by Brian Mahany
The 2011 offshore tax amnesty program, called the Offshore Voluntary Disclosure Initiative or “OVDI”, ended less than 2 weeks ago. The government isn’t wasting any time, however, on looking for Americans with unreported accounts. Although tens of thousands of people came forward during the last 2 amnesty programs, hundreds of thousands of taxpayers still have unreported foreign bank accounts.
According to a Reuters wire story yesterday, the feds announced that as part of its offshore compliance initiative, prosecutors have convened a criminal grand jury and issued subpoenas to 8 offshore banks. The Department of Justice did not name the banks.
In recent years, prosecutors have used “John Doe” subpoenas (sometimes called Bank of Nova Scotia subpoenas) to compel foreign banks to disclose the names of U.S. taxpayers with accounts in their foreign branches. New information exchange agreements and a wave of criminal indictments against foreign bank employees have caused many banks to share information with the IRS. Whereas Switzerland and other countries were once known for their bank secrecy, that is quickly changing as taxing authorities worldwide get more aggressive.
U.S. taxpayers (Americans, dual nationals or foreigners with U.S. filing obligations) that fail to report a foreign bank or brokerage account or fail to report offshore income could be prosecuted criminally and are subject to huge civil penalties. Although ownership or use of a foreign banking is completely legal, U.S. taxpayers must disclose those relationships in most instances.
The amnesty program is officially over but the IRS does maintain an on-going disclosure program. By coming clean, there is generally no risk of prosecution and the ability to negotiate penalties. How much the IRS will negotiate post amnesty remains to be seen but taxpayers who did not willfully evade the reporting requirements are still better of coming forward.
If you have an unreported account or unreported income, call us. Our tax lawyers have helped U.S. taxpayers around the world. All calls are completely confidential. For more information, contact attorney Brian Mahany at (414) 704-6731 (direct) or by email at
Mahany & Ertl LLC – America’s Tax Lawyers. offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine & San Francisco, California. Services nationwide and beyond.