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IRS Offshore Accounts Archives

The Cost of Taxing Foreign Income

United States citizens must pay tax to the U.S. government on income earned anywhere in the world. This comes as a surprise to some U.S. taxpayers who are confused about how the U.S. could have the right to levy taxes and acquire so much information on money that, in some cases, has no connection to the U.S. other than the fact that it is earned by a U.S. taxpayer. These same taxpayers are equally surprised to learn that the U.S. laws concerning the reporting of their income in foreign countries are very strict and the related penalties, draconian.

Leniency for FBAR Violators

Much has been made of the government's recent crackdown on secret offshore bank accounts. Despite making the enforcement of these reporting requirements a top priority, courts have been handing out relatively lenient sentences for violators.

IRS Still Seeking to Identify Offshore Account Holders

Pursuing information obtained from individual taxpayers participating in the Offshore Voluntary Disclosure Program, the IRS identified Canadian Imperial Bank of Commerce FirstCarribean International Bank (FCIB) as a foreign financial institution at which many U.S. taxpayers may be keeping accounts in an attempt to evade U.S. taxation. However, because FCIB does not have any U.S. locations, obtaining jurisdiction over the bank in order to demand information, documents, and records has been challenging for the IRS. Nevertheless, finding a creative loophole in its jurisdictional limits, the IRS recently served a John Doe summons to Wells Fargo & Co., a U.S. bank where FCIB maintains a correspondent account.

Offshore account compliance: recognizing the challenges

Every year, the IRS releases what it calls a "dirty dozen" list of tax scams. Some of the tax tactics on the list, such as computer phishing schemes or identity theft, are admittedly dubious. The IRS is certainly well within its mission in seeking to prevent tax fraud.

79 Year Old Widow Faces Prison for Offshore Accounts

On January 8, 2013, the Department of Justice announced that Mary Estelle Curran of Palm Beach, Florida pleaded guilty for failing to file tax returns for tax year 2006 and 2007. Ms. Curran has agreed to pay a civil penalty of over $21 million, a tax liability of $667,716 and faces a potential maximum prison term of six years. Her plea agreement limits her prison sentence to 30-37 months.

Foreign accounts: the role of intergovernmental agreements

For several years, fears about the impact of the Foreign Account Tax Compliance Act have extended well beyond the tax professional community. One concern is that FATCA will create unduly burdensome regulatory requirements for financial institutions.

Offshore accounts: FATCA rules delayed

The Foreign Account Tax Compliance Act (FATCA) is an ambitious attempt by the U.S. government to enlist foreign financial institutions and governments as allies in tax collection efforts. Indeed, it is so ambitious that many critics have called it over-reaching - an unprecedented power grab for tax collectors that may have negative consequences for global commerce.

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