It is no secret that the Internal Revenue Service (IRS) is cracking down on offshore accounts. An ABC affiliate out of Boston addressed the agency's aggressive tactics in a recent article, noting the IRS has pursued thousands of audits of foreign accounts that led to criminal charges and "billions of dollars in criminal fines and restitutions."
Those who hold foreign accounts and wish to come into compliance without facing criminal persecution can take part in voluntary programs. Over 50,000 taxpayers have taken part in these programs, netting the IRS tax and penalty payments that total more than $7 billion. The IRS has added an incentive to come clean: new rules may require financial institutions across the world to notify the IRS of accounts held by U.S. citizens.
Various programs are available to help taxpayers come into compliance with reporting requirements.
More on Streamlined Procedures
The IRS is attempting to ease the process of reporting foreign financial accounts by changing the Streamlined Filing Compliance Procedures. The Streamlined Procedures were initially offered in 2012, but the IRS was criticized for the strict requirements. As a result, the agency modified the requirements. One key change - all taxpayers residing within the United States can potentially qualify instead of just those residing outside of the U.S.
The Streamlined Procedures are available for individual taxpayers who can certify that failure to comply was not intentional. The IRS refers to this as willful conduct. Those who qualify may face a potential monetary fine of five percent of the foreign financial asset. This penalty is generally much lower than the $10,000 fine that can apply under the Foreign Bank and Financial Accounts report, or FBAR.
The IRS also notes that those who have qualified for the 2011 Offshore Voluntary Disclosure Initiative that qualify for the Streamlined Procedures can opt out of the offshore program and request use of the Streamlined Procedures instead. In fact, those who have already had their cases resolved and closed in an offshore voluntary disclosure program may be able to have their cases reconsidered under the Streamlined Procedures.
Legal counsel can help
These are just a few of the options available for those with foreign accounts to come into compliance while limiting the risk of monetary penalties and potential criminal charges. Anyone with an offshore account that is not in compliance is wise to seek the counsel of an experienced tax attorney. This legal professional will review your options and help to better ensure a more favorable outcome.
Keywords: tax law