There is often a romantic notion attached to the idea of having money stashed in bank accounts around the world. It’s kind of like the ultimate game of hide and seek. Unfortunately, this game is more and more leaning in favor of the US government. Many have heard of the recent success the US government has had with obtaining the identities of US account holders in Swiss banks and financial institutions (See the UBS case). Well the IRS is in on the game as well. After all, the IRS isn’t too keen on US citizens hiding money oversees that is off of their tax radar. Many US citizens may think that if they invest money offshore the IRS has no claim to interest and dividends earned by these funds. This idea couldn’t be more wrong. The US taxing regime taxes its citizens on their worldwide income, not just on what’s earned in the US.
If the IRS discovers that you have foreign bank accounts, they can assess back taxes, penalties and interest. In addition to back taxes and civil fines and penalties, the IRS can also pursue criminal prosecution in cases where US investors hold foreign accounts. It is important to understand that it is not inherently illegal to hold money in foreign bank accounts or invest in foreign ventures, as long as you make proper disclosures to the IRS. As one might expect, the required disclosures can be complex and burdensome. This is why it is always best to consult a competent tax attorney to assist you. It is also important to note that time is of the essence. If you voluntarily disclose your offshore accounts to the IRS prior to audit, you can qualify for reduced penalties (assuming that penalties are warranted in your case). Once an audit begins, however, you are out of luck. If you are in a situation where you have money held in offshore banks or investment accounts, call an expert tax attorney to help you navigate yourself into compliance.
The Gregory Law Group, PLLC is the premier Dallas tax law firm for representing clients through the IRS audit, collection, and controversy stages. Gregory Law Group, PLLC offers a Free Consultation with Mrs. Gregory. To schedule your free consultation, please call us toll free at .