G20 Countries Agree on Plan to Combat Global Tax EvasionOffshore Account Update
Posted on October 23, 2014 | Share
Today, it is easier and faster than ever before to move money and investments around the globe. Many people invest offshore for added gains, diversity of investments or privacy reasons. However, there are also some investors who have put money into offshore bank accounts in order to avoid some of the taxes that are due in their country of residence.
In recent years, countries, including the United States, have been recognizing the importance of maximizing revenue and reducing the amount of tax income lost because of offshore investors who fail to properly report all income. Combating this problem has become a top goal, and the OECD reports that different countries throughout the world have begun to recognize the value of the open exchange of information in an effort to achieve the aim of stopping global tax evasion.
Several laws and regulations requiring new information have already gone into effect, and new changes are coming in upcoming years. Any taxpayer with an offshore account or who is considering moving money offshore needs to be aware of the changes to the law and of the potential consequences that you face if new systems are put in place that allow authorities to identify your account. A Boston tax attorney can provide invaluable advice about the upcoming new regulations and can help you to protect all of your investments.
The Tax Evasion Fight
At a recent meeting of finance ministers in Australia, the G20 countries reportedly came to an agreement on the next step forward in efforts to fight global tax evasion. According to The Guardian, the countries have agreed to a plan to increase information sharing by 2018. Under the new agreement, bulk data on taxpayers will be transmitted periodically and systematically from the country where an investment has been made to the country where the investor is a citizen and is obligated to pay taxes.
When the country of residence receives information on an investor’s interest, dividends and other monies earned or received on an offshore account, this can tip off the tax authorities to the fact that the account exists. If it was not previously declared, this can lead to criminal prosecution, fines and other consequences. US citizens with offshore accounts must declare these accounts each year by filing a report of Foreign Banks and Financial Accounts (FBAR). There have been recent cases in which people who failed to disclose accounts have faced penalties exceeding the value of the account.
When a country of residence receives information, it can also determine if the taxpayer who earned income offshore failed to adequately report that income and pay required taxes.
Financial centers are encouraged to make commitments to fostering the exchange of information that G20 finance ministers have agreed to.
If financial centers cooperate and data is turned over to the IRS on accounts you have not declared, you could face serious consequences. Now is the time to talk to a Boston tax attorney about your options for amnesty and voluntary disclosure to minimize potential finances, penalties and financial loss.
For a consultation, contact Kevin E. Thorn, Managing Partner, at firstname.lastname@example.org or (617) 692-2989