by Brian Mahany
We field calls almost everyday from taxpayers with unreported foreign accounts. As the January 2014 compliance date looms large and the IRS / Justice Department juggernaut continues to ramp up enforcement efforts, much confusion about the IRS’amnesty program remains.
Unlike most IRS programs that have thousands of pages of regulations, rules and forms, the Offshore Voluntary Disclosure Program (“OVDI” or “OVDP” for short) only has a couple dozen “frequently asked questions” listed on their website. Unfortunately, that could mean bad surprises for the unwary.
Sometimes we speak with taxpayers who enter the OVDI tax amnesty program simply to avoid criminal prosecution. Amnesty allows taxpayers with unreported foreign accounts to avoid both prosecution and audit. Even amnesty has its limits, however.
According to the IRS offshore disclosure unit and the Criminal Investigations Division, amnesty only applies to the unreported accounts. In other words, if you have other tax problems, don’t expect a free pass. That means if you also cheated on your taxes, failed to pay taxes,or engaged in money laundering, the IRS may still prosecute you for those offenses.
Willful failure to file a report a foreign account is a felony. Offshore bank, brokerage, annuities and hedge fund accounts are disclosed annually on a Report of Foreign Bank and Financial Account also known as an FBAR. Comply with the amnesty program and any possible criminal prosecution for failing to file an FBAR is avoided. As noted above, however, the IRS is free to prosecute for other illegal conduct.
If you have failed to properly and fully disclose foreign accounts, seek a qualified tax lawyer immediately. There are options and amnesty programs available to help most taxpayers. With such high stakes and so many options, getting good information is a must.
Anyone with an unreported foreign account or other potentially criminal tax problems should consult with an experienced tax attorney immediately. The tax lawyers at Mahany & Ertl specialize in offshore reporting issues. For more information, contact attorney Bethany Kroes at or by telephone at (414) 223-0464. All inquiries are protected by the attorney – client privilege and kept in strict confidence.
Mahany & Ertl – America’s Tax Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine; Minneapolis, Minnesota and San Francisco, California. IRS tax services available worldwide.
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