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IRS Foreign Asset Seizures to Satisfy Tax Debt

Offshore Account Update

Posted on July 31, 2019 |

For U.S. taxpayers with offshore bank accounts, they should be particularly wary of one potential action by the IRS: If it believes the taxpayer is intentionally failing to report the offshore accounts, the IRS can seize the taxpayer’s foreign assets and income.

If you are at risk of foreign asset seizure by the IRS, New Jersey tax attorney Kevin E. Thorn can help. One of the best methods of assistance in this regard is the use of the IRS Streamlined Filing program, which can bring the taxpayer into legal compliance. However, this program is complex with numerous pitfalls, so it is vital to seek legal assistance from a tax attorney who is familiar with Streamlined Filing.

When Can the IRS Seize Foreign Assets or Income?

If the IRS believes a taxpayer is knowingly or willfully failing to disclose offshore accounts, it has options to collect the fines and tax penalties owed. One of these options is the seizure of foreign bank accounts, property or income.

The reason the IRS has this power is to prevent the taxpayer from fleeing the country with the assets or selling them off. Since these are legitimate risks when a taxpayer is purposefully hiding offshore assets, the IRS may be able to seize the assets or income. And the IRS may be able to do this without even providing notice to the taxpayer.

However, the taxpayer may still make a claim for the assets after the IRS seizure. However, this may or may not be advisable under the circumstances. For example, the seized property may have been obtained using funds that were not properly disclosed. This is where the guidance and counsel of a New Jersey tax attorney are invaluable.

How a New Jersey Tax Attorney Can Assist with Streamlined Filing to Avoid Asset Seizure

One of the better methods of avoiding IRS foreign asset seizure is the use of the Streamlined Filing program. Officially known as Streamlined Foreign Asset Procedures, this program allows taxpayers with previously undisclosed offshore accounts to come into tax reporting compliance. And even better, the taxpayer can avoid tax penalties.

There are two main requirements to be able to use the Streamlined Filing Program: (1) the violation must be non-willful and (2) the taxpayer must pass the residency test.

  • Non-Willful Violation: Determining the line between willful and non-willful violations of tax reporting requirements is not always an easy task. There are many factors that go into the analysis, such as the taxpayer’s sophistication and types of investments. A tax attorney familiar with Streamlined Filing can help determine whether this program is appropriate for a taxpayer’s particular situation.
  • Residency: You must qualify as a foreign resident under the IRS “330-day” rule for the Streamlined Program.

Once a taxpayer qualifies, their New Jersey tax attorney can guide them through the intricate process of the Streamlined Program.

Speak with a New Jersey Tax Attorney If You are Concerned About IRS Foreign Asset Seizure

If you are concerned about potential IRS seizure of your foreign assets or income due to undisclosed offshore accounts, consult a New Jersey tax attorney at the Thorn Law Group. Contact Kevin E. Thorn, Managing Partner, at 201-842-7696 to schedule a consultation.


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