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:
Golding & Golding, Board-Certified Tax Law Specialist Team
Golding & Golding represents clients worldwide in over 70-countries exclusively in Streamlined, Offshore and IRS Voluntary Disclosure matters. We have successfully completed more than 1,000 streamlined and voluntary disclosure submissions.
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