Have an Offshore Account That You Need to Disclose?
The Internal Revenue Service and the United States Government continue to gain access to those offshore accounts that were once considered safe havens. As they do so, more and more tax payers are exposing themselves to possible civil and criminal liability by not reporting their overseas financial activity.
In an effort to encourage voluntary disclosure of offshore accounts, and due to its success over the past few years, the IRS has renewed its Offshore Voluntary Disclosure Program. Under the program, tax payers have an opportunity to become compliant, avoid substantial civil penalties and generally eliminate the risk of criminal prosecution. Taxpayers who do not submit a voluntary disclosure run the risk of detection by the IRS and the imposition of substantial penalties, including the fraud penalty and foreign information return penalties, and an increased risk of criminal prosecution.
As part of its 2012 program the IRS has increased the program penalty to 27.5% of the highest aggregate balance in the foreign bank account. This is an increase from the 25% penalty the IRS imposed in 2011. Nevertheless, some taxpayers will still be eligible for 5 or 12.5 percent penalities if their offshore accounts or assets never surpassed $75,000 in any calendar year.
In addition to the above penalties, taxpayers are required to pay back taxes, interest, and regular penalties. Although this may seem like a lot of money, these penalties are a lot less than the penalties and possible jail time one would face if the IRS found out about the offshore accounts on their own. The IRS has been getting better and better at detecting offshore accounts, so the risk of being caught is increasing. And no, once the IRS initiates an examination, you cannot apply for the program.
The Offshore Voluntary Disclosure Program could end any day, so it is important to act as soon as possible. If you have an offshore account that you need to disclose then contact a San Diego tax attorney right away.
For more information on the United States's increased access to foreign bank accounts please refer to the links below:
Swiss court says was right to give U.S. bank data - http://www.reuters.com/article/2011/07/15/us-ubs-idUSTRE76E3R920110715
With Indictments, IRS Will Get More Data From Swiss - http://www.forbes.com/sites/robertwood/2012/02/04/with-indictments-irs-will-get-more-data-from-swiss/