If you’ve recently visited our tax law blog, you may already be familiar with the “Dirty Dozen”: an annual list, published by the IRS, highlighting the year’s most common – and costly – tax scams. Our tax defense lawyers have profiled several schemes included among the Dirty Dozen, cautioning taxpayers against scams ranging from fake Forms 1099, to “guaranteed” tax refunds obtained through illicit means (i.e. tax preparer fraud). For this article, we’re shifting focus to another scam on the IRS’ list: the willful nondisclosure of reportable offshore income or assets, a serious federal tax violation (which, as some readers may recall, also played a role in the investigation and later conviction of former Trump associate Paul Manafort). Even where such nondisclosure is non-willful, severe civil penalties can still be applied, endangering even well-intentioned taxpayers.
Fortunately, there are several ways to rectify – or, better yet, avoid – failing to disclose one’s offshore accounts. If you need help reporting foreign income or investments to the IRS this tax season, or have questions about which types of offshore assets are considered reportable, work with the international tax law attorneys at the Tax Law Office of David W. Klasing for guidance you can trust.
The Internal Revenue Service recently updated its 2018 Dirty Dozen tax fraud list, including, in the most recent version, the practice of “hiding money or assets in unreported offshore accounts,” such as undisclosed Swiss bank accounts. When a taxpayer intentionally fails to disclose reportable foreign accounts or assets to the U.S. government, he or she risks a foreign account tax audit – or even a criminal tax investigation. The Foreign Account Tax Compliance Act (FATCA), threatens non-U.S. banks with steep penalties for failing to report American account holders, consequently, foreign financial institutions (FFIs) are highly motivated to cooperate with the U.S. government, making it virtually impossible for even the most technologically savvy of taxpayers to successfully conceal foreign assets from the IRS – which is also assisted by the U.S. Department of Justice, the Financial Crimes Enforcement Network, and dozens of law enforcement networks around the world.
Despite the DOJ’s aggressive, sustained focus on offshore tax evasion, nondisclosure remains a widespread problem, as evidenced by its inclusion among the IRS’ “Dirty Dozen.” In cases where the taxpayer acted willfully, prison time is a possibility, in addition to IRS restitution and civil penalties. Non-willful violations can likewise trigger various civil penalties. The question for taxpayers is, how might this sort of scenario be avoided (or, if the willful or inadvertent nondisclosure has already occurred, be corrected)?
To report a foreign account, you may need to take some or all of the following actions, in addition to filing other forms online or via mail:
If you failed to disclose foreign accounts in the past, there may be several options for bringing you back into compliance, including:
Different situations call for different approaches – and, depending on how they are handled, can lead to drastically different outcomes – making it vital to work with an experienced tax attorney who understands the pros and cons of each strategy. If you need assistance reporting foreign investments or bank accounts, choose a tax firm with a solid record of outstanding service and support for international clients and businesses worldwide.
At the Tax Law Office of David W. Klasing, our FinCEN Form 114 attorneys are dedicated to helping U.S. citizens, residents, non-residents, trusts, estates, and business entities navigate FBAR and FATCA compliance successfully. Our FBAR tax attorneys can help you determine which assets must be reported, how and where to make your disclosure, and which steps you must take in order to correct past failures to disclose. We have dedicated a substantial portion of our award-winning practice to international tax law, and excel in the efficient resolution of FATCA- and FBAR-related tax issues. Contact us online today to arrange a reduced rate consultation, or call the Tax Law Office of David W. Klasing at (800) 681-1295 for assistance.
Also, we’ve expanded our offices! In addition to our offices in Irvine and Los Angeles, the Tax Law Offices of David W. Klasing now have offices San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland and Sacramento.
Note: If you have concerns about the privacy of our initial or subsequent communication and are unable to easily travel to our Irvine / Orange County Main Office, consider scheduling a GoToMeeting to safely and securely establish an initial or maintain an existing attorney client relationship. With end-to-end encryption, strong passwords and top-rated reliability, no one is messing with your meeting. To schedule a reduced rate initial consultation via GoToMeeting follow this link. Call our office and request a GoToMeeting if you are an existing client. We are generally happy to travel to any of our appointment only satellite offices for a subsequent meeting in appropriate circumstances once a relationship is established via a signed engagement letter and the payment of an initial retainer or where enough retainer is available where a current client to cover the reasonable travel time and time required for the meeting.
Will it cost me more to hire the Tax Law Offices of David W. Klasing, who’s main office and the vast majority of the firm’s staff is located in Irvine California, but an appointment only Satellite office is close to my location, as opposed to a local company? Absolutely not! See our policies that address this issue here:
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