In the first part of this post, we noted the multiple pressure points on U.S. taxpayers with undisclosed offshore accounts.
As we discussed, it isn’t only the IRS that is pushing for disclosure of this information. Swiss banks, once the bastion of foreign account secrecy, are now urging their clients or former clients to disclose the accounts as well.
In fact, the Swiss banks are doing more than merely urging this on their American clients. They are sending letters to those clients, informing them that the undisclosed offshore account information will soon be turned over to U.S. authorities. In some cases, Swiss banks are also freezing accounts.
In this part of the post, let’s review some of the options available to U.S. taxpayers who must decide what to do about previously undisclosed offshore accounts.
As we noted most recently in our November 6 post, one option is seek to participate in a limited-amnesty program offered by the IRS. In return for voluntary disclosure and a promise of continued cooperation with the IRS, taxpayers in this program have a good chance to avoid tax evasion charges.
But the limited-amnesty program does typically involve the payment of hefty tax penalties. And so some taxpayers have continued to look for other options.
Simply closing the accounts is of course possible. But taxpayers who do that continue to run the risk of tax evasion charges for the years during which the accounts were not disclosed.
There is also an option that is called “quiet disclosure.” This involves amending previous tax returns or filing forms that should have been filed previously. One such form is the Report of Foreign Bank and Financial Accounts, commonly known as the FBAR.
Like simply closing the accounts, the quiet disclosure option could carry considerable risk of detection.
That is why a taxpayer who is facing a full-court press to disclose offshore accounts could benefit from a huddle with a knowledgeable tax attorney. Indeed, it may well be worth calling a timeout from your daily activities to do so.
Source: The Wall Street Journal, “Swiss Banks Pressure U.S. Clients,” Laura Saunders, Dec. 27, 2013