Federal Investigators Increase Scrutiny of Offshore Bank Accounts

By:
Alicea Castellanos, CPA, TEP, N.P., and Jack Brister, TEP
Published Date:
Dec 1, 2016

Federal watchdogs are demonstrating their renewed focus on the illegal use of offshore bank accounts, as the Department of Justice (DOJ) says it is zeroing in on potential tax evaders.

The revelation is the latest chapter in U.S. officials’ efforts to ensure that Americans pay their share of taxes. A three-year long disclosure program, which resulted in 80 Swiss banks coming forward to reveal how they helped Americans evade taxes and identify those with funds hidden in offshore accounts, came to an end in January. That program resulted in non-prosecution agreements in exchange for $1.37 billion in penalties paid to federal authorities, as well as a guilty plea from a former Credit Suisse Group AG banker, who admitted to helping Americans evade taxes.

Following the launch of the IRS’s Offshore Voluntary Disclosure Program in 2012, more than 50,000 Americans have come forward, declaring that they failed to disclose their offshore holdings, but had innocent motivations for doing so—a proactive step necessary to avoid severe tax penalties or possible prosecution.

The DOJ, however, is now sifting through all the data compiled through these disclosure programs to try and find evidence of individuals who knowingly circumvented U.S. tax law. Investigators are “taking a second look” at thousands of accounts, while also comparing data against records at the Treasury's Financial Crimes Enforcement Network (FinCEN). While some people might have believed coming forward would spare them significant fines or prosecution, investigators are signaling their intent to ensure intentional tax evasion doesn’t go unpunished. With an “avalanche” of data at its fingertips, it may finally have the information it needs to make that goal a reality.

It's a little bit of a dangerous time, if you are an offshore account holder who's not gotten right, the DOJ Tax Division recently warned. 

Despite the significant level of voluntary disclosure from individuals and institutions alike, the DOJ isn’t turning the page on offshore accounts yet. Its ongoing investigations and public statements indicate a determination to identify offenders. As a result, U.S. citizens with offshore accounts should review their holdings and ensure their compliance to determine if further disclosure is required.

This article originally appeared in the July 2016 issue of The International Wealth Tax Advisor. Copyright, International Wealth Tax Advisors LLC, 2016. Reprinted with permission. 


Alicea Castellanos, CPA, TEP, N.P., has more than 15 years of experience. She specializes in U.S. tax planning and compliance for non-U.S. families with international wealth and asset protection structures, which include non-U.S. trusts, estates, and foundations that have a U.S. connection and executives living and working abroad. Alicea also specializes in non-U.S. persons investing in U.S. real property and other U.S. assets, pre-immigration planning, U.S. expatriation matters, U.S. persons in receipt of gifts and inheritances from non-U.S. persons, non-U.S. account and asset reporting, offshore voluntary disclosures, FATCA registration, and non-U.S. companies seeking to do business in the United States. Alicea has been published and has spoken at numerous events on U.S. cross border tax matters. She can be reached at acastellanos@iwtas.com.

Jack R. Brister, TEP, has more than 25 years of experience. He specializes in U.S. tax planning and compliance for non-U.S. families with international wealth and asset protection structures, which include non-U.S. trusts, estates and civil law foundations that have a U.S. connection, and non-U.S. companies seeking to do business in the United States. Jack also specializes in non-U.S. persons investing in U.S. real property and other U.S. assets, pre-immigration planning, U.S. expatriation matters, U.S. persons in receipt of gifts and inheritances from non-U.S. persons, non-U.S. account and asset reporting, offshore voluntary disclosures, FATCA registration and compliance (W-8BEN-E and Form 8966) and executives working and living abroad. He can be reached at jbrister@iwtas.com.

 
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