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It is not illegal, per se, to have a foreign bank account. However, failure to disclose the existence of such accounts on Schedule B of Form 1040 and FBAR can expose individuals to severe civil and criminal penalties.

Based on the following observations, the United States government’s battle against offshore tax evasion is just beginning:

1. According to IRS Commissioner Doug Shulman, IRS agents are poring over information contained in the over 14,700 voluntary disclosures and are seeking to identify individuals who have not disclosed their offshore accounts as well as financial institutions, attorneys, CPAs, investment advisors and others who promoted or otherwise facilitated U.S. persons hiding assets and income offshore.

2. The IRS has announced plans to increase audits and investigation of U.S. individuals and business taxpayers with foreign-sourced income, foreign accounts and foreign trusts.

3. The IRS has announced that it plans hire as many as 800 new employees to focus solely on international compliance issues.

4. The IRS has obtained (through the UBS case and the Offshore Settlement Initiative) information on banks in 70 countries that may have assisted U.S. taxpayers in hiding assets and income.

5. Liechtenstein and Switzerland have reversed decades of resistance and have agreed to enter into Tax Information Exchange Agreements in line with the model agreement developed by the Organization for Economic Cooperation and Development (OECD). Both countries have already initiated such agreements with the United States and other countries.

6. G-20 has signaled a new willingness to take action against uncooperative tax havens. It appears that the changes made by Liechtenstein and Switzerland have set off a chain reaction in other bank secrecy nations. Places like Luxembourg, Austria, Andorra, Monaco and others have pledged for the first time to share tax information and cooperate with international tax enforcement.

7. In the United States, indictments continue to be filed against U.S. taxpayers who have hidden assets and income offshore as well as the lawyers and accountants who have facilitated this activity.

8. The OECD has announced that all 87 countries in its global forum on transparency and information exchange have agreed to adopt the OECD model agreement on Tax Information Sharing. Essentially those 87 nations, including some of the most notorious tax havens in the world, have pledged to no longer allow their bank secrecy laws to be used to carry out international tax evasion.

9. A bill aimed at obtaining greater information from foreign banks about U.S. citizens and corporations with overseas accounts was introduced recently in Congress. The Treasury Department has been asking Congress to take action against those who are using offshore accounts to evade taxes for some time, making this bill strongly desired not only by powerful players on Capitol Hill, but also by the U.S. President and Treasury Department.

Tax Attorney Lawrence Brown has deep experience representing individuals in matters relating to disclosure/non-disclosure of offshore accounts and assets. Lawrence Brown is a former Trial Attorney with the Department of Justice Tax Division. His private practice focuses on resolving complex tax disputes including those related to offshore accounts and assets.

To address any and all matters related to offshore accounts and assets with a highly qualified tax lawyer, contact Brown, PC at 888-870-0025 or e-mail the law firm through this Web site for legal counsel regarding offshore account and asset disclosure/non-disclosure. Our main offices are located in the Dallas-Fort Worth, Texas metroplex and we represent clients throughout the United States and the world.

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