Sacramento Offshore Accounts and Foreign Trusts Disclosure Lawyers
At one point in time, it seemed as if all wealthy Americans and well-off individuals had foreign assets and secret Swiss bank accounts. In those days times were good, tax revenues were more than sufficient, and the public and officials alike recognized the importance of having resources in a number of nations. Unfortunately those times have come and gone and since the 2007 financial collapse and the ensuing “Great Recession” concerns over the net tax gap have moved to the forefront of policy maker’s concerns. As such, a series of laws have been passed designed to identify and crackdown on Americans who use foreign accounts and trusts to evade taxes.
Americans who have yet to disclose their foreign accounts face an extremely high likelihood of being identified and prosecuted. The United States government and governments around the world have made significant investments into a more globalized tax system where financial information is freely shared among nations.
Taxpayers Today Face the Highest Risk of Undisclosed offshore Account Discovery in History
Starting with the amendments to the Bank Secrecy Act, Congress has engaged in a lengthy process of providing IRS agents and prosecutors from the Department of Justice with additional tools to detect and prosecute offshore tax evaders. The Bank Secrecy Act is the law that establishes a taxpayer’s obligation to file FBAR when he or she holds or has signature authority over more than $10,000 in foreign accounts. The amendments to the law established a new $10,000 penalty for even a mistaken FBAR compliance issue. Furthermore the amendments also strengthen penalties for willful FBAR failure to the point where it is routine for these penalties to exceed the original value of the account or accounts.
Following the strengthening of FBAR, Congress then set up to build its “global banking system” through the passage of Foreign Account & Tax Compliance Act (FATCA). FATCA sets forth disclosure requirements for individual taxpayers and also requires foreign banks in jurisdictions where a governmental agreement is in effect to turn-over financial and account data. Taxpayers and financial institutions that do not satisfy this duty are subject to penalties. The IRS and DOJ use the information provided by foreign financial institutions to identify and pursue noncompliant taxpayers.
As part of the government’s FATCA and offshore tax enforcement efforts the DOJ has enacted a Swiss Bank Program. The program permits banks concerned about past activities to obtain a non-prosecution agreement provided that the institution takes additional steps to ensure compliance with FATCA. This includes turning over account data and identifying institutions that accepted or engaged in secret transactions. Furthermore, the IRS recently announce its successful implementation of automatic data swaps with a number of jurisdictions. Government efforts to identify and pursue taxpayers have reached a point where it is unjustifiably risky to fail to disclose.
What Are the consequences of a FATCA or FBAR Compliance Failure?
Aside from the FBAR penalties discussed above, a taxpayer can also face offshore penalties for his or her failure to also satisfy FATCA. Taxpayers who do not file IRS Form 8938 by the FATCA filing deadline can be fine up to $10,000. Taxpayers who continue to fail to comply with their disclosure duty can face an additional fine of up to $50,000.
Taxpayers must also accurately indicate whether they hold foreign financial accounts on Schedule B of their 1040 income tax return. Taxpayers who falsely state that they do not have foreign accounts when they do may be subject to additional penalties including the making of false statements, interference with the administration of the tax code, and even tax evasion. The failure to satisfy one’s offshore disclosure requirements is a dangerous situation for any taxpayer to find him or herself facing.
OVDP can Provide a Means to Fix Unfiled FBARs and FATCA Reports
Taxpayers who have failed to file FBAR or FATCA may be eligible to enter into Offshore Voluntary Disclosure or Streamlined Disclosure to reduce the penalties they face. While an offshore penalty is likely to apply, that penalty is a significant discount compared to the full extent of fines and penalties that can be imposed. To schedule a private offshore tax consultation with an experienced tax lawyer call the NewPoint Law Group, LLP, at 800-358-0305 or contact us online today.
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Roseville, CA 95661
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