Global Crackdown on Unreported Foreign Accounts – CRS & FATCA

Golding & Golding - Offshore Disclosure & FATCA Compliance

Golding & Golding – Offshore Disclosure & FATCA Compliance

For many individuals who either live in the United States or Overseas (but still maintain U.S. status, such as a U.S, Citizen, Legal Permanent Resident, or Foreign National subject to the Substantial Presence Test), there is a growing concern regarding unreported foreign accounts and undisclosed foreign income.


Specifically, with the introduction of FATCA (Foreign Account Tax Compliance Act), the United States has convinced over a hundred foreign countries and thousands of Foreign Financial Institutions to report US account holder information to the United States. As a result, many individuals are getting caught in the wave of FATCA reporting, which may result in being audited, examined or investigated by the Internal Revenue Service and leading to extremely high fines and penalties…and possible criminal investigation depending on the facts and circumstances of your case.


Beyond FATCA, there is a new player in town called CRS. CRS is the Common Reporting Standard and otherwise known as GATCA (Global Account Tax Compliance Act). GATCA is a bit different. It was not developed by one country, but rather a device of OECD (Organisation for Economic Co-operation and Development). The organization developed this series of rules in order to serve as a template or exemplar for foreign countries to implement and integrate into its own tax rules and regulations.

Each country is able to modify the agreement accordingly but in effect, it serves the same essential purpose of FATCA – to crack down on global tax evasion and tax fraud.

Foreign Banks Do Not Want to Mess with the U.S.

Before the days of FATCA, and before the Internal Revenue Service made offshore tax evasion a priority enforcement and mainstay on the dirty dozen tax list, it was very easy to move funds offshore undetected. Moreover, many foreign financial institutions and investment companies proactively sought out US investors for this purpose, with the promise of keeping the funds safe, hidden, and outside the reach of the U.S. Government (IRS, DOT, DOJ). 

Fast forward to 2016 — with the Internal Revenue Service, Department of Treasury and Department of Justice breathing down the next of foreign financial institutions, many of them rolling over on their customers. A perfect example is the Panama Papers debacle wherein the foreign bank essentially snitched on thousands of account holders who maintained accounts with understanding that their accounts were protected by some form of secrecy.

Which Foreign Bank or Foreign Investment Firm will be next to fold to the U.S. Government?

What will the U.S. Government do to me?

This is where you have to take a bit of caution and be careful what you read online. Many unscrupulous attorneys, CPAs and accounts try to scare you into OVDP. OVDP is the traditional offshore disclosure program, but these days it is primarily reserved for individuals who were willful. In other words, they intentionally sought to evade U.S. tax and reporting requirements by opening accounts overseas.

If you are non-willful (aka you had no intent to evade tax or avoid reporting requirements) there are various alternatives to reporting which are less painful and less costly.

This is Overwhelming, Where do I Begin?

At Golding & Golding, the only area of tax law we practice is offshore disclosure. We have represented hundreds of individuals in over 40 countries with all levels of disclosure from simple bank accounts of which they have signature authority and inheritances, to complex tax fraud matters involving multiple countries, hidden accounts and various forms of unreported income.

We have prepared an introduction page to give you the most basic information and help your understanding of the possible situation you may face. We have reproduced the information below for your review:


Foreign Account and Tax Summary

Golding & Golding is a flat-fee, full-service firm; we are lawyers who assist international clients in reporting their offshore accounts to the IRS. Most recently, many of our clients learned about Foreign Bank Account reporting requirements when they received a FATCA Letter from their Bank, asking them to certify their U.S. Status by submitting either a W-9 or W-8 BEN.

Who Has to Report?

We have represented numerous clients worldwide with issues similar to yours:

Expats who relocated overseas and did not know they had to report their foreign accounts.

U.S. Citizens who live overseas and may or may not earn significant income, but have accounts in a foreign country.

Legal Permanent Residents of the United States who relocate back to a foreign country but are unaware that they are still required to report the foreign accounts.

Non-Residents who meet the substantial presence test and therefore are required to report foreign bank and other accounts to the US government.

Please do not worry. We can assist you as we have assisted hundreds of clients in over 40 countries disclose upwards of $40 million in a single disclosure.

We are available seven days a week and provide flat-fee and full-service representation to our clients around the world.

The Basics

These are the most basic rules when it comes to foreign accounts and foreign income:

Foreign Income

If you are either a US Citizen, Legal Permanent Resident (aka Green Card holder or recently gave up your Green Card) or foreign resident who meets the substantial presence test, then you are required to report your worldwide income to the IRS. This means that even if you do not have any US-based income, you are still required to report your worldwide income (even if it is the type of income which is not taxed in your home country such as interest and dividend income in most Asian countries). And, if you have enough foreign income to meet the minimum threshold for having to file a US tax return, then you are required to do so even if it is based on your foreign income alone.

Foreign Accounts

If you meet the requirement for being a U.S. “Taxpayer” (even if you do not meet the threshold for having to file a US tax return), you are still required to file an annual FBAR (Report of Foreign Bank and Financial Accounts). The threshold is as follows: if at any time during the year, you have more than $10,000 in foreign accounts (whether the money is in one account or spread over numerous accounts), you are required to file an FBAR.

In addition, if you have significant amounts of money overseas, then you may also have to file additional forms such as an 8938 (FATCA Form) or 8621 (Passive Foreign Investment Company, which includes Foreign Mutual Funds along with as many other passive investments). There are many other forms you may have to file, but we determine those on a case-by-case basis.

Fines & Penalties

Unless you are criminal, chances are the IRS or Department of Justice will not be banging down your door to come drag you to jail. With that said, the fines and penalties can be very steep and depending on your particular circumstances, may include penalties upwards of 100% of the value of your foreign account. If the IRS believes you were willful (aka intentional), then they may launch a criminal investigation against you and the penalties and fines can get much worse from here, including Liens, Levies, Seizures…and worse.

Customs Holds and Passport Revocation

With the implementation of FATCA (Foreign Account Tax Compliance Act), the United States is heavily cracking down on offshore tax evasion and unreported foreign accounts in general. The IRS and US government have the power to both revoke your passport as well as possibly hold you at the airport “customs hold” to question you on the spot (usually outside the presence of your attorney).

Getting Into Compliance

Getting into compliance should be mandatory on your “to-do” list. Even though our firm, Golding & Golding, is based in Newport Beach, we represent clients worldwide. A majority of our clients live overseas in over 40 countries. We have helped numerous clients get into compliance and are regarded as one of the top Offshore Disclosure Law Firms worldwide.

To that end, there are three main methods of compliance:

(1) Streamlined Compliance

This program is for individuals who were unaware of any requirement to file an FBAR and/or report their income on a US tax return. The penalties under the streamlined program are significantly reduced and may possibly be waived depending on whether a person qualifies under the strict definition of foreign resident for offshore disclosure purposes.

(2) OVDP

This program is mainly for individuals and businesses who were willful, aka were aware they were supposed to report their foreign accounts but intentionally hid or kept the account/income information secret.

(3) Reasonable Cause Statement

This is not a particular program; instead, it is a method for getting to compliance while attempting to avoid any penalty. There are many pros and cons to this method depending on your specific situation, which must be evaluated carefully with your attorney before making a decision.

We provide a reduced fee telephone consultation to all potential clients (excluding CPAs, Lawyers, and/or other Tax Professionals) so that we can answer your questions. All calls are strictly confidential and the information is covered under the attorney-client privilege (even if you decide not to retain our firm).

Call now; let us help you.

International Tax Lawyers - Golding & Golding, A PLC

International Tax Lawyers - Golding & Golding, A PLC

Golding & Golding: Our International Tax Lawyers practice exclusively in the area of IRS Offshore & Voluntary Disclosure. We represent clients in 70 different countries. Managing Partner, Sean M. Golding, JD, LL.M., EA and his team have represented thousands of clients in all aspects of IRS offshore disclosure and compliance during his 20-year career as an Attorney. Mr. Golding's articles have been referenced in such publications as the Washington Post, Forbes, Nolo and various Law Journals nationwide.

Sean holds a Master's in Tax Law from one of the top Tax LL.M. programs in the country at the University of Denver, and has also earned the prestigious Enrolled Agent credential. Mr. Golding is also a Board Certified Tax Law Specialist Attorney (A designation earned by Less than 1% of Attorneys nationwide.)
International Tax Lawyers - Golding & Golding, A PLC