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You Can’t Avoid Paying Taxes Through Offshore Banking

 tax avoidance offshore

The IRS has been running the “Voluntary Disclosure” program for the past 9 years. It allowed tax dodgers with offshore accounts to willfully come forward and avoid criminal charges. This program, however is about to end in just 6 months from now. What is more, the IRS is ready to catch all those who didn’t take advantage and thought they could avoid paying taxes through offshore banking.

 

What is the “Voluntary Disclosure” Program

 

The Voluntary Disclosure program started in 2009 and its main purpose was to bring US tax dollars back to the States. After the FATCA was introduced and the most popular offshore jurisdictions no longer provided secrecy, it became much easier for the IRS to find those who tried to hide.

 

As you already know, intentional tax avoidance is a crime. The Voluntary Disclosure program was a chance to spare yourself the trouble. However, the fact that you won’t be prosecuted doesn’t mean you get out of the situation for free. Since 2009, as stated by Bloomberg Technology, over 56,000 American taxpayers have come forward. They had to pay all the missed taxes back, interest and penalties. The total amount of money the IRS has collected as a result of the program to date is over $11 billion.

 

Negligence Won’t Save You Either

 

You may think you dodged a bullet if your tax non-compliance was unintentional, but we have bad news for you. Many US taxpayers living or working abroad don’t know that they are required by law to file a tax return. In fact, in many cases filing an FBAR form each year is also compulsory. That’s even if they don’t owe any taxes. The IRS is determined to identify all those who did not disclose their foreign accounts. So if you simply didn’t know you were supposed to report your offshore account you may still get into trouble.

 

The Streamlined Program

 

The streamlined program was introduced to help exactly that type of taxpayers who were negligent of the law. This program will continue to run even after the ‘Voluntary Disclosure’ ends and it requires non-compliant taxpayers to pay back the money they owe for all missed years plus interest. Penalty charges will not be applied on top.

Now is the Time to Come Forward

 

The number of people taking advantage of the ‘Voluntary Disclosure’ program has significantly decreased last year. This may mean that generally US taxpayers have become more diligent and do not hide money abroad. On the other hand, it could also mean that they are still trying to avoid paying taxes through offshore banking.

 

If you happen to be part of the latter group, we would strongly encourage you to use the Voluntary Disclosure program while you still can. Once it ends in September, the IRS will not stop looking for tax dodgers and they certainly have the means and resources to uncover noncompliant tax evaders. It’s better to pay your taxes with interest and penalty on top than being prosecuted.

Take Out

  • The Voluntary Disclosure program, designed for people who willfully avoided taxation through offshore banking is ending in September 2018
  • It allowed tax evaders to pay what they owe with penalties and interest, but no criminal prosecution
  • For the past 9 years, 56,000 US taxpayers have come forward and that brought $11 billion in revenue to the IRS
  • Not filing a tax return due to negligence does not save you from trouble
  • Negligent taxpayers who didn’t file the required documentation from abroad can enter the Streamlined Program to avoid penalties and interest
  • The IRS will continue to chase after tax dodgers even after the Voluntary Disclosure program ends, so you are advised to come forward now

 

Do you need a tax professional to help you in your dealings with the IRS? Perhaps you simply need advice on tax planning and offshore banking? FAS CPA & Consultants can help with all of that and more. Contact us today on support@fascpaconsultants.com.

 

 

 

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Fulton Abraham Sanchez, CPA

Fulton Abraham Sánchez, CPA is a Certified Public Accountant, specialized In Tax Planning, International Business, Wealth Management and Offshore Banking. You can email him to fa@fascpaconsultants.com or follow us on Facebook : FAS CPA & Consultants.

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