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July 7, 2016


Re-examining streamlined disclosures of offshore accounts

To add onto our prior post this week, we want to discuss the IRS streamlined disclosure program. If you were one of 30,000 to use this program, your legal troubles might not be over.

The streamlined program does not come with any guarantee – it only offers a limit amnesty. This means that if the IRS uncovers anything indicating you were not completely truthful, you could still face prosecution.

This is a significant difference between the disclosure programs. The offshore voluntary disclosure program carries stiffer penalties (as much as 27.5 percent compared with 5 percent) and is a tougher process, but eliminates any worry of future prosecution related to disclosures.

“Scrubbing data for leads”

Last year, the IRS reached settlement agreements with many Swiss banks. In exchange for cooperation, the U.S. agreed not to prosecute. The banks have started turn over information on how they assisted American clients avoid taxes. They also paid penalties totaling $1.37 billion.

This data includes basis account information, but also communication with clients such as phone recordings.

A statement by a trial attorney in the Justice Department’s tax division has prompted concerns. While at a New York University Tax Controversy Forum, she stated we’re “taking all that data and scrubbing it for leads.” Apparently, the effort was already yielding results and could lead to indictments.

Difficult decisions

Failing to disclosure offshore bank accounts is serious. While about 84,000 people have come forward to disclose accounts since 2009, you may not be one of them. If this is the case, you need to proceed with caution. Civil penalties can take a significant portion of your foreign asset portfolio. Criminal charges are possible following an investigation for the willful failure to disclose accounts.

Knowledgeable counsel from an experienced tax attorney can help you weigh risks and reach an informed decision. When bad facts exist, it is crucial to address them before you are investigated.

It is a dangerous time for those with foreign holdings, get help filing a disclosure. A review of a prior streamlined or quite disclosure can also ensure you got it right.

Offshore Accounts/International Tax Disputes