Maintaining a foreign bank or other financial account is not illegal–but failing to report that the account exists can be.

The IRS and the U.S. Department of Justice (DOJ) have placed a high priority on enforcing taxpayers’ reporting of foreign income and offshore assets. Enforcement can include criminal prosecution of taxpayers and the foreign banks, bankers and other professionals who helped those taxpayers evade their US tax or reporting obligations. Others who were not criminally prosecuted can face severe monetary penalties for their failure to report foreign income, transactions and assets.

Who is at risk?

Those who have/had a foreign bank account or any other kind of offshore financial account and failed to report it to the IRS on the Foreign Bank Account Report (FBAR) and/or did not report the earnings to the IRS are exposed to criminal and/or financial consequences. Failure to meet the reporting responsibilities may result in significant fines and/or criminal liability.

Benefits of disclosure through an IRS program include:

  • Limits on the taxes, penalties, and interest owed
  • Minimizing the risk of criminal prosecution
  • Resolution of the noncompliance issues

Why work with an attorney? Answer: Attorney-client privilege

Because of the potential severity of the consequences—criminal prosecution and fines—we encourage clients with foreign income or foreign asset nondisclosure issues to consult with, and if appropriate, retain a tax attorney. When a taxpayer consults or retains an attorney, communications between the taxpayer and attorney are covered by the attorney-client privilege.

Why work with an attorney focused on international tax?

LTL has built a unique niche helping our clients with the intricacies of international tax law and compliance. Many people do not realize that international tax law is a specialized area of tax law; there are subtle nuances that other attorneys, even experienced tax attorneys, do not routinely encounter in their normal caseloads.

A dedicated focus on international tax law means that our clients benefit from our cumulative knowledge and experience. Our attorneys have handled more than 150 voluntary disclosure cases since 2009. In many instances, working with LTL results in more complete disclosure, as our detailed analysis can reveal additional areas of noncompliance of which a client may not have been aware. In other cases, we have been able to use our experience in handling these cases to reduce taxes and penalties that were due.

Contact Lin Tax Law to schedule a consultation.