The IRS and DOJ are going after tax evasion like never before.
The IRS and Department of Justice are cracking down on offshore tax evasion like never before. Taxpayers must therefore comply with new tax laws and procedures regarding offshore assets and accounts to ensure they do not face severe penalties, and even criminal prosecution.
This summer, the IRS made significant changes to filing procedures for the Offshore Voluntary Disclosure Program, for example, which provides taxpayers a route to comply with their tax obligations under the Foreign Account Tax Compliance Act and the Foreign Bank Account Reporting requirements. The IRS estimates that thousands of people are being provided with an alternative path to become tax compliant through the new OVDP.
The OVDP allows a taxpayer, or estates, to file amended or delinquent returns. The streamlined procedures are now available to certain eligible U.S. citizens for the first time. In addition, the IRS has eliminated the requirement that a taxpayer have $1,500 or less of unpaid tax and no longer requires the taxpayer to certify that failure to comply was non-willful.
FATCA implementation causing hardship for some
One recent global survey has found that as many as three-quarters of Americans living outside the U.S. have considered giving up their citizenship in response to the new stringent tax requirements. Some foreign banks have refused to open accounts for U.S. expatriates due to the fees and compliance requirements associated with FATCA.
FATCA requires foreign banks to report to the IRS any investment income and account balances of U.S. citizens over certain thresholds. If a financial firm fails to report the information, its customers will have 30 percent of income withheld from U.S. sources. Congress enacted FATCA in 2010, after learning that many financial institutions, particularly in Switzerland, were encouraging U.S. citizens to keep money in their institutions to avoid paying taxes.
Weir verdict has ramifications for IRS, DOJ crackdown on offshore accounts
On November 4, Raoul Weil, the highest ranking Swiss banker ever to be prosecuted by the IRS and the Department of Justice, was found not guilty by a Fort Lauderdale jury of helping Americans avoid tax through offshore accounts.
Raoul Weil faced up to five years in jail for helping Americans hide upwards of $20 billion in Swiss bank accounts, the IRS alleged. However, experts caution that this verdict does not mean that the IRS or DOJ will not prosecute such cases in the future. After the verdict, officials from the DOJ recommitted to cracking down on tax evasion.
A tax attorney can help
U.S. taxpayers with questions regarding their compliance with tax laws and voluntary disclosure options should speak to experienced tax law attorneys at Insight Law to discuss their options, limit potential penalties, and avoid criminal prosecution. With so much at stake, it is imperative to first contact a knowledgeable tax attorney before reaching out to the IRS.
Keywords: FATCA, FBAR, offshore accounts, tax evasion, criminal prosecution.