The goal of financial transparency worldwide is gaining momentum. The US FATCA initiative has spawned like legislation around the globe. The benefit of taxation derived from the discovery of offshore taxpayer financial accounts and interests has world leaders developing new standards to identify and exchange beneficial ownership information for bank accounts, investments, foreign corporations and assets such as real estate. The world is rapidly becoming a much more transparent place. How does this affect US taxpayers and offshore compliance with IRS FBAR initiatives such as the OVDP and streamlined programs?
The G20 has called on a powerful agency known as the Financial Action Task Force (FATF) as well as the Global Forum on Transparency and Exchange of Information for Tax Purposes (commonly known as the “Global Forum) to assist with the development and implementation of new processes to identify and exchange beneficial ownership information – the specific identity of the person(s) who own a bank account, company or asset. The FATF and the Global Forum will provide proposals on strategies to improve international standards of financial transparency, and the ease with which sovereign nations can exchange this information internationally.
Why should a US taxpayer be concerned about the actions of the G20? The G20 is a powerful financial alliance of the financial ministers and central bank governors of Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the United States of America. These nations intend to identify and exchange beneficial ownership information to increase tax revenue. Beneficial ownership information is becoming a standard piece of information required to open a bank account, form a company, make a foreign investment or transact business in most nations around the world. The nations of the world want to be able to track who, personally, owns or controls every bank account, investment account, business interest, real estate parcel, and asset globally. They intend to identify and exchange beneficial ownership information with each other in a centrally automated exchange format that makes it easy for an agency like the IRS to learn exactly what each and every US taxpayer owns or has an interest in around the world.
The next step is obvious: the IRS will compare this information to the data provided by US taxpayers on their FBAR, Form 5471 and Form 8938 disclosures and seek discrepancies (missing information). This will trigger an IRS audit and expose the US taxpayer to Draconian and extremely harsh penalties as well as back penalties and interest, not to mention criminal prosecution.
The number one question we are asked by those with offshore accounts and assets is “How will the IRS ever trace these things back to me?”
The answer to that question is: “With the help of every other nation in the world requiring you to provide personal identification regarding existing offshore accounts, corporation interests, investments and assets and any you may open or acquire in the future.”
The international tax attorneys at Allen Barron are uniquely positioned to guide international investors and US taxpayers with offshore accounts and assets. We invite you to contact us for a free consultation at 866-631-3470. Ask about the protections of the attorney-client privilege and all we can do to help protect your money and assets and bring you into compliance to avoid harsh penalties and criminal prosecution.