The IRS reports that it is receiving a vast amount of offshore account information from foreign banks, investment institutions and sovereign tax authorities regarding US taxpayers. The information is quite detailed and linked to individual taxpayer IDs, and includes data such as account information, balances (present and historical), transactions as well as associations with offshore investments and foreign corporations.
Institutions in almost every nation around the globe, including the Swiss and the Cayman Islands, are providing information directly to the IRS. US taxpayers are also required to provide information on other US taxpayers with whom they share an offshore investment or corporate ownership interest in many cases. The offshore account information is compared to the information provided by taxpayers on returns going back six years (and in some cases much further). When the information provided by the taxpayer does not match information provided by offshore banks, investment houses and tax agencies, the IRS audits will begin with enthusiasm. The IRS will hold all the cards.
US taxpayers have been provided the opportunity to fully disclose their offshore account information, income and assets and come clean with the IRS. The OVDP or Offshore Voluntary Disclosure Program provides substantially reduced penalties, and a full release from criminal tax evasion prosecution. A streamlined domestic (and foreign) offshore procedures option provides even less penalties if the taxpayer is absolutely certain that the missed reporting was “non-willful” – a designation the IRS is fighting aggressively in many cases.
If you have not yet come into compliance with FBAR reporting requirements and made a full, transparent and honest disclosure of your offshore account information and income now is the time to do so. The IRS is priming the pump for what it is confident will be a fruitful and abundant harvest. The penalties for unsuspecting US taxpayers, and for those who are not accepted into the voluntary disclosure programs (especially the streamlined applicants) are harsh, and unyielding. We invite you to contact the experienced tax attorneys and accounting professionals at Allen Barron for a free and substantive consultation at 866-631-3470.