If you are seriously delinquent on taxes your passport is safe for now. The IRS and State Department have yet to write regulations or begin enforcement. At the mid-year mark, proposed regulations are still not expected until mid-November.
United States law requires citizens and resident aliens (i.e. green card holders) to disclose all of their income regardless of where it was earned. This includes reporting foreign trusts and bank and security accounts held in other countries. Depending on the value of the foreign accounts various forms are required.
For better or for worse, the severity of offenses in the U.S. justice system is typically measured in sentence lengths. The more serious the crime, the longer the sentence tends to be.
Criminal penalties - for tax evasion or anything else - are typically measured in monetary fines and prison sentence lengths. For conviction on a serious charge, the sentence is often to a term of many years in prison.
Two recent Los Angeles cases show the potential consequences of failing to report offshore accounts to the IRS.
Individual tax filing season gets a lot of media attention. Historically, TV stations have run footage of taxpayers rushing to the post office in order to file. Even with more and more people filing online, filing day - usually on or around April 15 - remains etched in the popular consciousness.
How far can federal authorities go in seeking to compel American taxpayers to produce records concerning their foreign accounts? To be sure, there is no definitive answer to that question. But as the U.S. government continues its recent efforts to enforce offshore account compliance, it is important to become informed about the basic principles involved.
Constant vigilance! This is the watchword of Mad-Eye Moody, one of the colorful characters in the famous Harry Potter series. It's also a good watchword for U.S. taxpayers with foreign accounts. Constant vigilance is required for such taxpayers because the IRS keeps making changes in how it regulates offshore accounts.
Five hundred years ago, in the age of European exploration, America was thought of as a New World. And in many ways, the clash between old and new has continued to this day.
Much has been written, on our California tax blog and in the broader media, about the upcoming implementation of the Foreign Account Tax Compliance Act, also known as FATCA. Overseas financial institutions have been fretting about complying with the act's reporting provisions, but they can rest easy, at least for a time.