Kathryn Keneally, America’s top tax prosecutor, announced she was leaving the Justice Department this month but not before taking another shot at Americans with unreported foreign accounts. Many American taxpayers mistakenly believe that the IRS and Justice Department have only focused on undeclared Swiss accounts but that is simply myth.
Earlier this month, Credit Suisse pleaded guilty to conspiracy to defraud the IRS and paid agreed to pay a $2.6 billion fine. In discussing the prosecution, Keneally said, “It’s fair to say we know where the tax haven countries are, you’ve got Singapore, you’ve got the Cook Islands.” She also said that investigators were looking at accounts and transfers to Lichtenstein, Luxembourg, the Cayman Islands, India and Israel. We have personally seen several investigations surrounding banks in Israel, India and the Bahamas.
U.S. taxpayers have been required to report foreign accounts since the Bank Secrecy Act was passed by Congress in the early 1970’s. Enforcement was spotty, however, until the Justice Department began investigating Swiss bank UBS in 2008. Since then, the IRS has become very aggressive in ferreting out unreported accounts. While much of the media attention has been focused on Swiss accounts, most unreported offshore accounts are located elsewhere.
Although some taxpayers deliberately use offshore accounts to hide income and assets, we find that most folks with foreign accounts have valid reasons for doing so. Many of our clients are dual nationals who send money “home”, green card holders living in the U.S., Americans living abroad (ex pats) or U.S. businesses with overseas interests. Unfortunately, both the willful and merely negligent non-reporters are often lumped together by the IRS.
The willful failure to file a Foreign Bank Account Report (FBAR) carries a penalty of up to the greater of $100,000 or 50% of the historical highest account balance. In some cases, non FBAR filers can also be criminally prosecuted.
Folks with unfilled FBARs are running out of time to come into compliance. Taxpayers with foreign accounts in calendar year 2013 must file an FBAR by June 30th of this year. Things become more tricky if back years are also missing.
Just because your offshore account is not located in Switzerland does not mean you shouldn’t worry. If you are missing multiple years of FBARs, contact an experienced FBAR lawyer today.
Need more information? Let an IRS tax attorney from our law firm answer your questions and explain your obligations and options. Initial consultations are free and all communications are always kept in complete confidence. Contact attorney Bethany Canfield at or by telephone at (414) 223-0464 for details.