IRS: Offshore Financial Accounts will NOT go Unnoticed was published by JD Supra on 5/14/19.
On March 15, 2019, IRS reported that hiding money or assets in unreported offshore accounts remains on
the Internal Revenue Service’s “Dirty Dozen” list of tax scams for 2019. IRS continues to remind US Taxpayers to report their worldwide income on their US Tax Return. US citizens and Resident Aliens (green card holders) must report income from all sources within and outside of the U.S. whether or not they receive a Form W-2 Wage and Tax Statement, a Form 1099 (Information Return) or the foreign equivalent.
IRS is interested in financial accounts everywhere in the world. If the IRS finds that a Taxpayer has undisclosed reportable accounts or income before a US Taxpayer reports them, the Taxpayer could face serious consequences including criminal prosecution. Taxpayers are encouraged to come forward first, voluntarily disclose and become compliant with the system. “Offshore evasion remains a primary focal point of overall IRS enforcement efforts,” said IRS Commissioner Chuck Rettig. “Our Criminal Investigation and civil enforcement teams work closely with the Justice Department in the international arena to ensure our nation’s tax laws are followed. Taxpayers considering hiding funds or assets offshore should think twice; the civil penalties and criminal sanctions can be severe.”
Third-party reporting provides ample information to the IRS
Due to FATCA and Intergovernmental Agreements (IGAs) between the U.S. and partner jurisdictions, automatic third-party account reporting has been in place for four years. As a result, it is “less challenging” for IRS to pinpoint US Individuals and Green Card Holders that try to evade U.S. taxes attempting to hide income in offshore banks, brokerage accounts or nominee entities. IRS is well aware that these Individuals try to access the offshore funds using debit cards, credit cards, wire transfers, foreign trusts, employee-leasing schemes, private annuities or insurance plans. IRS will also pursue bankers and any other financial services professionals suspected of assisting U.S. Taxpayers with hiding assets or income overseas.
Best to come forward
IRS continues urging U.S. Taxpayers that have not reported their offshore investments or pay tax on this investment income to come forward. IRS offers options for addressing this noncompliance:
- Streamlined Filing Compliance Procedures
- Delinquent FBAR submission procedures
- Delinquent international information return submission procedures
- Sunset provisions of the Offshore Voluntary Disclosure Program which ended on September 28, 2018
Don’t be a Victim of your own Making
U.S. Taxpayers should report all reportable foreign financial accounts. They ought not fall prey to schemes that offer the promise of hiding money and income offshore. It is best to consult a specialized tax advisor that understands the IRS options for noncompliance and can diminish criminal exposure.