Keeping Quiet about Undisclosed Offshore Assets Invites Trouble with FATCA

Tax obligations for Americans living overseas are becoming a hotbed for attention from the IRS and taxpayers do best to seek advice from a tax attorney about the best way to disclose foreign income.

ftx-expatriates-tax-hong-kongEver since the implementation of the Foreign Account Tax Compliance Act (FATCA), the IRS has spent increased time and resources in seeking out undisclosed income and assets among U.S. citizens living abroad. FATCA now requires foreign financial institutions including banks, investment groups, insurance programs, and employers to report information on American account holders. Over 100 countries have already signed agreements with the United States and more are in discussions with the IRS. Because of this new widespread financial transparency, taxpayers living abroad are now in the spotlight.

The United States has already shown an aggressive increase in the number of individuals investigated for tax evasion or tax avoidance. Furthermore, the IRS levies steep fines, penalties, and even criminal charges for those who are found guilty. Because of this, it is imperative that U.S. citizens living abroad ensure that they are in full compliance with FATCA by disclosing all income held overseas and filing the necessary paperwork including an FBAR (fincen form 114).

Unfortunately, even with all the attention on U.S. taxpayers living abroad, there are still some individuals who will wonder whether or not they should disclose their income. People who have failed to disclose accounts or assets in the past now wonder if joining the Overseas Voluntary Disclosure Program (OVDP) will be of benefit to them. Others may choose to simply begin filing an FBAR (fincen form 114) this year and move forward in full compliance and ignore their failure to disclose income in the past years or attempt to simply amend previous returns without going through the actual program. This is known as “quiet disclosure” and is not an advisable choice.

The OVDP provides taxpayers an option to disclose previously unreported income from accounts held abroad. The process outlines specific fees and penalties but ensures that the participant is not held responsible for criminal charges or ongoing penalties. A tax attorney can assist clients in navigating the process and understanding what forms need to be filed and how to move forward.

The IRS is currently working with hundreds of banks and financial groups who are now providing information on U.S. account holders so it is important to understand that you can no longer hide your head in the ground and hope to be passed over. Now is the time to address any non-compliance that you may have in your tax history and consult a professional tax law firm for advice and legal representation.

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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