Argentinas offshore amnesty program nets $5.2 Billion in taxes after Argentinians disclosed over $90 Billion in previously hidden assets. Under the law Argentines could disclose offshore cash and assets to the government and pay a 10% tax. Argentine tax payers have an extension to disclose further offshore cash until the end of March 2017, however those assets will be taxed at the rate of 15%. Undeclared assets expose Argentines to criminal tax evasion prosecution. The news was announced by Argentina’s recently fired finance minister, Alfonso Prat-Gay at his last press conference. Prat-Gray was fired by Argentine President Mauricio Macri over “management disagreements.”
This is the first step as many countries around the world emulate FATCA and the IRS FBAR compliance programs such as the Offshore Voluntary Disclosure Program or OVDP and the Streamlined Domestic Offshore Procedures. Argentina represents the second largest economy in South America, and many members of the Organization for Economic Co-operation and Development (OECD) are adopting a global version of FATCA called the Common Reporting System or CRS. CRS is more widely known as “GATCA” a bit of a sarcastic twist on Global FATCA.
Why should US taxpayers and resident foreign nationals pay attention to Argentinas Offshore Amnesty Program and the OECD?
Argentinas offshore amnesty program is a model for every OECD member to follow. The CRS is designed to enact laws in every member nation requiring banks to identify and collect specific identification regarding the identity of account holders worldwide. Banks around the world are forcing account holders to disclose the personal identity or corporate identity of the “beneficial ownership interest” that controls the account. This information – including their national taxpayer ID, Passport Credentials, and even drivers license number – is communicated to the account owner’s resident national tax authority. The IRS is receiving information from banks around the world regarding account information, balances and transaction details associated directly to the personal social security number, taxpayer ID, passport or other identification of the individual with beneficial ownership interest in any offshore account.
We are often asked “How will the IRS ever find me, I’m just a small fish in a big pond?”
The answer is quite simple: they don’t have to. It is all becoming automated. Your own offshore bank is providing information about you, your accounts and their associated balances and transactions directly to the IRS. Newly updated IRS systems simply compare this information with your FBAR disclosures and flag any discrepancies for IRS audit.
The goal of the United States and sovereign nations around the world is to end tax evasion by creating international financial transparency. The recent developments in Argentinas offshore amnesty program are another example of progress toward that goal.
If you have more than $10,000 total accumulated at any point in the year in your combined offshore account balances you must disclose all offshore accounts, income and assets to the IRS. We invite you to contact the international tax attorneys at Allen Barron for a free consultation to discuss your unique situation and how we can help at 866-631-3470.