Skip to content
Tax Law Center Blog

Tax Law Center Blog

  • Tax & Foreign Assets
    • Tax Law Services
    • Foreign Asset Planning
  • About
  • Contact Us
Close Button

New Law’s Reporting Requirements Make It Very Likely That the IRS Will Now Know About Your Foreign Account

2 April, 2011

Under the recently enacted Foreign Account Tax Compliance Act (“FATCA”), foreign financial institutions (“Financial institutions” is broadly defined to include banks, mutual funds, funds of funds, exchange-traded funds, hedge funds, private equity and venture capital funds, etc.) must disclose their customers to the IRS.  Institutions that do not agree to comply with the reporting requirements of FATCA will subject all of their customers (even non-U.S. customers) to 30% mandatory withholding on all transfers of funds from the U.S. to the foreign institution.

Given the severity of these provisions, it is expected that most foreign institutions will ultimately comply with these account disclosure requirements.  Note also that FATCA imposes additional disclosure requirements (via a new Form 8938) on U.S. individuals with foreign assets (e.g., foreign accounts, foreign-issued stocks or securities or any interest in a foreign entity).

Thus, you should assume that the IRS will eventually be informed of your foreign account, and criminal prosecution for non-disclosure and non-reporting will likely follow.  Successful criminal prosecution will result in a fine of 50% of the highest value of the account or entity, plus an additional $250,000 fine, plus a possible prison sentence.

You should your attorney as soon as possible if you have undisclosed foreign accounts or entities, so that you can enter the 2011 Offshore Voluntary Disclosure Initiative (2011 OVDI) program and avoid criminal prosecution.

Patel Law Offices is a law firm dedicated to helping clients resolve complicated tax, criminal tax, and international tax problems.

Related Posts

  • Foreign Account Penalties Are Unfair

    Our office is advising dozens of clients (including many HSBC customers) regarding offshore accounts, all…

  • Navigating Foreign Waters: The Complex Requirements of Foreign Accounts Compliance

    Tomorrow night our firm will be presenting a three hour seminar to tax professionals on…

  • How Will the IRS Find Out By Your Foreign Account? Let’s Count the Dozens of Ways

    1.      FATCA (Foreign Account Tax Compliance Act of 2009) requires disclosure of your account information.…

Tags: amnestyAsset Protection foreign account offshore offshore accounts tax crime voluntary disclosure
Category: Planning for Tax Minimization

Post navigation

Previous: Charitable Remainder Trust: Frequently Asked Questions
Next: New Jersey Division of Taxation Now Issuing Letter Rulings

Related Posts

News from the 2014 Criminal Fraud and Tax Controversy Conference

We just returned last week from attending the Criminal Fraud…

Read More

The “Quiet” or “Silent” Disclosure

Our office consults with many clients in determining whether they…

Read More

IRS Listens, and Postpones Increased Form 1099 Reporting for PayPal and Venmo

As a result of taxpayer confusion, lack of guidance, concerns…

Read More

Recent Posts

  • Still Waiting for Your Employee Retention Tax Credit?: ERC Refund LawsuitsMay 9, 2025
  • Parag Patel Esq. Speaks at Annual Convention of New Jersey Society of Certified Public AccountantsMarch 28, 2025
  • Parag Patel Esq. speaker at the National Association of Enrolled Agents (NAEA) Seminar “2025 Mid-Year Update”March 25, 2025
  • Navigating the Puzzle: Understanding Form 8938 Audit TriggersMarch 21, 2025
  • Navigating Inheritance: The Step-Up in Basis and Recognizing Implied Life Estates After DeathMarch 18, 2025

Pages

  • About Patel Law Offices
  • Delinquent FinCen Form 114 (FBAR) Filings
  • Delinquent or unfiled IRS Form 5471
  • Request A Free Educational Consultation

Law Firm Attorney WordPress Theme By Themespride