WSJ on Offshore Accounts: “The Tax Man Cometh and, Holy Cow, He Means Business”

Posted on June 4, 2017, 11:10 pm by Asher Rubinstein, Esq.

The Wall Street Journal article, “The Tax Man Cometh and, Holy Cow, He Means Business” (WSJ, June 3-4, 2017), despite its provocative title, doesn’t break new ground on the IRS attack on offshore accounts.  Instead, it offers us the following lessons:

The IRS has obtained a vast amount of information from sources that include foreign banks, the Panama Papers and the Foreign Account Tax Compliance Act (FATCA).  Additional sources include Tax Information Exchange Agreements (TIEs), foreign bankers and other people’s voluntary disclosures.  According to the IRS, there are hundreds of US taxpayers subject to criminal tax charges in relation to their offshore accounts, and thousands more subject to large civil fines and penalties.

There are also opportunities to come forward before the IRS gets a taxpayer’s name, in return for lower penalties.  If a taxpayer willfully hid foreign assets and income (for instance, a taxpayer who set up an account in a tax haven country like Switzerland or Panama, without any legitimate ties to that country, or a taxpayer who utilized offshore entities like foreign trusts, corporations or foundations, or diverted business income away from the IRS), then such a taxpayer should apply to the IRS Offshore Voluntary Disclosure Program (OVDP) in return for lower penalties and no criminal prosecution.

On the other hand, if a taxpayer was non-willful (for example, a U.S. taxpayer who inherited a foreign account from a foreign relative, or a recent immigrant who was unaware that accounts “back home” become reportable to the IRS), then such a taxpayer may be eligible to make a Streamlined disclosure for much lower penalties, or in the case of US taxpayers who reside abroad, zero penalties.

Legal counsel experienced in representing people with offshore assets before the IRS can assess the background facts and help determine whether someone is willful or not, and can present the taxpayer and facts in the best light possible before the IRS.

Contact us to discuss IRS compliance for foreign assets including offshore accounts, the OVDP, Streamlined programs and alternatives to making a voluntary disclosure.

 

If You Have an Unreported Foreign Account, You Really Should Be Thinking about Tax Compliance








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