United States taxpayers who hold an ownership interest in or signature authority over a foreign financial account with an aggregate balance of at least $10,000 at any point during the year must file a Report of Foreign Bank and Financial Accounts (“FBAR”) by June 30. Although taxpayers are required to file the FBAR form electronically, the information may be completed online or uploaded to the Financial Crimes Enforcement Network’s website using a recently released form. Individuals with questions about their... Read More
New Investigation Into Swiss Banks May Affect San Diego Residents With Certain Unreported Foreign Securities
In 2009, Swiss banking institution UBS agreed to pay the United States government about $780 million for its role in helping American citizens hide assets overseas in order to avoid paying U.S. federal income taxes. The case also resulted in the voluntary disclosure of previously unreported offshore assets by thousands of U.S. citizens. As a result of the legal battle, the Swiss Parliament ultimately approved a measure that allows banking institutions operating within the nation to disclose the existence of financial accounts that are held by American taxpayers without simultaneously... Read More
California Taxpayers Should Consult With an International Tax Lawyer Before Disclosing Previously Unreported Offshore Bank Accounts
According to the Internal Revenue Service, millions of American taxpayers currently hold an ownership interest in an unreported foreign bank account. In addition to Swiss bank account holders, dual nationals, United States citizens living abroad, green card holders, and others may have an unreported foreign financial account. Since the Bank Secrecy Act was passed by Congress in 1970, American taxpayers with at least $10,000 in aggregate assets that are held offshore must file an annual report with the IRS.
By June 30 of each year, such accounts must be disclosed using the... Read More
A Laguna Beach, California physician is reportedly facing a potential prison sentence over his failure to file a Report of Foreign Bank and Financial Accounts (“FBAR”) in 2009. According to the United States Justice Department’s Tax Division, the American citizen maintained money in a Luxembourg bank account using a foreign corporate entity that was set up with the assistance of his tax preparer. Prosecutors from the U.S. Attorney’s Office for the... Read More
In October, a St. Louis man pleaded guilty to one count of filing a false income tax return and one count of failing to file a Report of Foreign Bank and Financial Accounts (“FBAR”). The Missouri man was apparently charged with the two felonies after he was investigated by the Internal Revenue Service’s Criminal Investigation Division. According to the indictment, the man chose not to disclose the existence of bank accounts he held in Switzerland and Singapore to his tax preparer between 2006 and 2008. In addition, the man apparently failed to file a completed FBAR between 2007 and 2010.... Read More
In general, the Internal Revenue Service has up to three years from the date a tax return was due to perform an audit and 10 years to collect any taxes owed. Interestingly, filing an amended return does not alter this time limit. Despite this, a number of exceptions may extend the statute of limitations. For example, a taxpayer who failed to report at least one-quarter of his or her income may be audited for up to six years. In addition, the audit timeframe is doubled for individuals who did not report over $5,000 in income that was earned overseas.
Normally, a taxpayer’s... Read More
U.S. Taxpayers Urged to Use the OVDP to Report Undisclosed Foreign Assets Before Banks Divulge Account Information Under FATCA
According to a recent survey, nearly three-fourths of the 7.6 million United States citizens who live overseas are now considering handing in their passports. Many Americans who are thinking about renouncing their citizenship are reportedly concerned about complying with the 2010 Foreign Account Tax Compliance Act (“FATCA”). The law went into effect on July 1, 2014 and requires foreign banks to disclose financial information about U.S. citizens who maintain assets valued at more than $50,000 overseas. Banking institutions that fail to comply with FATCA face possible exclusion from U.S.... Read More
Criminal Prosecution Reminds Taxpayers in California and Elsewhere to Voluntarily Report Offshore Bank Accounts
According to the United States Justice Department, a New Hampshire businessman recently pleaded guilty to filing a false and fraudulent federal income tax return for the 2009 tax year. The man apparently jointly held a secret offshore bank account in Switzerland with his sister. The high balance of that unreported overseas financial account purportedly reached about $1.3 million in 2009. In addition, the businessman reportedly failed to report his interest in a financial account with an Israeli banking institution on his income tax return.
Interestingly, the man reported... Read More
A panel of three federal judges is now considering whether an American businessman should get prison time for tax evasion related to about $24 million in unreported income earned from two Swiss bank accounts. Last year, the man pleaded guilty to one count of tax evasion and received a probation sentence. A Chicago judge also ordered him to serve 500 hours of community service at local area schools. In a rare sentencing appeal, federal prosecutors asked the nation’s Seventh Circuit to instead remand the businessman to a federal penitentiary. If the panel of judges agrees, the businessman... Read More
Earlier this month, an 83-year-old Florida man pleaded guilty to hiding up to $1.1 million in undeclared Swiss bank accounts. He also admitted to submitting false federal tax returns and engaging in a conspiracy that lasted for approximately 25 years. According to United States authorities, the man went so far as to move his undisclosed foreign financial accounts to an Israeli bank after learning that the U.S. government was cracking down on Swiss banking institutions for their alleged role in assisting American taxpayers with concealing overseas assets.
In May 2014, Credit... Read More
Additional Civil Penalties for Failing to Apply to Offshore Voluntary Disclosure Program And How to Avoid Them
Here, we will discuss some additional civil penalties to which taxpayers may be subject if they fail to participate in the Offshore Voluntary Disclosure Program.
OVDP Penalty: Failure to File Form 3520-A Reporting Ownership in Foreign Trusts
One consequence of failing to participate in OVDP is the Failure to File Form 3520-A penalty. Form 3520-A relates to taxpayers with ownership interests in foreign trusts have special reporting requirements and U.S. persons with interests in and power over foreign trusts under IRC § 6048(b) must... Read More
One of the greatest advantage of participating in the Offshore Voluntary Disclosure Process is the immunity it provides from a variety of civil penalties. If a taxpayer has undisclosed financial assets or accounts which are discovered by the IRS, numerous penalties may apply, potentially creating a huge financial burden on the taxpayer. Participating in OVDP can massive reduce the financial impact of failing to disclose foreign financial accounts and assets. If a taxpayer who is eligible to participate in OVD fails to do so, the following penalties may apply.
... Read More