Foreign Accounts & Quiet Disclosures

Posted by Wetenkamp on April 30, 2013 with 0 Comment

There is a general, overriding principle in the world of Federal Tax that goes something like this: if you voluntarily come forward to admit your prior tax shenanigans and get yourself back in the good graces of the IRS, there will be less negative consequences than if the IRS catches you trying to get away with it.

This principle holds true with respect to the reporting of foreign bank accounts. Taxpayers who are caught hiding assets in foreign accounts are subject to criminal prosecution, and could very well face jail time. But under the IRS voluntary amnesty programs, those who come forward and disclose their offshore assets are promised they won’t go to jail in exchange for payment of penalties that are based on a percentage of their account balances.

There are some who want to get back on the grid without having to pay hefty penalties. They do this by making a so-called “quiet disclosure” of foreign assets; they report their foreign accounts without giving the government information about accounts held in previous years. This type of disclosure sometimes tricks the IRS into believing the accounts are brand new.

According to a recent report by the Government Accountability Office (GAO), there may be more quiet disclosures happening around the nation than the IRS has the ability to identify. The IRS is taking tips from GAO on how to detect more of these quiet disclosures.

Ex-UBS Client Sentenced For Tax Crimes

Posted by Montgomery on July 30, 2012

In 2009 Zurich-based UBS avoided federal prosecution by paying $780 million, admitting it helped thousands of United States citizens evade federal taxes and turned over the names of 250 clients to U.S. authorities. U.S. prosecutors have since charged about 50 Americans with tax crimes

One such former client, Luis Quintero, from Florida, was recently sentenced to four months in federal prison for failing to disclose $4 million in Swiss bank accounts. Quintero, a 64-year-old wholesale perfume importer, pleaded guilty in April and agreed to pay a $2 million fine for failing to file a Report of Foreign Bank and Financial Accounts for the calendar year 2006, according to court records. Read the full article by Susannah Nesmith here.

OVDI Deadline Approaching

Posted by Wetenkamp on August 9, 2011 with 0 Comment

There is still time to obtain tax relief (and relief from criminal charges) for those with unreported foreign bank accounts.

The deadline for participating in the IRS’ Offshore Voluntary Disclosure Initiative (OVDI) is August 31, 2011. Under this program, the IRS is giving taxpayers an opportunity to report their foreign bank accounts without facing criminal sanctions. One thing we do know is that some people are simply too fearful and are not going to come forward because they are not willing to face the consequences. However, some tax professionals believe that the risks are multiplied for those that are not willing to participate in this initiative. The rationale is that the IRS must work even more aggressively to catch and prosecute the non-participants in order for the initiative to work. If not, then it will not seem that the participants received any benefit by disclosing their foreign bank accounts.

For information on obtaining an extension on submitting your FBAR filings, see Question 25.1 of the IRS’ Q&A page.

FBAR Deadline Approaching

Posted by Wetenkamp on June 24, 2011 with 0 Comment

If you have one or more foreign bank accounts or other financial accounts, you may be required to file a Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), which is due by June 30, 2011. The aggregate value of your accounts must be higher than $10,000 to trigger the filing requirement. The FBAR is required even if the accounts did not generate any interest or taxable income during the past year.

Penalties for willful non-compliance with FBAR reporting requirements are severe: $100,000 or more for civil penalties and $500,000 for criminal penalties, plus possible prison time.

If you failed to file FBAR reports for prior years, you should file them along with a statement explaining why they were filed late. However, if your account(s) generated any reportable income for the delinquent years, then you should follow the procedures under the IRS 2011 Offshore Voluntary Disclosure Initiative.

Tag: FBAR

According to a recent report by the Government Accountability Office (GAO), there may be more quiet disclosures happening around the nation than the IRS has the ability to identify. The IRS is taking tips from GAO on how to detect more of these quiet disclosures.