Over the last several years, the IRS has made a concerted effort to crack down on American citizens who have attempted to “hide” assets overseas in an effort to avoid taxation. Their strategy was simple – by gradually phasing in tax penalties (and criminal prosecution in certain circumstances), they hoped to encourage taxpayers to come clean of their own free will in order to avoid more harsh penalties down the road.
Over the last several years, the IRS has made a concerted effort to crack down on American citizens who have attempted to “hide” assets overseas in an effort to avoid taxation. Their strategy was simple – by gradually phasing in tax penalties (and criminal prosecution in certain circumstances), they hoped to encourage taxpayers to come clean of their own free will in order to avoid more harsh penalties down the road.
Now, it appears that the IRS is stepping up the pressure by worsening the penalties to be faced by taxpayers.
As a recent Forbes article reports:
On June 18 in the IRS announced important modifications to the 2012 Offshore Voluntary Disclosure Program (OVDP) and an expansion of the offshore related Streamlined Filing Compliance Procedures (SFCP) announced in 2012.
Changes to the OVDP include requiring taxpayers to submit all account statements and pay the offshore penalty at the time of the OVDP application. Further, the offshore penalty increases from 27.5% to 50% if, before the taxpayer’s OVDP pre-clearance request is submitted, it becomes public that the financial institution where the underlying financial account is maintained is under investigation by the IRS or the Department of Justice. Further, beginning on August 4, 2014, any taxpayer having an undisclosed interest in an account maintained at certain listed foreign financial institutions listed at irs.gov will be subject to a 50% miscellaneous offshore penalty if they submit a pre-clearance letter to the IRS Criminal Investigation.
If you’ve got money or other assets offshore, the message the IRS is sending you is simple: Come clean now, and face penalties that are much less severe than what you’ll face if we find you on our own.
As tax attorneys, if there’s one thing we know about the IRS, it’s that they are persistent. Once they’ve got a taxpayer in their sights, they don’t back down. If you’re concerned about possible IRS tax issues, whether related to overseas holdings or anything else, please contact us today. We will help you evaluate your options and pursue the best possible settlement with the IRS –so that you can go back to living your life.