The Internal Revenue Service (IRS) continues to remind taxpayers of the danger of hiding money or assets in unreported offshore accounts. The IRS has been very focused on this issue now for over 5 years. Violations of U.S. global tax reporting and FBAR filing laws can be criminal and there are severe civil penalties even for those that are not prosecuted. This is just one reason the IRS offshore voluntary disclosure programs have processed over 50,000 cases raking in over $7 billion. This is expected to increase because the chances of being caught with undisclosed accounts are only going up.
The IRS now has FATCA, the U.S.’s global tax enforcement law that applies virtually everywhere. As a result, it is easier for the IRS to find taxpayer’s with assets hidden offshore because banks worldwide are handing over American account details to the IRS. Some banks are sending disclosure letters warning client’s that their information will be supplied to the IRS, but other are supplying this information with no warning.
The IRS and Department of Justice are still aggressively hunting tax evaders through John Doe summonses. The IRS is also relying on data mined from previous disclosures. Now that they have added FATCA, their arsenal is virtually complete. On June 18, 2014, the IRS announced additional options for taxpayer’s who wish to come forward regarding undisclosed foreign accounts in addition to the already existing Offshore Voluntary Disclosure Program (OVDP). These programs include: OVDP, Domestic Streamlined, Foreign Streamlined, Transitional Relief, and Delinquent FBAR Submission.
It is extremely important to understand what IRS offshore program is right for you. For example, the OVDP protects from prosecution, while the Streamlined program does not. The OVDP costs more, but you get more – this program may absolve bad facts. The Streamlined program requires certifying under penalties of perjury that your failure to disclose was not willful, the OVDP does not.
For assistance with the disclosure of your offshore accounts or assets contact Hone Maxwell LLP today for a complete analysis of your case.