Robert J. Fedor, Esq., L.L.C.

U.S. taxpayers subject to penalties and tax charges under FATCA

Ohio residents likely recall hearing about the famed foreign Swiss bank accounts of wealthy Americans hoping to evade paying U.S. taxes. In an attempt to prevent foreign bank accounts from becoming tax shelters for U.S. citizens, in 2010, the federal government enacted the Foreign Account Tax Compliance Act.

The rules and regulations associated with the FATCA are complex and often arduous. Under the FATCA, taxpayers must disclose information related to any foreign assets held in their name including trusts, bank accounts, real estate and even presents from foreign relatives. As a result of the recently enacted FATCA, some U.S. taxpayers may unknowingly be in violation of IRS and federal laws and therefore subject to penalties and even criminal tax charges.

Depending on the amount of foreign assets an individual holds, he or she is required to complete and file one or more of numerous tax forms under Report of Foreign Bank and Financial Accounts or FBAR. Failure to file the applicable tax forms can result in an individual being subject to hefty IRS fines and penalties and, in some cases, criminal charges.

Due in part to the recent and numerous changes imposed on foreign account holders by the enaction of FATCA, in 2009, the IRS established offshore voluntary disclosure programs. If accepted into one of these programs, delinquent U.S. foreign account holders are "assessed reduced penalties for nondisclosure, and they avoid criminal prosecution". While acceptance and participation in one of the OVDPs allows an individual to report all foreign assets and avoid any criminal charges, participants are still subject to burdensome IRS penalties and fines.

Ohio residents who hold assets in foreign accounts and have failed to abide by the terms of the FATCA would be wise to discuss their situation and options with a criminal defense tax attorney. Likewise, individuals who have already been targeted by the IRS for violating the FATCA are in need of a criminal defense attorney who has successfully handled and defended against IRS tax crimes.

Source:, "IRS continues to go after foreign account holders," Michelle Abroms Levin, May 2, 2014

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