By Nick Eusanio
The IRS has recently noticed a significant trend in taxpayers using Caribbean bank accounts to avoid federal tax reporting and payment obligations related to foreign income, rather than taking advantage of the IRS’ Offshore Voluntary Disclosure Program to become compliant. The tax attorneys at Nardone Law Group routinely advise Ohio taxpayers about the Internal Revenue Service’s Offshore Voluntary Disclosure Program and the importance of coming forward to report previously unreported foreign income, accounts, and assets to the IRS. Nonetheless, many taxpayers do not seek advice from a tax lawyer about the Offshore Voluntary Disclosure Program, and instead ignore their federal tax reporting and payment responsibilities or make a “quiet disclosure” of unreported income. For more information on “quiet disclosures” and the associated pitfalls, see our prior article about the IRS chasing Down Quiet Disclosures. But, ignoring the Offshore Voluntary Disclosure Program or making a quiet disclosure can expose a taxpayer to audit, increased penalties and interest, and even criminal investigation and prosecution.
The tax attorneys at Nardone Law Group want to help inform taxpayers about the IRS’ current plans to expose and pursue those taxpayers using Caribbean bank accounts to evade their federal tax reporting and payment obligations. The IRS is now using John Doe summonses to discover noncompliant Caribbean account holders and pursue them for payment of tax, penalties and interest, and possibly even criminal investigation and prosecution under U.S. tax laws. The IRS’ pursuit of Caribbean bank account holders underscores the importance of consulting an experienced tax attorney about entering the Offshore Voluntary Disclosure Program to limit exposure to significant penalties and the risk of criminal investigation and prosecution related to undisclosed foreign accounts, assets, or income.
IRS Exposing Noncompliant Caribbean Accounts Using John Doe Summonses
The IRS recently noticed that many taxpayers continue to use Caribbean bank accounts to conceal foreign income or assets and avoid U.S. taxes. As a response, the IRS is now obtaining John Doe summonses—court orders for records relating to presently unknown individuals—to force foreign banks and financial institutions to turn over information and records identifying their U.S. account holders. Specifically, a federal court in San Francisco recently granted the IRS a John Doe summons demanding information about U.S. account holders from the Canadian Imperial Bank of Commerce First Caribbean International Bank (“First Caribbean International Bank”). See In re Tax Liabilities of John Does, N.D. Cal., No. 13-CV-01938, order 4/29/13. Based on the IRS’ recent efforts to expose potential tax evasion and other noncompliance, taxpayers with foreign bank accounts—and especially those with Caribbean bank accounts— should strongly consider the Offshore Voluntary Disclosure Program.
The Offshore Voluntary Disclosure Program provides a potential life-line to taxpayers that want to come into compliance with U.S. tax laws and regulations, and limit exposure to onerous penalties and the risk of criminal prosecution. Nardone Law Group plans to continue following the IRS’ use of John Doe summonses to expose tax noncompliance, and providing relevant updates to taxpayers with foreign accounts, assets, or income. Now, more than ever, taxpayers with undisclosed foreign accounts, assets, or income should consider entering the Offshore Voluntary Disclosure Program to limit their exposure to IRS penalties and criminal prosecution.
Nardone Law Group represents businesses and individuals in federal and state tax issues, including the Offshore Voluntary Disclosure Program. If you have an undisclosed foreign account or entity, you should contact an experienced tax attorney today. Nardone Law Group’s tax lawyers and professionals have vast experience representing clients before the IRS. Our experienced tax lawyers will thoroughly review your case to determine what options and alternatives are available, including the Offshore Voluntary Disclosure Program. Contact us today for a consultation to discuss your case.