Offshore Accounts
The IRS published in an Internal Revenue Bulletin that the Offshore Voluntary Disclosure Program (OVDP) will remain open indefinitely at least for the time being. The IRS opened the OVDP in 2009 and subsequently shuttered the program. It reopened the program in 2012 and has operated it continually since.
United States taxpayers are required to report income from any source in the world and disclose their offshore accounts on Schedule B. The IRS has constructed over 1000 audits of foreign accounts and have made a high number of discoveries doing so. The IRS noted that there are many US citizens evading taxes by hiding money in offshore accounts. The Department of Justice has aggressively prosecuted and are prosecuting these cases. The IRS notes the voluntary compliance is working insofar as 45,000 taxpayers have reported disclosures and paid $6.5 billion in taxes.
Editor’s Comment
Record keeping is a very important part of business. Here, it seems as though the couple tried calling the IRS’s bluff only to find out that the IRS was not bluffing. If you are under audit, the IRS will not allow a deduction where in fact, the deductions may have been completely legitimate. If the IRS demands records, the worst thing you can do is to not produce any.
By: Basi & Basi at the Center for Financial, Legal and Tax Planning for Transworld M&A Advisors