Nine Things That Will Elevate Your Chances Of Being Targeted By IRS For Past Nondisclosure Of Foreign Accounts and/or Failure To Report Worldwide Income
If you have undisclosed foreign accounts you have an important decision to make. That decision being – when do you start disclosing your foreign bank accounts and foreign income and how should you disclose?
Many people thought that forever they can keep their foreign accounts a secret – not just from their creditors and spouses but also from the IRS.
But with recent changes in the tax law, mandatory reporting of U.S. account holders by foreign banks and the IRS’ placement of dedicated resources and systems to detect non-compliant taxpayers, it is not a question of “if you get caught” but “when you will get caught”.
Here are the nine things that would accelerate your chance of being caught by IRS:
1. Starting to report foreign income on your 2013 income tax return and disregarding the fact that you did not disclose this in previous years. The IRS computers already are programmed to compare information on prior returns to your current return to look for unusual swings in activity and income.
2. Starting to report your foreign accounts on an FBAR in 2013 and disregarding the fact that you did not disclose this in previous years. The IRS computers already are programmed to compare information on prior returns to your current return to look for unusual swings in foreign accounts and can do this more quickly and effectively as information is required to be filed electronically.
3. Filing delinquent FBAR’s with or without statement as to why they are filed late. It is always a red flag to the IRS when a taxpayer files delinquent FBAR’s which in order to be processed will need to be reviewed by an IRS agent.
4. Filing amended income tax returns identifying that you have foreign accounts and reporting foreign income. Another red flag to the IRS when a taxpayer files delinquent returns which in order to be processed will need to be reviewed by an IRS agent.
5. Supplying your foreign bank with your identifying information so that the bank can report you to IRS. And just like your employer or another payor, your information at the foreign bank will be reported to IRS.
6. Ignoring requests from your foreign bank for your identifying information. Even where the bank does not receive any information from you, the bank will still report what information it has to IRS which the bank is still required to do. In addition, the foreign bank will freeze your account until you provide the bank with your identifying information.
7. Transferring funds from the U.S. to your foreign account or from the foreign account to the U.S. These transfers are independently reported through the banking channels and will make their way to IRS.
8. Paying your credit cards and other bills from an account associated with a foreign bank. These transactions are independently reported through the banking channels and will make their way to IRS.
9. Closing your foreign account and withdrawing the funds or transferring the funds to another bank (whether to the U.S. or another foreign bank). Even where an account was closed, the bank will still report what information it has to IRS which the bank is still required to do. We have clients whose foreign account was closed at least three years ago and they are still being reported to IRS.
If you have never reported your foreign investments on your U.S. Tax Returns, you should seriously consider participating in the IRS’s 2012 Offshore Voluntary Disclosure Initiative (OVDI). Once the IRS contacts you, you cannot get into this program and would be subject to the maximum penalties (civil and criminal) under the tax law. Taxpayers who hire an experienced tax attorney in Offshore Account Voluntary Disclosures should result in avoiding any pitfalls and gaining the maximum benefits conferred by this program.
Protect yourself from excessive fines and possible jail time. Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. located in Los Angeles, San Francisco and elsewhere in California qualify you for OVDI.
Description: Let the tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. resolve your IRS tax problems, get you in compliance with your FBAR filing obligations, and minimize the chance of any criminal investigation or imposition of civil penalties.