Has Your Offshore Account Been Outed? Know What Steps to Take NextOffshore Account Update
Posted in on July 31, 2017
When 11.5 million files leaked from a prominent Panama-based law firm, the leaked files revealed the secret ownership of confidential offshore accounts by a number of wealthy individuals. While having offshore accounts is not, by itself, unlawful, many of the holders of these offshore accounts were not in compliance with tax laws. Failing to report offshore accounts and not paying taxes on investment income held in offshore accounts can have serious consequences.
The information released from the Panama Papers put accountholders at risk of having their account information become known to taxing authorities, which could subsequently pursue legal action to recover unpaid taxes and even to bring criminal charges. Those whose information was revealed needed to guard against the possibility of substantial financial loss as well as the threat of a criminal case by responding in a smart way to the leak.
The Panama Papers are not the only way in which taxing authorities have been able to gain access to accountholder information. Within the United States, the Swiss Bank Program incentivized financial institutions to provide details on accountholders in exchange for the banks avoiding criminal prosecution for their role in alleged tax evasion. As a result, many accountholders had their personal details on their offshore accounts revealed.
If your offshore account is outed, you need to act quickly. A New Jersey tax attorney can provide advice on what you can do to try to protect yourself in the event that your private account information has fallen, or could fall, into the hands of taxing authorities.
What to Do If Your Offshore Account Information is Revealed
If your offshore account information is revealed, you may have a very limited time to act to protect yourself. Once you are already under investigation with the IRS, you may have fewer options to try to reduce penalties and consequences of not complying with tax laws.
For U.S. affiliated persons with offshore accounts, it is important to realize you could face legal problems for offshore accounts even if you don't believe you tried to evade taxes. Offshore accountholders whose account balances across all foreign accounts add up to $10,000 or more are expected to file a Report of Foreign Bank and Financial Account (FBAR) each year. Not filing FBARs could lead to financial penalties for not alerting the IRS to the existence of your foreign investments.
You don't want to be fined and penalized for not filing forms, as many people who have faced financial consequences for not filing FBARs have had to pay more than the value of their undeclared offshore accounts. You also don't want to be at risk of criminal prosecution for failure to comply with tax laws. Therefore, it is so important to take swift action if your offshore account information is revealed.
You should speak with a New Jersey tax attorney about the options available to you, including the option to take advantage of the Offshore Voluntary Disclosure Program (OVDP). This program protects you from criminal prosecution and limits your penalties for undeclared offshore accounts, provided you are eligible to participate. Attorney Kevin Thorn can advise you on your options and help you to formulate the best response once your offshore tax haven has been outed.