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.
The Internal Revenue Service's inquiry into offshore tax evasion is a multi-pronged effort. While the IRS and the Department of Justice apply pressure to foreign governments and financial institutions, the IRS is also creating initiatives for U.S. taxpayers--living here in California or residing abroad--to come back into compliance with reporting requirements.
The IRS has reopened the Offshore Voluntary Disclosure Program (OVDP) for offshore bank account holders. This is a significant opportunity for California taxpayers with hidden overseas accounts to disclose these accounts to the IRS and avoid the possible criminal tax evasion penalties that are typically associated with offshore accounts.