Some California readers of our estate planning and litigation blog (with occasional entries addressing offshore-related accounts and taxpayer/IRS interactions) might reasonably conjure up the oft-referenced image of an ostrich with its head buried in the sand when perusing a recent Forbes tax-focused article.
That article — which is obviously timely and closely relevant for select filers, given the rapid approach of the filing season for 2016 taxes — focuses upon American taxpayers holding some portion of their wealth in foreign banks or other institutions offshore.
Most of those filers know, and have long known, that the IRS is quite serious and aggressive in its approach to such accounts.
To wit: The agency demands that filers report worldwide income in their tax forms and couple that with a separate report that fully discloses all relevant data germane to foreign holdings.
Many filers have duly complied for years. Others — many of them in good faith being a bit confused by agency exactions — have stumbled a bit, yet ultimately managed — often with the help of proven tax counsel — to get things straight with the IRS.
And some, well, there’s that ostrich. They have just turned away from all the hype, buzz and frightening rhetoric, finding it overwhelming to deal with.
The above-cited Forbes piece strongly counsels against that “strategy,” noting that “it is becoming harder to claim ignorance.”
As Forbes notes, there are now multiple options for a filer with foreign holdings to consider when disclosing offshore assets. One is compliance through the Offshore Voluntary Disclosure Program (in place for some time), with so-called “Streamlined” programs being introduced in 2014.
The requirements differ between the programs, as do the potential downsides related to inaccurate reporting or instances where the IRS perceives willful noncompliance by an individual.
For many filers, tax season is always stressful and fraught with complexity. For Americans with offshore accounts, the angst is often magnified.
Persons with questions or concerns regarding offshore holdings and IRS reporting requirements might reasonably want to contact an experienced tax attorney without delay for candid counsel and, when necessary, proven legal representation.