Is banking secrecy a thing of the past?
Pay phones, videotape, paper maps, CDs, typewriters – the list of technologies and once-useful objects rendered obsolete seems to grow every day. Many observers of banking argue that that industry’s long-vaunted secrecy is also about to be relegated to the past.
As Orlando foreign bank account holders know, the U.S. Justice Department and Internal Revenue Service have been busy over the past several years, forcing foreign bankers to hand over information about American accounts. For some account holders, it raises the possibility that they will be charged with tax evasion or filing false tax returns.
As Forbes and others point out, a tax evasion conviction can result in up to five years in prison and up to a $250,000 fine. A false return conviction can mean up to three years behind bars and up to a $250,000 fine.
Failing to file a report of Foreign Bank and Financial Accounts (FBAR) with the IRS can be punished even more severely with a criminal conviction: up to a decade in prison and a fine of up to $500,000. A civil violation can mean a penalty of either $100,000 or half of the account for each year you did not file a FBAR – whichever is greater.
For some people with offshore holdings, it can make sense to take advantage of the Offshore Voluntary Disclosure Program and its 27.5 percent penalty. In the program, you pay owed taxes and penalties, but do not face criminal prosecution.
There are many who believe the federal government won’t actually prosecute those who fail to file FBAR reports. But the risk of being wrong might be more than many are willing to bear.
An experienced tax attorney helps clients understand the laws and weigh the options so that they can make informed decisions.