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IRS reminds taxpayers: Report foreign assets or face consequences

The Internal Revenue Service (IRS) recently sent a representative to a meeting of legal professionals from throughout the country. At the meeting, held by the tax section of the American Bar Association, the agency’s representative stated the IRS will continue to review taxpayers’ foreign accounts and would continue to look for evidence of United States taxpayers’ holding and failing to report such accounts.

The representative was clearly reminding tax professionals the IRS continues to prioritize its search for those who are attempting to avoid tax obligations through the use of foreign accounts.

What can taxpayers take away from the representative’s comments?

If you have foreign assets, make sure they are in compliance with applicable U.S. tax laws. The agency is rarely lenient with those it finds in violation of reporting laws.

The agency also has a long reach back into the taxpayers’ records if the taxpayer has failed to report. For example, the IRS can look back six years for those who failed to file a Report of Foreign Bank and Financial Accounts (FBAR) from when the FBAR was due.

What options do taxpayers have for compliance?

Those who need to come into compliance have options. In some cases, the IRS’ Streamlined Procedures process may provide a way to come into compliance. This option is available for taxpayers whose failure to report was not willful.

Due to the complicated nature of reporting and the serious penalties that can come with a failure to properly report, it is wise for taxpayers to seek legal counsel when coming into compliance.  

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