Here’s the bottom-line take from the Internal Revenue Service regarding money held abroad in foreign banks by Americans: You can have your cake, but we want our slice.
The IRS has never come out with overt objections concerning the offshore accounts in which many thousands of Americans park their money. Given, though, that the singular tax system operative in the United States makes all worldwide income subject to domestic taxation, agency representatives can get a little agitated when they suspect that an offshore account holder is attempting to keep his or her banking information shielded from IRS scrutiny.
In fact, the IRS’s typical response following any such suspicion is to go into immediate investigative and enforcement mode in a most aggressive way. Failure to comply with agency disclosure requirements concerning offshore bank holdings is deemed flatly illegal by tax authorities, being an act of tax evasion.
And that comes with a bagful of penalties that can be truly frightening. A recent article discussing compliance duties regarding offshore accounts notes, for example, the heavy fines and penalties that can be levied by the agency against individuals who fail to duly disclose their account details and the institution/s holding their money. In some instances, those exactions include forfeiture of account holdings and even lengthy prison terms.
In fact, an IRS official quoted in the above-cited article notes the “billions of dollars in criminal fines and restitution” that have resulted from IRS probes and enforcement actions against taxpayers deemed in noncompliance with agency directives. IRS Commissioner John Koskinen says it is “a bad bet to hide money and income offshore.”
Admittedly, some people knowingly engage in tax fraud. Conversely, though, many American taxpayers have only unwittingly engaged in wrongdoing or might be flatly unaware that they are deemed in noncompliance with IRS rules.
An experienced tax attorney with a proven history of representing clients in IRS-related matters can answer questions and advocate diligently on behalf of any person needing assistance regarding offshore account disclosure duties.