Remedying with Offshore Account Disclosure Violations: What U.S. Taxpayers in New York Need to Know

If you weren’t aware that you are required to report your offshore accounts to the federal government, you aren’t alone. Many people are unfamiliar with the offshore account disclosure requirements that apply to U.S. taxpayers under federal law. But, when it comes to federal compliance, ignorance isn’t a defense—so, now that you know you need to take action, you will want to take action as soon as possible.

How To Resolve Unintentional Offshore Account Disclosure Violations

In most cases, U.S. taxpayers who need to resolve unintentional offshore account disclosure violations have two primary options available—they can either: (i) submit a delinquent offshore disclosure filing; or, (ii) submit a filing under the IRS’s streamlined filing compliance procedures.

• Submitting a Delinquent Offshore Disclosure Filing – Submitting a delinquent filing is an option for both IRS Form 8938 and the Report of Foreign Bank and Financial Accounts (FBAR). But, in some cases, submitting a delinquent filing can be risky, and it will be more advantageous to submit a streamlined filing instead.
• Submitting a Streamlined Filing – The IRS’s streamlined filing compliance procedures provide a way for U.S. taxpayers to resolve offshore account disclosure violations without the risk of facing an audit or investigation. But, strict eligibility criteria apply, and it is critical to make sure you are eligible before you file.

What About the IRS’s Voluntary Disclosure Practice?

If you have been researching this topic online, you may have come across references to the IRS’s Voluntary Disclosure Practice. This option is available specifically to U.S. taxpayers who have committed willful violations—and who are therefore at risk of facing criminal charges. If your failure to file was truly inadvertent, then submitting a voluntary disclosure isn’t the right option for you.

What About Making a “Quiet Disclosure”?

If you have been researching this topic online you may have also come across references to so-called “quiet disclosures.” A quiet disclosure involves reporting past years’ offshore holdings on a present-year tax return. Quiet disclosures are insufficient to establish compliance, and they can actually increase your risk of facing scrutiny from the IRS.

What if the IRS Already Knows About My Delinquent Filing?

The two options we discussed above—submitting a delinquent return or submitting a streamlined filing—are options as long as you are not currently facing scrutiny from the IRS. If the IRS already knows about your delinquent filing, then you will need to respond to the IRS’s audit or investigation directly. This can be an extremely high-risk scenario, so it is imperative that you have an experienced New York international tax attorney on your side.

Discuss Your Options with a New York International Tax Attorney at Thorn Law Group

If you need to know more about remedying offshore account disclosure violations, we encourage you to contact us promptly to arrange a confidential consultation at Thorn Law Group. To schedule an appointment as soon as possible, call us at (914) 534-6004 or contact us confidentially online now.