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Hiding Income Offshore?

To disclose or not to disclose, that is the question.

Hiding Income Offshore is not the way to go.

Mike Habib, EA

For years, offshore accounts have been a hot topic in popular culture and for the IRS; most recently Liechtenstein has been mentioned, however the IRS is interested in accounts anywhere in the world that generate income for US taxpayers. The IRS is particularly interested in locating those people trying to hide income in offshore accounts as well as the promoters of off-shore tax avoidance schemes.

Individuals continue to try to avoid paying US taxes by illegally hiding income in offshore bank and brokerage accounts or using offshore debit cards, credit cards, wire transfers, foreign trusts, employee leasing schemes, private annuities or life insurance plans.

US taxpayers are required to report all foreign financial accounts if their total value exceeds $10,000 at any point during a given year. Failure to report the accounts can result in a penalty of up to 50 percent of the amount in the accounts. Yikes!

Hiding or not reporting income from foreign sources may be a crime. And the IRS, along with its international partners is pursuing those who hide income or assets offshore to evade taxes. There are specially trained IRS examiners whose focus is to examine aggressive international tax planning, including the use of entities and structures established in foreign jurisdictions. The goal is simply to ensure that U.S. citizens and residents are accurately reporting their income and paying the correct tax.

In addition to reporting your worldwide income, you must also report whether you have any foreign bank or investment accounts. The Bank Secrecy Act requires that you file a Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), if:

· You have financial interest in, signature authority, or other authority over one or more accounts in a foreign country, and

· The aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year.

There are serious consequences for unreported income or undisclosed foreign financial accounts if the IRS uncovers them. These can ranges from additional taxes, to substantial penalties, interest, fines and possibly imprisonment.

Just in the past month a federal judge agreed to allow the IRS to serve legal papers on Swiss banking giant UBS AG in an expanding investigation of U.S. taxpayers who may have used overseas accounts to hide assets and avoid taxes. The summons is one that allows the IRS to investigate a full range of people as it is not limited to one particular individual. The investigation was started after a former UBS private banker pleaded guilty to defrauding the IRS, and claims that UBS has about $20 billion in assets in undeclared accounts for U.S. taxpayers.

UBS is cooperating with Swiss and U.S. investigations and will disclose records involving U.S. clients who might have broken tax laws.

The Treasury Department and the Internal Revenue Service recently announced their initiative to encourage the voluntary disclosure of unreported income hidden by taxpayers in offshore accounts. Under this new plan, eligible taxpayers have to pay back taxes, interest and accuracy and delinquency penalties, but will not face fraud and information return penalties. To obtain the benefits of the initiative, taxpayers will be required to disclose information about who promoted or solicited their participation in the offshore financial arrangement.

Do you have an offshore tax problem? Did you receive an opportunity letter? Contact us today to represent you before the IRS.

Client Reviews
Mike has given us peace of mind! He helped negotiate down a large balance and get us on a payment plan that we can afford with no worries! The stress of dealing with the IRS is huge and Mike helped us through it all. The peace of mind is invaluable, thank you Mike!April S.
Mike Habib - Thank you for being so professional and honest and taking care of my brothers IRS situation. We are so relieved it is over and the offer in compromise process went just as you said. Mike is very professional and will give you honest answers to the OIC process and you can really trust him. You won't be sorry you chose him!Joe and Deborah V.
Mike is a true professional. He really came thru for me and my business. Dealing with the IRS is very scary. I'm a small business person who works hard and Mike helped me see that they are not that scary after all. He was always there with the answers I needed and was very good about calling me back which I appreciated since your first reaction is to freak out and ask a million questions. He solved a messy case and worked very hard to resolve it. His rates are VERY reasonable for the amount of work he does! I give him my highest recommendation!Marcie R.
Mike was incredibly responsive to my IRS issues. Once I decided to go with him (after interviewing numerous other tax professionals), he got on the phone with the IRS immediately (as in the same day I signed with him) to squash an impending issue. And he worked directly with them to quickly come to a resolution I am very happy with. I'd highly recommend reaching out to Mike to see if he can help you with any IRS issues. I'm very satisfied!Marshall W.
I’ve seen and heard plenty of commercials on TV and radio for businesses offering tax help. I did my research on many of them only to discover numerous complaints and unresolved tax issues. I found Mike Habib through my own online search and contacted him. He was very professional with great communication, always answering my questions and concerns. Mike resolved my complicated tax problem just as he said he would. I would definitely recommend his services to family and friends.Nancy & Sal V.
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