A Tax Controversy And Litigation Law Firm

serving clients throughout the U.S. and around the globe

Tax Litigation

Employment &
Business Tax

IRS Audits & Appeals

Tax Return Preparers
Collection Matters
Offshore Accounts

White Collar &
Criminal Tax Defense

State & Local Tax

The highest level of personalized service from experienced tax attorneys

Archives

  • Follow

    AV Peer Review Rated

    Risks of offshore accounts

    On Behalf of | Sep 21, 2021 | Offshore Accounts/International Tax Disputes

    Having an offshore account is a commonly used method of protecting liquid assets from taxation. Additionally, international business is more straightforward if you maintain an account in the country you do business. While having an offshore account is not necessarily illegal can lead to many additional risks, listed below.

    Extra taxation

    Having an account in another country means that the funds in that account will face taxes twice, once by the country housing the account and once more by the US. This double tax issue is frustrating, but it is unavoidable. As an American citizen, you will pay taxes on the money you make.

    Difficulties opening or making transactions

    Because of the long arm of the IRS, many foreign banks are reluctant to open accounts with US citizens. This does not mean it is impossible to open such accounts, but it does mean that you may have more significant future difficulties. Additionally, anyone who has worked in a bank will tell you that transactions with foreign accounts face scrutiny. It is not uncommon for a bank to reject a transaction outright simply because it originated in a bank overseas.

    Steep penalties for failure to disclose

    Some would see the extra taxation and the additional layers of scrutiny as reasons to simply keep their offshore accounts secret. This is a mistake. The IRS looks at concealed accounts unfavorably, to say the least. A person found to have concealed offshore accounts can face up to $500,000 in fines and a ten-year sentence.

    Additionally, a concealed offshore account may also signal other government sectors that there may be other illicit activity, and you may face an investigation. An investigation of any sort is time-consuming and stressful, even if there is nothing to find.

    You can protect yourself with a voluntary disclosure

    Ensuring your offshore accounts comply with US tax law is vital. One step you can take is to disclose your account. Once done, the IRS may not pursue criminal action against you. However, these matters are extremely sensitive and demand the attention of skilled tax attorneys.

    The highest level of personalized service from experienced tax attorneys

    Archives

  • Follow

    AV Peer Review Rated