We are often asked about how seriously the IRS intends to push the “wilfull” conduct measure when reviewing a US taxpayer’s returns over the past 8 years, their FBAR reporting, and how that compares with the information the IRS is receiving from offshore tax agencies and financial institutions. There will be an IRS audit of this information, and the returns of US taxpayers. The answer is straightforward: The IRS needs revenue, and when they can prove that a US taxpayer did not report offshore income, assets or accounts over a period of years they have no reason to consider “non-willful” conduct.
In fact, the behavior pattern itself and the numbers provided by the taxpayer’s own financial institution will be enough to show a pattern of trying to hide income and assets. From that point, its going to be a negotiation with the IRS and they will hold all of the cards – including criminal tax fraud liability. The genuine risk of jail time compels many to pay the IRS a lot more than they should have simply to gain a release from criminal exposure.
The key here is compliance. If you have not taken the necessary steps to be in full FBAR compliance we suggest you do so and immediately. We can provide the full protection of attorney-client privilege to you as we work through the specfics of your unique situation. We will work to bring you into compliance voluntarily, with the goal of achieving the best possible outcome for you based upon the facts at hand.
What is your appetite for risk? Are you prepared to endure the significant costs and associated exposures of an IRS audit? Are you willing to risk having to pay more than 50% of the aggregated total of all of your assets at any point over the past 8 years in one lump sum as a penalty to the IRS? Are you willing to risk jail time? The answer to those questions will guide your next steps. If you need additional perspective we invite you to contact us at 866-631-3470 for a free and confidential consultation.