The various players in the offshore banking and related tax evasion issues continue to look for a solution to their problems. The U.S. government remains vigilant in its investigation of banks, individuals and financial professionals who had their hand in hiding money abroad. Popular offshore banks, like UBS, are still dealing with the U.S. government's effort to obtain account information. Wealthy individuals and business entities may still voluntarily disclose offshore accounts and income, with the benefit of the Voluntary Disclosure Program for offshore account holders.
Transferring money to offshore bank accounts is not in itself a criminal act. People have been using offshore banks for their tax benefits and privacy safeguards for many years. Offshore banks - such as Swiss banks and those in the Cayman Islands - may also provide better interest rates and keep money safer during times of political unrest or economic instability in a depositor's home country. However, individuals and businesses must be vigilant in following all applicable laws, especially those related to offshore account reporting and disclosure of offshore income.
Since the U.S. taxes any citizen or resident on their international income, any failure to report income on offshore accounts may lead to hefty penalties or criminal prosecution by the IRS for tax evasion. In addition, failure to report offshore accounts over $10,000.00 is a serious felony. Criminals or terrorists sometimes use offshore banks to launder funds. This activity - and the protection of wrongdoers by banks and bank personnel - is part of the continued controversy over the manner in which some offshore financial establishments operate. The IRS is concerned with offshore accounts and unreported income even if the source of the money in the offshore accounts was from legal sources.
The U.S. government, mostly through the IRS, still views their efforts to combat tax evasions a top priority, especially failure to disclose offshore income. During a recent speech at a money laundering conference in Florida, an IRS official advised international bankers about the possibility of prosecuting bankers for their roles in offshore tax evasion. Jeffrey A. Neiman, an assistant U.S. attorney, stated that bankers involved in back-dating financial documents; aiding clients by opening accounts named to offshore companies; and establishing fake consulting agreements to substantiate fraudulent money transfers may face criminal charges. He also indicated that the IRS will continue to identify and pressure anyone involved in tax evasion schemes to help the recovery of billions of lost tax revenue for the U.S.
One key compliance initiative the IRS pursued last year was targeting a large offshore bank, UBS, for their part in helping rich Americans evade taxes. The lawsuit was settled early in the year, with UBS forfeiting $780 million and agreeing to release a few hundred customer identities. The suit also sought disclosure of thousands of accounts. It is clear that the IRS and Department of Justice will continue to vigorously pursue offshore account information.
Another act that proved successful for the U.S. government was the amnesty program known as the Voluntary Disclosure Program for offshore accounts. The IRS extended an open invitation to eligible individuals and other entities to voluntarily disclose their previously hidden assets held by foreign banks. In exchange for their cooperation, the IRS significantly decreased penalties for the failure to report offshore accounts and agreed not to pursue criminal charges.
Voluntary disclosure is still an option for people who have not yet been approached by the IRS. The IRS treats those who volunteer their past tax misdeeds in a more lenient manner than others who are discovered after prolonged and intense investigations.
Rather than getting caught up in an investigation, those who believe they are in danger of prosecution for using offshore accounts as tax shelters should contact a experienced criminal defense attorney prior to disclosing any information to the IRS or other government agency. A lawyer experienced in defending against offenses such as income tax evasion and failure to report offshore accounts can explain the available options and help in handling these complex issues.
Rob, Former Client
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