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Government Cracking Down on Non-Reporting of Offshore Accounts

Offshore Account Update

Posted on September 25, 2014 |

The U.S. government has gotten serious about preventing revenue loss that occurs when American keep accounts offshore. There are numerous laws that are designed to make it easier for the government to find people who have offshore investments and to take action if these investors aren’t paying their taxes. 

The Foreign Account Tax Compliance Act (FACTA) is one of the most important tools in the government’s arsenal and it impose a requirement that foreign banks report offshore accounts valued at $50,000 or more. The Department of Justice has been going after banks that may be facilitating tax evasion, and encouraging them with threats of criminal prosecution to turn over information on customers. Banks are complying.  

In addition to taking action against the banks, the government has also become more aggressive in going after individual investors who have their money in offshore accounts and who are not filing the required Report of Foreign Bank and Financial Accounts (FBAR). Not only has the government taken investors to court and secured fines that are sometimes larger than the value of the offshore accounts, but authorities are also prosecuting investors and seeking harsh penalties to make an example of people who fail to report their foreign accounts.  Investors concerned about their potential liability should consult with a Boston IRS tax attorney as soon as possible for help. 

 Government Appeals Sentencing in Case Against Offshore Investor 

One prime example of the aggressive measures the government is taking can be found in the case of Ty Warner, who created Beanie Babies toys. Warner had Swiss accounts offshore that he did not report and he pled guilty. In addition to paying the government $53 million in fines and penalties, he was also sentenced to probation for the crime of tax evasion.  

This was not enough for prosecutors who, according to Forbes, do not want to be seen as going easy on the wealthy. As a result, despite the fact that it is very unusual, authorities are appealing the sentence against Warner. They want him sentenced to jail time to make an example of him in order to more effectively deter other investors from failing to comply with their reporting requirements.  

People with offshore accounts may be concerned when they read stories about criminal prosecutions, large fines and jail time. There is definitely cause for worry, especially as banks have begun to cooperate with U.S. authorities and provide customer information. However, there are options available. 

The Offshore Voluntary Disclosure Program (OVDP) makes it possible for investors to come forward and report offshore accounts that they have not reported in the past. If your failure to report accounts kept offshore was based on misunderstanding, mistake or negligence- rather than intentional- it is possible to avoid the most serious penalties and to avoid the risk of being prosecuted in criminal court. 

Eligibility for OVDP’s streamlined reporting procedures is limited and it is important you get the right legal help before you come forward to report your tax accounts. A Boston IRS tax attorney at Thorn Law Group can provide you with the assistance you need.

For a consultation, contact Kevin E. Thorn, Managing Partner, at ket@thornlawgroup.com or (617) 692-2989

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