Last week was the deadline for US taxpayers who had requested extensions to file their tax returns. The following day the IRS issued Notice IR-2015-116 issuing a warning to US taxpayers with offshore bank accounts and assets:
“The groundbreaking effort around automatic reporting of foreign accounts has given us a much stronger hand in fighting tax evasion. People with undisclosed foreign accounts should carefully consider their options and use available avenues, including the offshore program and streamlined procedures, to come back into full compliance with their tax obligations.”
The notice specifically mentions the automated third party reporting systems required under FATCA, and designed to increase direct reporting to the IRS by foreign banks, investment houses and sovereign tax agencies. It notes that as more and more institutions and nations sign on to FATCA, the stronger of flow directly to the IRS about US taxpayers activities and accounts “making it less likely that offshore financial accounts will go unnoticed by the IRS.”
The notice provided fresh statistics into the numbers of US taxpayers that have filed applications under the OVDP and Streamlined options. More than 54,000 have submitted applications under OVDP, and 30,000 through the streamlined procedures.
The notice concludes with cold hard barely veiled warnings to US taxpayers who have yet to come into compliance with FBAR reporting:
“Separately, based on information obtained from investigations and under the terms of settlements with foreign financial institutions, the IRS has conducted thousands of offshore-related civil audits that have produced tens of millions of dollars. The IRS has also pursued criminal charges leading to billions of dollars in criminal fines and restitutions.”
This is not an issue that can be avoided, and if you do not make a voluntary disclosure the IRS will recieve information about your accounts and transactions from offshore banks and other institutions. You will then face the full force of FBAR related penalties, fines and interest as well as the genuine threat of jail time for tax evasion.
The IRS concluded its notice with:
“The IRS remains committed to stopping offshore tax evasion wherever it occurs … the agency continues to pursue cases in all parts of the world.”
If you have not yet filed under the OVDP or Streamlined program for FBAR compliance with the IRS, we invite you to call us for a complimentary and substantial consultation at 866-631-3470. The IRS audits have already commenced.