Offshore Accounts and Tax Reporting

With tax season well underway, the annual list of tax scams released by the IRS is getting a great deal of attention. This list is often referred to as the “dirty dozen” and for 2015, avoiding taxes by hiding money or assets in unreported offshore accounts is at the top of it.

While it is not illegal to have active accounts and investments in other countries, there are specific reporting requirements for them, and taxpayers who do not disclose all the proper information could come up against fines and even civil and criminal penalties.

Those taxpayers with offshore accounts should be familiar with the Offshore Voluntary Disclosure Program (OVDP), which first opened in 2009. The program saw a short lived closure, but at the beginning of 2012, it was reopened due to strong interest from taxpayers and tax professionals. The program is slated to remain open for an indefinite period until otherwise announced.

The OVDP is designed to create complete compliance for taxpayers that have undisclosed offshore accounts and entities to evade tax responsibilities. In recent years, thousands of taxpayers have voluntarily come forward to disclose their account information, and new account reporting requirements have made hiding money offshore more difficult to do.

Even with this matter on the IRS radar, offshore accounts can be used to lure taxpayers into scams, especially during filing season. Such scams can result in penalties and prosecution and the IRS works alongside the Department of Justice to stop these activities and prosecute the responsible parties.

If you have questions about your personal offshore assets, or feel as though you have been subject to a tax scam related to offshore accounts, don’t hesitate to contact Holbrook & Manter today for assistance.