Perhaps you moved to Barbados for the surf and sun when you were 23 years old. Struggling to make ends meet, you set up a modest tourism company on the island. Over the last 30 years, it’s grown into a multi-million-dollar business.
The thing is, all your business accounts are Barbadian. You haven’t reported a dime to the IRS in all this time.
It was an honest mistake. When you started the company, you didn’t think it was necessary to report foreign income. However, now that you’ve heard about “global high wealth audits” and IRS unreported income recapture programs, you’re wondering what to do.
Get a global tax lawyer
A tax attorney who works with high net worth clients overseas will be able to help you assess your potential tax liabilities. A lawyer will also help you come clean to the IRS in the right way. He or she will reduce the chance of criminal consequences, and reduce your final tax burden.
What the IRS says about foreign bank accounts
U.S. expats live all over the world. Having a foreign bank account – even a bank account with millions of dollars of unreported income – is not a unique situation. Most people in this situation can’t determine what their tax liability will be. They’re also afraid of criminal consequences. For this reason, many foreign bank accounts remain unreported, as their owners – wanting to come clean – either don’t know how to come forward or are too afraid to do so.
The IRS recognizes that many taxpayers are reluctant to come forward due to lack of clarity about penalties and tax liabilities. In response, the IRS has centralized its processing of voluntary disclosures of offshore accounts. It has also created a uniform penalty structure for those who voluntarily come forward. Taxpayers who are accepted into the IRS voluntary disclosure program benefit from consistent and predictable tax liabilities and sanctions in this regard.
The benefits of voluntary foreign account disclosure
If you have a bank account in Barbados, with millions of dollars of unreported income inside it, the benefits of disclosing this account to the IRS are clear. Successful participation in the voluntary disclosure program allows expat taxpayers to:
- Become compliant with United States tax laws.
- Avoid large civil penalties.
- Eliminate the risk of criminal consequences.
- Accurately calculate how much it will cost to resolve on overseas matter.
- Rest comfortably, and not worry about a surprise audit by the IRS.
The benefits are clear. If you have an offshore bank account with substantial assets, it may be time to speak with an offshore tax lawyer about strategies for disclosing unreported foreign income to the IRS.