FATCA Investigations Reveal Overseas Banking Clients who May be Guilty of Tax Avoidance

FATCA investigations lead to a prominent overseas bank to agree to a settlement for tax non-compliance charges putting U.S. clients in hot water with the IRS.

United States citizens living and working abroad need to take a hard look at their current tax situation and determine whether or not they are in compliance. Since the creation of the Foreign Account Tax Compliance Act (FATCA), the United States government has required foreign financial institutions to share financial information on account holders who are U.S. citizens. As more and more countries sign agreements with the United States and banking institutions face penalties for non-compliance, the level of financial transparency across the globe continues to increase.

Are You at Risk?

As a result, U.S. citizens who may have been holding assets, income, or accounts overseas without disclosing them to the IRS may need to determine a change of course. Individuals who are found to have delinquent tax payments or unreported income and assets face steep financial penalties and even criminal charges for their neglect or willful avoidance.

Some Problems Can’t Be Ignored

Rather than tangle with the IRS to disclose unreported accounts, some U.S. taxpayers living overseas still believe they can hold out in silence and avoid any penalties. Some may question the benefits of joining the Overseas Voluntary Disclosure Program (OVDP) or the Streamlined compliance program. Others may choose to simply begin filing an FBAR (fincen form 114) this year and move forward in full compliance ignoring their failure to disclose income in the past years or attempting to simply amend previous returns without going through the actual program. Neither of these choices are advisable.

Not only is it illegal to fail to disclose income and assets to the IRS, it is also foolish. Just ask any of the U.S. taxpayers who banked with a popular Israeli bank who are now finding themselves in murky waters with the IRS. The bank admitted to offering clients advice and services related to tax avoidance over the course of several years. However, as a result of FATCA investigations, the bank has agreed to a $157 million settlement over tax-related non-compliance issues with the U.S. has agreed to disclose information on account holders who are also United States citizens to the U.S. Federal government. Those citizens who may not be compliant with their tax obligations to the IRS could now find themselves facing audits, penalties, and charges.

Seek Professional Representation

Now is the time to speak with a professional tax attorney to determine if you are in compliance with FATCA requirements. A qualified tax law firm can help outline your options for compliance and provide representation with the IRS as necessary.

About Freeman Tax Law

Freeman Tax Law (FTL) is a boutique law firm consisting of a multi-disciplinary team of tax professionals including tax attorneys, CPAs and a professional staff that have vast experience with foreign tax compliance and regulatory matters for financial institutions. FTL consults with both FFIs and USFIs with regard to Foreign Account Tax Compliance Act (FATCA) and related regulatory matters and assists them developing procedures on how to comply with these laws. FTL provides a multidisciplinary approach for filing offshore voluntary disclosures. Working to help clients prevent future tax headaches we offer a complete wealth management and estate planning team. As an experienced firm with wide reach, Freeman Tax Law provides immediate assistance to our clients planning for and resolving all tax related challenges.

Freeman Tax Law

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