Orange County tax attorneys and planners are receiving increasing inquiries from clients about what they believed were perfectly innocent offshore accounts. Now the Internal Revenue Service is reexamining these accounts as they crack down on intentional tax evasion.
The IRS cracked down last year on United States citizens with offshore bank accounts who were not reporting income or filing the proper reports.
The IRS created a voluntary disclosure period during which people could come forward. The voluntary compliance period ended last year, but some people still are coming forward.
In the meantime, the IRS and the Department of Justice are conducting a wide-ranging investigation into whether Americans with offshore bank accounts have used the accounts to evade U.S. taxes.
Some reports say there are 17,000 cases in the U.S. of people needing to amend their taxes, but not everyone with a foreign bank account is a criminal. Many of those people have not received good tax advice.
Penalties have been increased to up to 50 percent of the account balance in the case of a willful violation. The penalty for a non-willful violation is $10,000.
For many years, the IRS has had a voluntary disclosure practice in its criminal manual. Once the IRS Criminal Investigation division has determined preliminary acceptance into the voluntary disclosure program, the case is referred to the civil side of the IRS for examination and resolution of taxes and penalties.
Many people are contacting Orange County tax lawyers about offshore accounts. They may have simply received bad tax advice in the past, and are hoping to be compliant with the law.
- Source: North Bay Business Journal "Experts see rise in inquiries on offshore accounts" August 18, 2010