IRS continues to focus on Cayman Islands for tax violations

Offshore accounts continue to face scrutiny by the Internal Revenue Service (IRS). The federal agency examines these accounts to ensure the owner is in compliance with tax laws. A failure to do so can result in serious penalties, including fines and potential prison time for serious offenses.

With these potential penalties, it may seem like too much of a hassle to have this type of account. In reality, the accounts can be well worth the hassle. Offshore accounts can offer a number of benefits. Entrepreneurs may use these accounts to diversify their portfolios, take advantage of higher interest rates or provide easy access to funds while traveling. The IRS continues to focus on the Cayman Islands as a haven for tax violations.

A recent report by the Institute on Taxation and Economic Policy finds that this area is still used to avoid tax compliance within the U.S. The Chief Executive Officer of Cayman Finance counters that the report is flawed. He states it fails to show the area's commitment to "global standards for transparency and cross-border information sharing with law enforcement and tax authorities." He goes on to state that the Cayman Islands are a hub for those who want to seek global opportunities for financial growth. It offers a combination of capital and financing that can prove beneficial to entrepreneurs.

So how can you ensure that the benefits of an offshore account outweigh the risk? It is often wise to seek legal counsel. An experienced international tax attorney can review your current situation to make sure you are in compliance, can offer solutions if you are not currently in compliance, can help you structure a future account to meet tax obligations and can help you navigate a tax conflict with the IRS. 

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