The regulatory and enforcement muscle of the Internal Revenue Service can certainly be felt in Cleveland, but the agency's might extends to Americans living in Caracas, Cape Town, Chiba and Cairo, too. These days, the IRS is squeezing hard on foreign banks to disclose information on American account holders.
Forbes reports that the number of banks acceding to IRS demands is growing, too. The agency recently updated its list of foreign financial institutions where unreported offshore accounts can result in a 50 percent penalty if you participate in its Offshore Voluntary Disclosure Program (OVDP).
Why would anyone volunteer to disclose to the IRS unpaid taxes on holdings in an offshore account? Simple, really. One of the alternatives to disclosure is to face prosecution as well as financial penalties.
The IRS recently added more names to the list of overseas banks falling in line and agreeing to deals in which they will give up account information on Americans, and more banks are apparently in the final stages of talks on agreements.
If your bank has not already fallen in line, you can still voluntarily disclose your foreign holdings and be penalized 27.5 percent. Painful, yes, but far better than possible prosecution or the 50 percent penalty for those whose banks have already agreed to turn over account information (more than 100 Swiss banks have so far entered agreements with the IRS).
A Cleveland tax law firm with up-to-date knowledge of constantly shifting offshore compliance and tax law can help you understand all of your options. If you have not filed a due FBAR (Report of Foreign Bank and Financial Accounts), our firm can help you become compliant and avoid prosecution. Please see Sound Advice About Offshore Tax Issues to learn more about what Robert J. Fedor, Esq., LLC can do for you.