November 18, 2009
/24-7PressRelease/ --
Coming Clean on Offshore Bank Accounts
Article provided by Law Office of Ramon de la Cabada, P.A.
Visit us at
www.ramondelacabadapa.com
The end of a special tax amnesty program for people with secret offshore bank accounts has left an unclear path for those who still want to come disclose their accounts and avoid penalties or jail time.
The program began in March, a month after Zurich-based UBS paid $780 million and avoided prosecution by admitting it helped Americans evade taxes, and ended October 15th. During this time, more than 7,500 Americans took advantage of the voluntary disclosure program, informing the IRS about offshore accounts with between $10,000 and $100 million in undeclared funds.
The goal of the special tax amnesty program was to permit taxpayers to avoid prosecution and public disclosure of their identities by revealing their accounts and paying back taxes, fines and penalties.
According to federal law, any American who has an offshore bank account with more than $10,000 in it at any time during the year must report that account and pay taxes on the income earned on it. Those who fail to come forward risk losing $100,000 or 50 percent of an offshore account's value (depending on which is higher). The penalty may apply each year that the required forms are not filed. This means that after four years of failing to comply, an account holder may owe 200 percent of the account's value.
Due to these penalties, the IRS program offered individuals with undisclosed offshore bank accounts a chance to ?come clean? regarding these accounts and avoid the legal and financial penalties they would face otherwise. Though, it is important to note that an open period of voluntary disclosure may have advantages and disadvantages for offshore bank account holders.
An advantage is that the account holders can avoid criminal prosecution from the IRS and limit the tax delinquency exposure that they may have faced. Although, even with this advantage it is important to ensure an all encompassing agreement has been reached with the government to avoid tax delinquency exposure.
Conversely, a disadvantage to open disclosure periods is that the account holder has put themselves on the radar screen of the IRS. This could result in negative consequences in the future, such as multiple audits.
Disclosing Offshore Bank Accounts
There are signs that there will be a more aggressive U.S. stance toward illegal use of offshore accounts. The IRS plans to hire 800 agents and open or expand offices in locations like Hong Kong, Beijing, Panama City and Barbados to investigate offshore accounts. Singapore and Israel, among other places, may also be targeted.
Now that the special tax amnesty program has expired, account holders are wondering what they can do if they would like to disclose their offshore accounts without having to face full legal repercussions. It is important to know that even though the open period is over, there are still options.
One option may be to pay the IRS what you owe without calling attention to yourself. This may be done by filing amended back returns, paying back taxes and interest and awaiting the outcome.
Another approach may be to contact the IRS and make a voluntary disclosure, where you pay taxes, interest and penalties. That was the option many chose, before October 15th, to take advantage of the amnesty program. However, it is expected that civil penalties will increase now that the voluntary disclosure program has ended.
Either way, the key is to come forward before you are prosecuted by the IRS. There are many issues to decipher when disclosing offshore bank accounts. Therefore, it is important to consult with a criminal attorney, with experience defending tax matters, and a certified public accountant (CPA) to help you protect your rights and learn more about your options.
Article provided by Law Office of Ramon de la Cabada, P.A.
Visit us at
www.ramondelacabadapa.com---
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