More On Tax Planningfrom The Advisor's Professional Library
- Health Insurance: Health and Medical Savings Accounts A Health Savings Account is a trust created exclusively for the purpose of paying qualified medical expenses of an account beneficiary. Although they are popular, they are not without their pitfalls and the regulations can be complicated. Learn more about how to avoid federal taxation on the accumulation and distributions of HSA.
- Long Term Care Insurance: Premiums While premiums for qualified long-term-care insurance may be deductible as medical expenses there are exceptions to this general rule. Learn how to avoid unnecessary tax liabilities.
The days of hiding assets in accounts overseas are coming to an end, says the Internal Revenue Service.
On Wednesday, the IRS announced changes to its 5-year-old campaign to force greater tax compliance from millions of Americans with undisclosed foreign accounts.
“Our aim is to get people to disclose their accounts, pay the tax they owe and get right with the government,” IRS Commissioner John Koskinen said in a statement.
The changes to the IRS’ offshore account compliance program should help the people in the U.S. and abroad who unintentionally cheated on their taxes by having offshore accounts, while also pushing those who have been trying to hide money abroad to come forward sooner.
The first change is an expansion of the streamlined filing compliance procedures, which allow U.S. taxpayers living abroad who didn’t know they were out of compliance to catch up on their U.S. filing requirements without paying steep penalties.
“To encourage these taxpayers to come forward, we’re expanding the eligibility criteria, eliminating a cap on the amount of tax owed to qualify for the program, and doing away with a questionnaire that applicants were required to complete,” Koskinen said.
The second change will allow those that don’t qualify for the streamlined procedures because their tax evasion is considered willful to participate in this program. People who want to participate in this program will have to provide more information than in the past, submit all account statements at the time they apply for the program, and in some cases pay more in penalties than they would have done had they entered this program earlier.
“[W]e want to send a message to anyone who continues to willfully and aggressively evade our tax laws by hiding money overseas that they will pay a higher price for that noncompliance,” Koskinen said.
Since the IRS started its offshore voluntary disclosure initiatives in 2009, there have been more than 45,000 voluntary disclosures and the collection of about $6.5 billion in taxes, interest and penalties. Federal prosecutors have filed more than 100 criminal indictments since the campaign began in 2009.
“We want everyone to know that we are continuing our efforts to track down people still out there who are hiding assets overseas,” Koskinen said. “More information on these accounts is coming in every day.”
Related on ThinkAdvisor: