In a recent appearance before The U.S. Conference for International Business, the IRS Commissioner stated the following:
“One of the most exciting aspects of our current times is to see governments working so closely together to ensure that taxpayers comply with the tax obligations of their home jurisdictions. With respect to individual tax compliance, we see this collaboration in the process by which FATCA will soon go into effect, and it’s younger but already bigger sister, the Common Reporting Standard, or CRS, will soon be adopted globally. The cornerstone of these efforts, of course, is the automatic, multilateral exchange of information, which signals quite clearly that international tax transparency is no longer a distant hope, but rather an immediate reality”
What the statement means for U.S. taxpayers with offshore accounts is that the days of “hide and seek” may be coming to an end. The tools available to the IRS as a result of the Common Reporting Standard will make it easier for the government to uncover non-compliant U.S. taxpayers. It will allow make it easier for foreign governments to do the same.
The Commissioner went on to state:
“International tax evasion was, and would continue to be, a top priority for the agency, and people hiding assets offshore would find themselves increasingly at risk of enforcement actions.”
The options available to recalcitrant U.S. taxpayers, those taxpayer who have not yet come forward and properly disclosed the offshore accounts are: (1) continue their law breaking conduct, not wise, or (2) apply to enter the Offshore Voluntary Disclosure Program (OVDP). If a taxpayer fails to have a “pre-clearance” prior to the date that the government obtains information that the taxpayer has an unreported foreign financial account, then the taxpayer will be ineligible for the OVDP and face FBA and income tax penalties that are severe. The “willful” failure to file an FBAR penalty is the greater of $100,000 or 50% of the highest account balance per year for up to 6 years.
The game of “hide and seek” is fine for children, but not for adults with unreported offshore financial accounts. Now is the time to come forward.