Undisclosed Foreign Assets

Undisclosed foreign bank accounts and other assets have become a priority for the IRS over the recent years, and the agency has created and revised on multiple occasions a voluntary disclosure program that allows taxpayers to come out of the shadows, disclose their offshore assets, prepare and file original or amended forms, pay a penalty of varying amounts depending on one’s circumstances, and avoid criminal prosecution. There is no doubt that the program has been beneficial for those taxpayers with undisclosed accounts.

However, the process is rife with dangers and requires legal determinations, including with regard to such matters as making willfulness determinations (which has an effect on the penalty amount), what IRS forms must be filed, how to handle follow-on audits, and whether to disclose at all. A taxpayer must engage qualified legal counsel experienced in tax controversy matters to ensure that decisions are being made carefully and with a full understanding of the legal implications.