The Internal Revenue Service (IRS) announced that more than 54,000 taxpayers have participated in offshore disclosure programs since 2009. The programs have collected more than $8 billion in taxes and fees. U.S. taxpayers still have the option to disclose foreign bank accounts under the disclosure programs but time may be running out. (IRS October 16, 2015 Press Release)
IRS Is Committed to Stopping Offshore Tax
Stopping offshore tax evasion is a priority for the IRS. Swiss bank accounts have been the primary target but the U.S. now has agreements with more than 80 countries under the Foreign Account Tax Compliance Act (FATCA). 80,000 banks and financial institutions from all over the world, including the Cayman Islands, Hong Kong, Singapore, Panama, Liechtenstein, Colombia, New Zealand, South Africa and Kuwait are now sharing account information with the U.S. government.
Offshore Voluntary Disclosure Program (OVDP)
The Offshore Voluntary Disclosure Program (OVDP) and Streamlined Filing Procedures are two options for taxpayers with undisclosed foreign bank accounts who are seeking to come into compliance with the IRS. Taxpayers should carefully review the options for disclosing foreign bank accounts to determine in which program they are qualified to participate. See The Boston Tax Attorney blog post “What Should You Do If You Have An Undisclosed Foreign Bank Account” for an overview of disclosure programs, including:
- Streamlined Filing Compliance Procedures
- Offshore Voluntary Disclosure Program
- Delinquent FBAR Submission Procedures
- Delinquent International Information Return Submission Procedures
Is It Too Late?
But time may be running out. If a bank has already reported account information to the U.S. government, taxpayers may not be eligible to participate in OVDP or other available programs. In fact, if the government already has information about undisclosed bank accounts, taxpayers may face higher penalties and even criminal prosecution resulting in jail time.
Taxpayers looking to come into compliance with the IRS should consult the IRS website or a tax attorney to determine which option is best for them.