Your Offshore Tax Haven Has Been Revealed: What’s Your Best Course of Action?
Keeping money in an offshore bank account is not illegal. However, under United States law, you are required to file a Report of Foreign Bank and Financial Account each year. You must also comply with other tax requirements, including reporting any and all income earned to the Internal Revenue Service and paying taxes on the income that your offshore investments produce.
There has been a major crackdown in recent years on investors who put money offshore in order to hide assets from the IRS and evade their tax obligations. Not only has the U.S. government been aggressively going after banks to try to get offshore institutions to make deals to avoid prosecution by turning over accountholder information, but there was also a major international incident in which the “Panama Papers” were revealed.
The Panama Papers were papers released from an exclusive Panama law firm that was instrumental in helping companies to set up offshore accounts to hide funds. A total of 11.5 million leaked files revealed secret ownership of bank accounts and companies in 21 different offshore jurisdictions.
If you have funds offshore and are concerned that your account could be revealed either by your bank or because of leaks like the Panama Papers, it is vitally important that you take the right steps to protect your offshore investments. A Washington, D.C. tax attorney can provide you with insight into what your best course of action is if your offshore tax haven is revealed.
What Should You Do if Your Offshore Tax Haven is Outed?
If your offshore tax haven becomes public knowledge or comes to the attention of the IRS, you're in a dire legal situation. There is a possibility that you could be criminally prosecuted for tax evasion, although this outcome isn't usually likely. There's a much greater chance that you could face financial penalties for failure to file FBARs, which have- in many past cases- exceeded the value of the offshore funds. You could also owe back taxes and penalties if it is revealed that you were not paying all that you owed.
Because of the fact you could be in legal trouble, you should talk with an experienced attorney as soon as possible after your offshore tax haven is revealed. You should contact an attorney who provides representation in tax evasion cases and who helps offshore investors who failed to file FBARs. You should explain to your lawyer why you believe your offshore accounts in a tax haven have come to the attention of the IRS or could soon come to the attention of the IRS.
Your lawyer will help you to assess options, including filing amended tax returns or participating in various types of voluntary disclosure programs. Programs like the Offshore Voluntary Disclosure Program give people a chance to limit penalties for noncompliance with tax laws by coming forward on their own to report their tax-law lapses to the IRS. The benefit of participating in this type of program is that you'll be protected from criminal prosecution with successful participation and your financial penalties can be limited.
While you may not have to pay as much of a penalty under OVDP as you would if the IRS investigated you and found wrongdoing without you coming forward, penalties are still substantial for OVDP participants. Talk with Kevin Thorn, a Washington DC tax attorney, to make certain that you're making the right choice to protect your freedom and financial investments.