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July 05, 2016

Update Regarding Offshore Accounts and IRS Enforcement Action

Nardone Limited's experienced tax attorneys, located in Columbus, Ohio, routinely advise taxpayers about U.S. tax reporting obligations regarding foreign financial accounts and the importance of reporting previously undisclosed foreign accounts. The Internal Revenue Service (IRS) offers various programs that allow taxpayers to disclose offshore accounts and resolve any tax and penalty obligations. The Offshore Voluntary Disclosure Program (OVDP) and the Streamlined Filing Compliance Procedure Program (SFCP) offer taxpayers who have undisclosed foreign accounts a way to become compliant with U.S. tax laws. Due to ongoing IRS enforcement efforts in the offshore area, it is important for taxpayers with undisclosed foreign assets or accounts to consider voluntary disclosure to minimize their penalty amount, and reduce their chances of criminal prosecution.

You would think that most taxpayers are now aware of the IRS reporting requirements for offshore accounts. But, there are likely many taxpayers that simply do not know about, and others that continue to simply disregard, the statutory and regulatory requirements for reporting offshore accounts. The European Union, however, is making it harder for taxpayers that choose to conceal their assets and income from IRS reporting requirements, and the EU’s recent position will likely expose other taxpayers that simply do not know the rules.

Background on Offshore Accounts

The OVDP and the SFCP are available to U.S. taxpayers who have undisclosed foreign accounts and assets and wish to become compliant with federal tax laws. But, certain events make these programs unavailable to particular delinquent taxpayers. As an example, if the IRS has initiated a civil or criminal examination for any year, regardless of whether it relates to undisclosed foreign financial assets, the taxpayer will not be eligible to participate in the OVDP or any of the streamlined procedures. Further, once the IRS has served a “John Doe” summons, made a treaty request, or has taken similar action and has obtained information that provides evidence of a specific taxpayer’s noncompliance with the tax laws or reporting requirements, that particular taxpayer may become ineligible for one of the voluntary disclosure programs. For this reason, taxpayers should be concerned about and monitoring the European Union’s activity in the offshore area.


The UK’s recent exit from the EU has given other countries the ability and clout to push for more transparent requirements regarding tax disclosure obligations in Brussels. As reported by certain news outlets, the EU is reviewing its role regarding investments and looking at toughening its reporting and disclosure requirements of certain investors. As an example, the EU is looking at requiring “trusts” to disclose their actual owners as part of the investments that the "trust" may have within the EU. These additional disclosure requirements, if ultimately implemented, would make it more difficult for taxpayers from other countries to conceal their assets and income. We will have to wait for more detail regarding potential actions of the EU regarding the "trusts" and disclosure requirements. The potential move by Brussels and the EU, in general, should be closely watched.

Vince Nardone Comment: We understand and know that there are many taxpayers that remain committed to not disclosing their assets and income to the U.S. authorities, including the IRS. Although we understand it, we certainly believe it is in the taxpayer's best interest to disclose and minimize the negative economic impact of IRS enforcement.

Contact Nardone Limited

Nardone Limited represents businesses and individuals with federal and state tax issues, including identifying U.S. tax reporting and payment obligations related to foreign financial accounts and utilizing the Offshore Voluntary Disclosure Program or Streamlined Filing Compliance Program to come into compliance related to previously undisclosed foreign accounts. If you have unreported foreign income, or an undisclosed foreign account, asset or entity, you should contact an experienced tax attorney today. Nardone Limited’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. Contact us today for a consultation to discuss your case.

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« Vince Nardone Talks IRS Enforcement with Ohio Society of CPAs | Main | Vince Nardone Named to 2017 Ohio Super Lawyers List »

July 05, 2016