The United States Internal Revenue Service (IRS) requires taxpayers report foreign assets. A failure to do so can result in fines and even criminal charges. Although most people know about this requirement, not everyone knows exactly how to go about reporting these assets. This post will provide some basic information, including common tax forms that the IRS often requires to meet this obligation.
The Internal Revenue Service (IRS) recently announced the impending end of the Offshore Voluntary Disclosure Program (OVDP). The program, scheduled to end this September, offers a trade. In exchange for reporting previously undisclosed foreign assets, the IRS will cap some of the potential penalties.
The allure of a foreign country calls to many United States citizens. Some fall in love with the views, the culture, the weather. Some choose to make their vacation destinations more than just an occasional stop, but rather invest in property and visit their personal paradise on a more regular basis.
The Internal Revenue Service (IRS) requires those who hold an interest in or signature authority over a foreign account with a value over $10,000 at any point during the applicable tax year file the Foreign Bank Account Report (FBAR). A failure to do so can lead to both civil and criminal penalties.
The United States has taken a hard line approach on tax compliance for assets held in foreign countries. Those who hold these assets and fail to comply with tax laws face serious penalties. Penalties that can include jail time.
American taxpayers with overseas accounts are required to report these accounts through the use of the Report of Foreign Bank and Financial Accounts form (FBAR). Failures to file this report with the Treasury’s Financial Crimes Enforcement Network (FinCEN) are not uncommon. Failures can stem from a lack of awareness of the requirement or simple confusion. The tax law responsible for this requirement is complex and some level of confusion is understandable.
To report or not to report? That question has likely crossed the minds of any investor that owns cryptocurrency. Those who ask this question should note that the Internal Revenue Service (IRS) has now trained agents on how to pursue digital currencies like Bitcoin.
The Foreign Account Tax Compliance Act (FATCA) went into effect in 2010. This law requires all foreign institutions outside of the United States to report assets and identities of account holders that are United States citizens. Failure to comply can result in serious ramifications, including steep financial penalties.
The United States government recognizes that unreported foreign assets translate to lost revenue. Various efforts are made in an attempt to recoup some of these losses. Three examples include:
A second wave of leaks about the use of offshore accounts is making its way through the media. The first was dubbed the Panama Papers; the latest, the Paradise Papers.