Just when many thought the wave of IRS focus on offshore accounts and investments had passed the next wave has reached our shores. The recent decisions by Mexico and South America to implement their own FATCA regulations means a continued tightening of inter-agency communication and international monetary tracking. The success of the US led FATCA effort has changed international banking and tax reporting forever. The US has required all taxpayers to come into compliance with IRS FBAR reporting and disclosure of previously unreported offshore accounts, assets and income through the OVDP or streamlined application process.
The failure to do so results in exceptionally harsh penalties of 50% of the highest annual accumulated balance of all offshore accounts, or $100,000 per unreported incidence whichever is higher. In addition, the IRS has threatened consistent criminal prosecution for tax evasion for those who refuse to come into compliance.
The recent decisions by Mexico and South America to implement their own FATCA regulations means even more possibility for exposure for those who attempt to secret money and assets in offshore havens. The inter-agency sharing of account information relating to individual taxpayers and their balances and transactions is already underway. Independent legislation by these foreign nations will require US banks to reciprocate and provide extensive information about the accounts, balances, historical transactions and income of foreign nationals with US bank accounts and investments.
The international tax attorneys at Allen Barron have led the charge to help US taxpayers to come into compliance with IRS FBAR reporting and offshore disclosures. The pending legislation will generate a new wave of reporting requirements and financial disclosures throughout the New World. It seems like only a matter of time before all nations adopt their own versions of FATCA and the noose of financial transparency tightens around those who continue to attempt to shield income and assets from taxation.
If you have concerns regarding IRS FBAR, FATCA and the international reporting of income, accounts, and assets we invite you to call for a free consultation at 866-631-3470.