by Brian Mahany
In the last two years, the IRS and Justice Department have been turning up the heat on Americans with unreported offshore accounts. First it was Americans with Swiss accounts. More recently, the focus has been on foreign born nationals with accounts at HSBC India. Today we add another pin in the map; Bermuda.
A Boston resident, Michael Schiavo, was criminally charged with failure to file a Report of Foreign Bank and Financial Accounts, more commonly known as an FBAR. The government says he transferred money to an undeclared account at HSBC Bermuda Bank.
Clearly the government is looking around the globe for U.S. taxpayers with undeclared foreign accounts. Fail to file the proper forms and you could head to prison for 5 years AND lose ½ the highest historical balance in the unreported account. That’s a steep penalty by anyone’s definition.
Our planet keeps getting smaller. Most developed countries now have tax exchange agreements in place. It is easier than ever for the IRS to access account information from foreign banks or foreign officials where those banks are located.
Whereas many Americans knowingly attempt to hide money in so called “tax havens” like Switzerland and the Caymans, these folks are in the minority. Many Americans born outside the USA with unreported accounts simply do not understand that sending money “home” may be a felony.
Indians, Koreans, Chinese, Mexicans and Europeans often work here but send money to their country of birth. The IRS estimates there are still 500,000 people with unreported accounts. We think that number is at least double that.
Presently the IRS is running a last chance tax amnesty for holders of unreported foreign accounts. That program, called the Offshore Voluntary Disclosure Initiative, runs until August 31 but program materials must be completed by that date and the paperwork requirements are quite cumbersome.
If you have an unreported foreign bank or financial account, call us immediately. Do not delay. Successful completion of the amnesty means no jail and the potential to save thousands of dollars or more in penalties.
Mahany & Ertl, LLC – America’s premier tax lawyers. Milwaukee, Detroit and Portland. Services nationwide.