Required Reporting of Offshore Assets

US individual and business taxpayers with interests in certain foreign or offshore financial assets or accounts are required to disclose those assets on their federal income tax returns or file additional forms. A failure to file the necessary forms or a failure to disclose reportable assets can lead to both criminal and substantial monetary penalties.

The IRS has established various programs for remedying certain non-compliance issues and limiting liability for taxpayers that either fail to file or make proper disclosure. The programs typically involve voluntary disclosure of the reportable assets or the filing of amended returns. These voluntary programs must normally be undertaken prior to any IRS investigation of the matter. The correct remedy and actual eligibility for the various programs depends on the circumstances surrounding the failure to disclose the reportable assets or the failure to file the necessary forms.

In 2014, the IRS announced modifications of certain programs, but expanded others to accommodate additional taxpayers. For more information, see http://www.irs.gov/uac/Newsroom/IRS-Makes-Changes-to-Offshore-Programs;-Revisions-Ease-Burden-and-Help-More-Taxpayers-Come-into-Compliance. IRS, IRS Makes Changes to Offshore Programs; Revisions Ease Burden and Help More Taxpayers Come into Compliance; IR-2014-73, June 18, 2014.

If you have foreign or offshore assets, it is best to contact an attorney to determine whether those assets are reportable, and if you have failed to report those assets, it is important to determine what steps should be taken to limit the risks associated with the previous failure to report foreign or offshore assets.

© 2015 Houghton Vandenack Williams

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