The tax attorneys at Nardone Law Group in Columbus, Ohio, continuously monitor the Internal Revenue Service’s efforts to incentivize taxpayers to disclose foreign financial accounts, assets or entities. IRS programs, such as the Offshore Voluntary Disclosure Program and the Streamlined Filing Compliance Procedures, allow taxpayers with undisclosed offshore accounts to come into compliance. Recent expansions to the streamlined filing procedures made them available to a broader population of U.S. taxpayers. U.S. taxpayers living outside the United States are able to take advantage of the Streamlined Foreign Offshore Procedures, while U.S. taxpayers residing within the United States may now utilize the Streamlined Domestic Offshore Procedures. Each program involves certain criteria that taxpayers must satisfy to obtain the program’s benefits. It is important that taxpayers review the relevant criteria to help decide which program is best suited for their needs, because waiting to come into compliance is no longer a viable option.
The IRS and U.S. Department of Justice have also reached agreements with an increasing number of countries, working to uncover taxpayers with undisclosed foreign financial accounts, assets or entities. Most recently, the U.S. and the Bahamas signed an intergovernmental agreement to implement the Foreign Account Tax Compliance Act. The full text of the agreement can be found here: Agreement between U.S. and the Bahamas. This agreement is part of an ongoing effort to uncover delinquent U.S. taxpayers with undisclosed foreign accounts and bring them into compliance.
U.S. and the Bahamas Reach Agreement to Implement FATCA
On November 3, 2014, the United States and the Commonwealth of the Bahamas signed an intergovernmental agreement to implement the Foreign Account Tax Compliance Act (FATCA). Enacted in 2010, FATCA targets non-compliant U.S. taxpayers with foreign accounts. FATCA focuses on reporting, either by the U.S. taxpayers themselves, or by foreign financial institutions in which U.S. taxpayers hold an account or a substantial ownership interest in an account held by a non-U.S. entity. The agreement between the U.S. and the Bahamas is designed to promote cooperation between the two countries in regards to FATCA.
Under the agreement, the Bahamas “shall obtain the information specified…with respect to all U.S. Reportable Accounts and shall annually exchange this information with the United States on an automatic basis.” The information to be obtained and exchanged, with respect to each U.S. Reportable Account includes:
i. The name, address, and U.S. Taxpayer Identification Number (TIN) of each specified U.S. taxpayer that holds an account, or of each U.S. taxpayer who owns a substantial ownership interest in a non-U.S. entity’s account;
ii. The account number (or functional equivalent in the absence of an account number);
iii. The name and identifying number of the Reporting Bahamas Financial Institution; and
iv. The account balance or value as of the end of the relevant calendar year or reporting period.
As you can see, the agreement gives the Bahamas significant authority to report U.S. taxpayers’ financial interests in Bahamas Financial Institutions. Taxpayers who fail to come into compliance can be subjected to substantial penalties, including civil and criminal fines. As the IRS and Justice Department increase their efforts to uncover undisclosed foreign financial accounts, now is the time to come into compliance and significantly reduce the risk of further negative impacts. Taxpayers with an undisclosed foreign account should consult with a tax attorney to figure out which method of offshore account disclosure is best suited for their needs and circumstances.
How Nardone Law Group Can Help
Nardone Law Group routinely represents individuals and businesses in federal and state tax issues, including the IRS Offshore Voluntary Disclosure Program and the Streamlined Filing Compliance Procedures. If you have an undisclosed foreign account, asset, or entity, contact one of our experienced tax attorneys today. There are many factors for taxpayers to consider when determining what method of offshore account disclosure will produce the optimal results. We will thoroughly review your case to determine what options and alternatives are available.