Even though the latest voluntary disclosure program has officially past, it is still better to come clean with unreported offshore bank accounts than to wait for the IRS to contact you. The IRS is placing more severe penalties on non-compliant offshore account holders than ever before. A recent Forbes article titled “Florida Widow Guilty + $21M Penalty for Inherited Swiss + Liechtenstein Accounts,” explains just how tough it has become.
The article’s author, Robert W. Woods highlights the recent case of Mary Estelle Curran of Palm Beach, Florida who pleaded guilty to filing false 2006 and 2007 tax returns. Mrs. Curran’s husband died in 2000 leaving her with both Swiss and Liechtenstein accounts which she failed to report from 2001 through 2007. According to Woods, the IRS lost out on approximately $667,716 in taxes. By 2007, the accounts totaled over $42 million.
IRS Penalties for Offshore Account Non-compliance
According to the article, the IRS penalties for Mrs. Curran are the following: 50% of the highest balance or in her case – $21,666,929 and a possible prison sentence of up to six years.
Voluntary Disclosure is The Only Way – Coming clean with the IRS means you will pay back taxes and penalties but not be prosecuted. “Quiet Disclosures” such as closing a foreign bank account will not solve disclosure problems.
Woods reminds us of five important points taxpayers will want to know regarding offshore accounts:
Reporting – All income worldwide must be reported on your U.S. income tax return. Schedule B must be checked if you have an interest in a foreign bank or financial account.
FBAR – U.S. citizens with a foreign bank account that exceeds $10,000 any time during the year must file an FBAR by each June 30.
FATCA – Some citizens are required to file an IRS Form 8938 to report your foreign accounts and assets.
Penalties – IRS penalties are HUGE and can exceed 100% of the value of the asset plus interest.
- FBAR fines can start at $10,000 for each non-willful violation.
- A willful penalty is the greater of $100,000 or 50% of the account balance for each violation (year of non-filing). Important note: the criminal statute of limitations is six years. The statute of limitations on civil tax fraud never expires.
Prison – FBAR non-compliance tax issues are very serious. Failing to file FBARs can carry penalties up to $500,000 and prison up to ten years.
When it comes to offshore account disclosure, don’t mess around with the IRS; seek tax relief now! If you have unreported offshore bank accounts or assets you need IRS tax relief now – it’s only a matter of time before the bar gets raised higher. You will need to consult a tax attorney or Certified Tax Resolution Specialist expert in dealing with offshore cases to let you know what your options are and help you resolve this serious IRS issue with an offshore tax settlement.
More Tax Help, IRS News and Tax Relief Tips:
- Senator Rand Paul Challenges U.S. and Swiss Banking Treaty
- Offshore Tax Accounting Paperwork
- Treasury Proposes Multilateral Agreement for Offshore Compliance
- FATCA-No Tax Relief for Americans Living Abroad
- Tax Resolution News Round Up
Tags: certified tax resolution specialist, FATCA, FBAR regulations, Forbes Magazine, Forbes.com, IRS back taxes, IRS penalties, offshore bank accounts, offshore tax settlement, tax attorney, tax fraud, tax relief