It is a bitter pill to swallow. There are fewer and fewer secrets. The world is becoming much smaller for tax evasion and the authorities have broken the backs of banks and financial institutions worldwide. They have used FATCA to drag huge Swiss Banks and Cayman Island institutions into court where they have settled for millions or billions of dollars. Most banks worldwide have agreed to provide the information directly to the IRS as well as local sovereign national tax authorities. The IRS then shares information with other countries around the world. Other countries provide information to the IRS. This data is cross-checked and re-checked.
“They won’t be able to track it back to ME!” This is the mantra of those who still don’t believe in the magnitude of the problem they are facing. They simply don’t believe the IRS will be able to tie data back to them personally. You need to ask yourself a question: “Can your bank identify you personally?” How? What information do you provide to them when you arrive and wish to make a withdrawal from your account? What other bank or investment accounts have you transferred funds to or from this account? That information, along with account numbers, balances, earned interest, and in many cases transactions is being provided to the IRS and sovereign authorities worldwide. It is literally as easy as sorting a spreadsheet. They can and will tie accounts and offshore activity to US and foreign identification and tax IDs. They will identify those using foreign citizenship while residing in the US. It’s simply a matter of time.
The world is becoming much smaller for tax evasion and the time to come into compliance with IRS FBAR regulations is now.
“So if I’m caught, I’ll just pay some back taxes and a few fines, right?”
The penalty for failure to comply with offshore reporting to the IRS is 50% of the highest accumulated total of your offshore accounts and assets at the highest point in the year, for each of the past 6 to 8 years, or $100,000 per incidence (failure to list or report an item) whichever is higher. In addition, you will face criminal tax evasion charges and the genuine likelihood of jail time in a federal prison.
When you sign IRS forms, there is a paragraph above your signature that is legally quite important. It will usually say something to the effect of:
“Under penalties of perjury, I declare that I have examined this certification and all accompanying schedules and statements, and to the
best of my knowledge and belief, they are true, correct, and complete.”
You might be surprised how often a person visiting my office has said something to the effect of: “That is just meant to scare people, it really doesn’t mean anything.” Nothing could be further from the truth.
Perjury relating to an IRS form is a felony, and the IRS and its Criminal Investigations Unit can and will fine you $5,000 plus the costs of the prosecution (tens of thousands) and send you away to prison for 3 years:
26 USC Section 7206(1)
Anyone who willfully makes and subscribes any return, statement, or other document, which contains or is verified by a written declaration that it is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter shall… be guilty of a felony and, upon conviction thereof, shall be fined not more than $5,000, or imprisoned not more than 3 years, or both, together with the costs of prosecution.
When the taxpayer attempts to continue their argument before an IRS revenue officer, such as during an audit, and claims all of the information or any line item in a tax return is accurate, they open themselves up to additional charges for perjury that are stacked on top of the previous charges:
18 USC Section 1621
Whoever, (1) having taken an oath before a competent tribunal, officer, or person, on any case in which a law of the United States authorizes an oath to be administered, that he will testify, declare, depose, or certify truly, or that any written testimony, declaration, deposition, or certificate by him subscribed is true, willfully subscribes as true any material matter which he does not believe to be true; is guilty of perjury and shall… be fined no more than $2,000 or imprisoned not more than five years, or both.
I am not surprised when I meet people who believe it is their right to avoid taxes at all costs. I believe in aggressively taking every advantage of the tax code, and personally refuse to pay 1 penny more than is absolutely required by law. However, I do not condone tax evasion as this is a crime, punishable by a federal prison sentence and penalties of six or seven figures. I simply will not break the law or help others to do so. I am required to sign every tax return I prepare and submit, and am making the same statements under penalty of perjury. I cannot and will not assist clients who attempt to shelter income from US taxes. The price for tax evasion is too high. The risk that every taxpayer’s activities will come to light increases with each passing day.
The world is becoming much smaller for tax evasion and the IRS is exchanging information with the majority of nations and financial institutions worldwide. This includes the classic havens of the Swiss and the Cayman Islands, where thousands of banks and financial institutions provide direct information to the IRS. The IRS is receiving data from all over the world. Their computer systems are stacking, cross-referencing and analyzing the data, associating every strand to US taxpayers (citizens, resident aliens and foreign nationals). The IRS simply compares this information to the returns you’ve submitted, and the omissions and false representations are obvious and evident.
The time to come into compliance with the IRS and FBAR reporting is now. Once the IRS contacts you it will be too late. The IRS has provided two voluntary programs for US taxpayers to come into compliance: the OVDP (Offshore Voluntary Disclosure Program) and the Streamlined Domestic/Foreign Offshore Procedures. The IRS is looking for “willful or non-willful” conduct on the part of the taxpayer to determine which program is best for each individual set of circumstances.
If you have offshore accounts, investments, trusts, business interests, assets or income we invite you to contact Allen Barron for a free and substantive consultation at 866-631-3470.