Call Now (800) 681-1295

Can You Be Prosecuted if You Opt Out of an Offshore Voluntary Disclosure?

Table of Contents


    The IRS requires that all American citizens declare the money they earned as income on their taxes. It does not matter where you are or how you earned your money. Even Americans who live in other countries with their money and investments held in foreign bank & financial institutions must declare any income earned offshore and supply all required information reporting. Failure to disclose information about your foreign bank & financial accounts and report all income earned offshore could land you in hot water with the IRS and the United States government.

    Depending on the amount of tax liability in dispute, people who fail to disclose information about their foreign bank & financial accounts can face steep penalties. These penalties may include heavy fines and even criminal tax prosecution if your actions were willful. However, to encourage people to come forward about their willful failure to report offshore income generating assets, the government offers an Offshore Voluntary Disclosure Program to provide a way to come into compliance without facing criminal tax prosecution. Under this program, the government will impose lesser penalties than would apply without the program and forego criminal tax prosecution. Opting out of the program could open you up to the harshest civil penalties and potentially to criminal tax prosecution.

    Call our International Tax Attorneys and CPAs for help with coming back into offshore income tax and information reporting compliance. Call The Tax Law Offices of David W. Klasing at (800) 681-1295 to arrange a legal consultation with our team.

    Consequences of Opting Out

    By entering the Offshore Voluntary Disclosure Program, you could partially mitigate the applicable civil penalties for willful nondisclosures and criminal tax and offshore information reporting prosecution. Under the program, you will cooperate with U.S. authorities and work to determine how much tax penalties and interest you owe and begin paying that money back. The government will also choose to forego offshore criminal tax and information reporting prosecution. However, opting out of the program opens you up to these penalties again. Whether you remain in the program or opt out is a discussion you need to have with your International Tax Attorney as a wrong decision could be catastrophic to your net worth and your liberty. Our California Tax Lawyers are here to help you.

    Certain cases may carry a higher risk of criminal prosecution, especially if the government finds your nondisclosures were willful.

    The United States Court of Appeals for the Fifth Circuit held in United States v. Horowitz that a couple who opted out of an Offshore Voluntary Disclosure were subject to the willful FBAR penalties. Additionally, the court explained that since the couple’s actions were deemed willful, they may also be subject to criminal prosecution.

    If you are considering opting out of on Offshore Voluntary Disclosure, please get in touch with one of our California tax attorneys. We can discuss your case and figure out what decision is best for you.

    BBB Rating

    Note: As long as a taxpayer that has willfully committed tax crimes (potentially including non-filed foreign information returns coupled with affirmative evasion of U.S. income tax on offshore income) self-reports the tax fraud (including a pattern of non-filed returns) through a domestic or offshore voluntary disclosurebefore the IRS has started an audit or criminal tax investigation / prosecution, the taxpayer can ordinarily be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously often receive a break on the civil penalties that would otherwise apply. 

    It is imperative that you hire an experienced and reputable criminal tax defense attorney to take you through the voluntary disclosure process. Only an Attorney has the Attorney Client Privilege and Work Product Privileges that will prevent the very professional that you hire from being potentially being forced to become a witness against you, especially where they prepared the returns that need to be amended, in a subsequent criminal tax audit, investigation or prosecution.

    Moreover, only an Attorney can enter you into a voluntary disclosure without engaging in the unauthorized practice of law (a crime in itself). Only an Attorney trained in Criminal Tax Defense fully understands the risks and rewards involved in voluntary disclosures and how to protect you if you do not qualify for a voluntary disclosure.

    As uniquely qualified and extensively experienced Criminal Tax Defense Tax Attorneys, KovelCPAs and EAs, our firm provides a one stop shop to efficiently achieve the optimal and predictable results that simultaneously protect your liberty and your net worth. See our Testimonials to see what our clients have to say about us!

    Questions and Answers About Foreign Tax Audits

    Questions and Answers about FBAR Compliance and Disclosure

    Tax Help Videos

    Representing Clients from U.S. and International Locations Regarding Federal and California Tax Issues

    Main Office

    Orange County
    2601 Main St. Penthouse Suite
    Irvine, CA 92614
    (949) 681-3502

    Our headquarters is located in Irvine, CA. Our beautiful 19,700 office space is staffed full-time and always available for our clients to meet with our highly qualified and experienced staff of Attorneys, Certified Public Accountants and Enrolled Agents. We also offer virtual consultations and can travel to meet with clients in one of our satellite offices.

    Outside of our 4 hour initial consultation option, we do not charge travel time or travel expenses when traveling to one of our Satellite offices, or surrounding business districts, where it is necessary to meet personally with taxing authority personnel, make court appearances, or any in person meeting deemed necessary for the effective representation of a client. To make this as flexible, efficient, and convenient as possible, David W. Klasing is an Instrument Rated Private Pilot and Utilizes the Firms Cirrus SR22 to service client’s in California and in the Southwest by air. Offices outside these areas are serviced via commercial jet airlines. None of these costs are charged to our clients.

    Satellite Offices

    (310) 492-5583
    (760) 338-7035
    (916) 290-6625
    (415) 287-6568
    (909) 991-7557
    (619) 780-2538
    (661) 432-1480
    (818) 935-6098
    (805) 200-4053
    (510) 764-1020
    (408) 643-0573
    (760) 338-7035
    (602) 975-0296
    New Mexico
    (505) 206-5308
    New York
    (332) 224-8515
    (512) 828-6646
    Washington, DC
    (202) 918-9329
    (702) 997-6465
    (786) 999-8406
    (385) 501-5934