On April 16, 2019, the Large Business and International (LB&I) Division of the Internal Revenue…
The IRS Large Business and International division (LB&I) has announced a new Offshore Private Banking enforcement campaign
The new Offshore Private Banking enforcement campaign was recently identified through LB&I data analysis and suggestions from IRS employees. IRS employees likely saw that many taxpayers were not properly reporting offshore bank accounts, as a result, they suggested the campaign. The IRS Offshore Private Banking enforcement campaign goal is to improve return selection, identify issues representing a risk of non-compliance, and make the greatest use of IRS limited resources.
U.S. persons are subject to tax on worldwide income from all sources including income generated outside of the United States. It is not illegal or improper for U.S. taxpayers to own offshore structures, accounts, or assets. However, taxpayers must comply with income tax and information reporting requirements associated with these foreign activities, otherwise, they are subject to penalties and possible criminal prosecution.
Via FATCA and subpoenaed bank records, the IRS is in possession of records that identify taxpayers with transactions or accounts at offshore private banks. This campaign addresses tax noncompliance and the information reporting associated with these offshore accounts. The IRS will initially address tax noncompliance through audit examination and soft letter treatment streams. Soft letters are IRS correspondence to targeted taxpayers identifying tax noncompliance and passively seeking compliance. Failure to respond to such letters may result in audit or penalties and possible criminal prosecution.
In the meantime, Patel Law Offices has consulted with hundreds of clients regarding their offshore asset and income compliance issues. 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 assets.