntary
Disclosure
Information
cannot be
used if
application is
refused
One time
procedure
U.S. Tax Seminar
PwC Israel
Applicable to
all taxpayers
Full
disclosure
No previous
investigation
Amnesty
November 2014
13
Practicalities – Details of Request Form
• File request with the ITA
• Includes:
• Name
• Tax years
• Income source
• Breakdown of untaxed income
and estimated tax payable
• Relevant attachments
U.S. Tax Seminar
PwC Israel
November 2014
14
2014 Temporary Provisions – Additional Options
Same
information
but
anonymous
request
Available until
September 2015
Expedited
Request
Limitation on
utilization of
losses
U.S. Tax Seminar
PwC Israel
Anonymous
Request
Available until
September 2015
> 2m NIS
value of
assets & 0.5m
NIS of
taxable
income
Offsetting
Losses
November 2014
15
Thank you!
Ron Mazurik, Senior Tax Manager, PwC Israel
03-7954471
[email protected]
Rasha Hanania, Tax Manager, PwC Israel
03-7954814
[email protected]
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