The Scope of the Crackdown on Offshore FundsOffshore Account Update
Posted in on August 26, 2014
Taxpayers can take advantage of voluntary disclosure opportunities if they have offshore accounts that they have not properly reported. By participating in disclosure programs including the Offshore Voluntary Disclosure Program (OVDP) for foreign bank accounts, it is possible to limit penalties and avoid criminal prosecution.
While there are costs associated with disclosing your unreported offshore accounts, participating in OVDP or similar programs can be far better than the alternative: having your accounts identified by the Internal Revenue Service before you have reported them. With the massive crackdown on offshore secret tax accounts that is occurring worldwide, the risks associated with unreported accounts are higher than ever. If you have an account that you are concerned is not in compliance with tax laws, now is the time to contact a New Jersey IRS voluntary disclosure lawyer for help exploring your options.
Massive Crackdown on Offshore Accounts
The Financial Times recently reported on the scope of government actions against tax evaders. According to the article, governments worldwide have collected more than €37 billion since 2009. In 2009, the first phase of a global effort to fight tax evasion began. Tax authorities were given the authority to request information about offshore accounts in situations where they had grounds for suspicion, giving them more power than in the past to uncover the truth about tax havens.
In light of the new focus on finding tax cheats, countries including the United States launched voluntary disclosure programs to encourage people to come forward and protect their accounts from maximum penalties. The United Kingdom and France also launched similar programs to the OVDP in the U.S. More than half a million taxpayers have already taken advantage of these voluntary disclosure opportunities and admitted to secret offshore accounts.
In 2017, the next phase of the effort to identify undeclared offshore accounts will go into effect. The Organization for Economic Co-Operation and Development (OECD) is leading the charge, providing global standards for automatic information exchange that are designed to reduce the secrecy that allows people to keep accounts offshore and not report the income.
The OECD has published more than 200 pages of detailed information on how banks and governments can exchange tax information across country boundaries. More than 65 different countries have made public commitments to be part of the new information exchange, the details of which will be presented to G20 finance ministers at a September meeting in Australia. A total of around 45 countries have indicated their intent to become part of this exchange in 2017 when it becomes operational; and many others are expected to implement the measures a year later.
The OECD secretary-general announced new rules on automatic information exchange and indicated: “Today’s launch moves us closer to a world in which tax cheats have nowhere left to hide.”
For those with offshore accounts, the added enforcement measures will make it even more difficult to prevent these accounts from coming to the attention of authorities. To limit your risk and keep your penalties as low as possible, don’t wait for more crackdowns. Act today and contact a New Jersey IRS voluntary disclosure lawyer at the Thorn Law Group today.