The IRS has added four more foreign financial institutions to its list of "Foreign Financial Institutions or Facilitators." Those who had accounts at one or more of these institutions are required to pay an increased penalty of 50% if they wish to participate in the Offshore Voluntary Disclosure Program (OVDP). The list is expected to continue to grow as the U.S. government continues its ongoing investigations of offshore tax evasion.
Over the summer, the IRS continued its fight against offshore tax evasion by reaching nonprosecution agreements with dozens of Swiss banks, bringing the total list of "facilitators" to nearly fifty. This list should continue to grow over the next few months. As part of the new reforms made to the ongoing Offshore Voluntary Disclosure Program (OVDP), individuals with one or more accounts at a bank included on this list must pay an increased offshore penalty of 50%, rather than the usual 27.5% that has been required since 2012.
The U.S. District Court for the Western District of Washington has upheld FBAR penalties of $10,000 for tax years 2005 through 2008, but admonished the IRS for what it said was "arbitrary" and "capricious" conduct. As a result, the court ordered that any additional interest or late payment penalties are void.
More U.S. taxpayers have either renounced their citizenship or returned their green cards in 2013 than ever before, primarily high net-worth individuals who sought to avoid higher taxes on income and capital gains. The major driving forces of the sharp increase are new changes to the tax law, including the Foreign Accounts Tax Compliance Act (FATCA), a law designed to assist the U.S. government in identifying unreported offshore bank accounts.
Following a deal between the United States and several Swiss banks to pay fines rather than face a criminal investigation, Zurich bank Rahn & Bodmer has disclosed that they are currently under investigation by the U.S. Department of Justice. Long known for being a tax haven for wealthy individuals, Swiss banks have been heavily targeted by American authorities over the past few years.
For many years, Americans were able to hold money in offshore accounts without worrying about being prosecuted by U.S. authorities. All of that has changed in the past few years. Since the United States began its intense crackdown on undisclosed offshore accounts in 2009, it has used its long-arm to force foreign banks intro compliance with U.S. tax regulations.
Who would've thought that someone able to create such sweet and loveable toys would also plead guilty to tax evasion? That's just what millionaire businessman, Ty Warner, the creator of Beanie Babies, did on Wednesday.
The United States campaign against secret offshore accounts was greatly aided by a high-level Swiss adviser's guilty plea to a single count of conspiracy. On August 16, Edgar Paltzer, a Swiss lawyer formerly with the Zurich firm of Niederer, Kraft & Frey, pleaded guilty in a New York federal court. Paltzer faces up to five years plus fines. However, he is expected to receive a shorter prison sentence due to his cooperation.
There has been a great deal of commotion surrounding the use of offshore bank accounts to shield assets from authorities in the United States. Some of these accounts are used for the purpose of evading income taxes, but there are also many situations where an individual has foreign accounts for legitimate reasons.
Life, as the saying goes, is full of choices. For holders of foreign bank accounts, those choices continue to require up-to-date information and an awareness of effective tax strategy.