The IRS Has Extended The Deadline For Entering The Amnesty Program Relating To Offshore Accounts To October 15, 2009.
The IRS Amnesty Program for reporting offshore accounts presents people with an opportunity to avoid criminal prosecution and significant civil penalties for not reporting offshore accounts.
Many United States citizens and non citizen residents of the United States have offshore accounts. While there is nothing illegal about having offshore accounts, it is a crime to not report an offshore account that contains over $10,000.00.
The criminal consequences are very serious. Several felonies can result from not reporting an offshore account and the income earned on the account. These offenses include the following felonies:
1. Failure to file the yearly disclosure form known as an FBAR, is a felony, punishable by up to 10 years in prison, plus a significant criminal fine.
2. Failure to disclose the income earned on the account can be prosecuted as tax evasion which is punishable by up to 5 years in prison. Each year that the income is not reported can be the basis for a separate charge of tax evasion.
3. Failure to disclose the offshore account and the income from the offshore account can also be prosecuted as a false statement on the income tax return which is a felony punishable by a maximum of 3 years in prison.
The civil penalty for not filing the FBAR is 50% of the highest value of the account for each year. This severe civil penalty is another reason to take advantage of the IRS Amnesty Program. The civil penalty under the Amnesty Program is a one time penalty of 20% of the highest value of the account in the years 2003 through 2008.
Over the years, I have represented people under criminal investigation by the Internal Revenue Service. My clients came from various geographical areas and work backgrounds and have included professionals, business owners, salaried workers and others. They all had several things in common. They thought of themselves as law abiding citizens and could not believe that they were under criminal investigation. They also were under severe emotional stress because of the investigation and potential humiliation of being charged with a crime. Finally, they were shocked to learn that even though they had never been arrested or convicted, that the federal sentencing guidelines called for a prison sentence. Even when I was able to convince the IRS not to prosecute my clients criminally, they still had to pay civil penalties, back taxes and interest. Each and everyone who went through that experience regretted not paying the taxes and complying with the tax laws.
The Amnesty Program, if done correctly, allows people to avoid criminal prosecution and significantly reduce the civil penalties as well. Anyone with an offshore account should seriously consider entering the IRS Amnesty Program. I am currently helping clients with the Amnesty Program.