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IRS says time running out for foreign assets disclosure

A recent warning from the IRS is prompting taxpayers to voluntarily admit if they've been hiding income in a foreign bank. According to a news report in the Laredo Sun in Texas, new reporting requirements concerning foreign accounts will become a part of tax law over the course of the next few years. As such, time may be running out for people who fail to disclose all income to the IRS.

A spokesperson for the IRS advised tax payers to take advantage of an opportunity to testify regarding their overseas funds as a part of the Voluntary Disclosure Initiative Abroad. The opportunity to admit income hidden in a foreign bank will reportedly expire on August 31.

It is believed that taxpayers who make a voluntary confession may receive a better opportunity for regularizing their status. In effect, people who wait to be found out and have failed to report the funds in a foreign bank account will likely encounter serious problems with the IRS.

Additionally, federal tax officials are focusing on banks that assist United States taxpayers in hiding assets. The IRS Commissioner told reporters that citizens would be best served to comply with the tax system, because the risks of hiding money overseas are climbing. In fact, individuals who are exposed violating taxation law in this manner may be faced with criminal charges and more substantial fines.

As of now, a penalty of 25 percent of the money spent in a foreign bank account, as well as back taxes and interest, are applied to people who are discovered to be in violation of the law. Undoubtedly, individuals who find themselves facing problems with the IRS feel overwhelmed and often intimidated. Regardless of the circumstances surrounding tax law violations, those accused are still entitled to legal rights. As such, a Texas attorney who specializes in tax law may be considered a wise investment.

Source: The Laredo Sun, "IRS warns taxpayers who hide income in foreign banks," Francisco Diaz, Aug 16, 2011

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