G20 Countries Come Together To Battle Tax EvasionOffshore Account Update
Posted in on October 23, 2014
The Internal Revenue Service has always aimed to fight tax evasion in order to maximize revenue for the United States government. The US and many other developed countries are experiencing ongoing budgetary problems due to the effects of the 2008 crash and following global recession. Countries have been working together to develop plans to help prevent investors from moving money offshore and failing to declare the assets and pay appropriate taxes on gains.
Laws passed in recent years have had a profound impact on taxpayers and more laws are coming in the future. It is imperative to consult with a New Jersey tax attorney for information on your obligations if you have offshore accounts.
G20 Companies Identify Undeclared Offshore Accounts
Laws that have already gone into effect to fight global tax evasion include the Foreign Banks and Financial Accounts (FBAR) reporting requirement, as well as the Foreign Account Tax Compliance Act (FATCA). Individuals in the US who have offshore accounts and who do not file FBARs have faced prosecution and, in some cases, fines that were totaled at more than the value of funds kept offshore.
FATCA, on the other hand, imposes a requirement on banks to report higher-valued accounts that are kept offshore. Many ex-patriots have had accounts at banks in their current home countries closed as financial institutions opt out of the burden of providing the US government with information under FATCA.
These existing laws have shaped tax policy and investor behavior, and future laws are also expected to result in fundamental changes for many investors as well as for financial institutions worldwide.
The Guardian recently reported that the G20 countries came to an agreement at a recent finance ministers meeting in Australia. The countries agreed to a plan to facilitate the automate exchange of tax information no later than 2018. Under the terms of the agreement, there will be a periodic and systematic transfer of bulk data on tax payers from the country where accounts are kept to the country of residence.
The country of residence will thus now receive information on dividends, interest and other money that is received into the offshore account. If the account has not been declared or if taxes have been evaded, the information will tip the country-of-residence off to the fact that there is a problem. Receiving this information will provide an alert to authorities even if the tax administrators had no previous evidence of non-compliance with tax laws.
Financial centers are being asked to commit to fostering the exchange of information by October. The OECD has also commented that the value of openly and automatically exchanging tax information has been recognized in recent years and is expected to have a continuing positive impact on effective revenue collection.
If you have undeclared offshore accounts, this means there is a very limited period of time before the US government is alerted to these financial investments and you face potential tax consequences, as well as potential criminal consequences. It is important to speak with a New Jersey tax attorney for information about your options in taking advantage of voluntary declaration or amnesty programs so you can protect the value of your offshore account and reduce or eliminate the risk of prosecution.