In her recent testimony before Congress Caroline Ciraolo Acting Assistant Attorney General stated the enforcement priorities for the Tax Division. Among the the four areas of focus is Offshore Tax Evasion.
“combating the use of foreign bank accounts to evade U.S. taxes has been a longstanding enforcement priority for the Tax Division. Since 2009, when the Tax Division reached a ground-breaking deferred prosecution agreement with UBS, it has publicly charged more than 100 account holders, of which approximately 90 have pleaded guilty, 12 were convicted following trial, and five are fugitives. The Department’s enforcement efforts have reached far beyond Switzerland, as evidenced by public actions involving banking activities in India, Israel, Liechtenstein, Luxembourg, and the Caribbean.”
The accelerated use of Information Exchange Agreements as a result of the Foreign Account Tax Compliance Act (FATCA) has resulted in more and more disclosure of U.S. persons holding offshore accounts. The Swiss are a prime example.
“The Swiss Federal Tax Administration told swissinfo.ch that it is obliged by law to inform account holders that it is cooperating with international requests for information in relation to tax investigations. Usually, the account holder’s bank would get in touch with its client. This is to give the individual the opportunity to appeal the decision to cooperate with the Swiss courts. But in some cases the bank has lost touch with the client and no longer has an up-to-date address. In such cases the tax authorities notify the account holder via the government’s online gazette – sometimes giving the full name of the client and in other instances just the initials and date of birth.”
The fact is that U.S. taxpayers who maintain undisclosed foreign financial through intermediaries, like trust companies, charitable foundations, and shell companies, may not have received information disclosure warning letters from their offshore financial institution, and will be surprised to find that their information is made available to U.S. authorities. The Swiss disclosure model is not unique and many other “tax havens” can be expected to cooperate as well.
What all this means is that the risk of not coming forward is now much greater than ever. Whether through an incidental examination or through information exchanges there is more and more certainty that holders of undisclosed foreign accounts will be found out.
We offer a complete service from analyzing methods of disclosure and reporting to submission of the disclosure to the IRS and state taxing authorities. We are skilled at all aspects of voluntary disclosure and can guide you in the correct direction.
While Albert Einstein may have been correct when he said,The hardest thing in the world to understand is income taxes.” a lack of understanding does not justify acting like an Ostrich and burying your head in the sand hoping that you will not be discovered.
