The 2014 World Cup will be getting underway soon in Brazil. As always in a soccer-mad world, the festivities will surely galvanize the attention of tens of millions of soccer fans around the world.
During the many matches that comprise the quadrennial tournament, there is likely to be more than one penalty kick. In such a kick, the offensive team is awarded a clear shot at the goal due to a serious rules infraction by the other team.
In this two-part post, we will discuss a very different form of penalty kick: the IRS's penchant for penalizing taxpayers for violations of offshore account reporting requirements.
Last week, in an offshore civil enforcement case, a jury in Miami held that a taxpayer could owe foreign-account penalties that exceed the actual value of the account.
The case was called USA v. Zwerner. It concerned a Swiss bank account that authorities said the taxpayer should have disclosed to the IRS. The penalty assessed by the IRS in that civil case could be as much as $2.2 million.
The IRS’s offshore enforcement crackdown of the past few years has been a recurring theme in this blog. As we noted, for example, in our February 21 post, U.S. authorities have particularly targeted alleged tax evasion through Swiss accounts.
The impending implementation of the Foreign Account Tax Compliance Act (FATCA) is expected to raise the ante even further for taxpayers who may have undisclosed offshore accounts. Beginning on July 1, FATCA will require an unprecedented level of information-sharing by foreign banks and other financial institutions about assets held by clients who are U.S. taxpayers.
In part two of this post, we will discuss how this may affect the choices those taxpayers face about offshore account disclosure.
Source: The Wall Street Journal, "The IRS's Big Penalty Kick," Laura Saunders, June 6, 2014