Our office consults with many clients in determining whether they need to enter into the…
Quiet or Silent Disclosure Commentary from the Government Accountability Office
The recent report from a government watchdog agency called the Government Accountability Office (GAO) shows how well the IRS attack on offshore tax evasion is coming. The GAO makes recommendations to the IRS, and the IRS pays attention. Those recommendations could put some taxpayers in trouble. Particularly concerning is the Quiet Disclosure commentary. Below is an excerpt from the report.
Despite the significant risks of not coming forward through one of IRS’s
offshore programs, some taxpayers decide to do nothing and remain
noncompliant. Other taxpayers have attempted to disclose their offshore
accounts without paying all the delinquent taxes, interest, and penalties
required by the programs. In a quiet disclosure, taxpayers file amended
tax returns for all or some of the tax years covered by an offshore
program, and report the income from the previously unreported accounts.
The taxpayers would generally pay interest and either accuracy-related or
delinquency penalties on the newly reported income, but would avoid the
higher offshore penalty.
At the same time, taxpayers attempting quiet
disclosures would file late FBARs, if they had not previously filed FBARs,
or amended FBARs, if they had, to disclose the offshore accounts that
they had not previously reported. Taxpayers might also try to circumvent
some of the taxes, interest, and penalties that would otherwise be owed
in offshore programs by reporting the existence of any offshore accounts
and any income from the accounts on their current year’s tax return,
without amending prior years’ returns. These taxpayers would also likely
disclose the existence of the accounts by filing FBARs for the current
calendar year. This filing would appear similar to the opening of a new
account. Such a taxpayer would avoid paying any delinquent taxes,
interest, or penalties, unless audited. As described earlier, taxpayers who
are caught disclosing offshore accounts outside of one of IRS’s offshore
programs risk steeper penalties and criminal prosecution, based on the
facts and circumstances of their cases.
Patel Law Offices has consulted with hundreds of clients regarding their offshore compliance issues, including Quiet Disclosures. Patel Law Offices is a law firm dedicated to helping clients resolve complicated tax, criminal tax, and international tax problems. Our firm assists (and defends) clients and their advisors to legally disclose (and legitimize) foreign accounts.