Offshore Tax Enforcement Update: IRS Unveils Major Changes To Voluntary Disclosure Program

Tax

Since the 1970s, U.S. taxpayers with foreign banks accounts have been required to annually report their foreign bank account information to the Department of Treasury on a Report of Foreign Bank and Financial Accounts ("FBAR") by June 30th of each year. In addition to requiring the filing of an FBAR, the United States, unlike many other jurisdictions in the world, taxes worldwide income, meaning that a U.S. taxpayer's income is subject to tax, regardless of where it is earned. The failure to file an FBAR or to report foreign income can subject a taxpayer to significant civil, and sometimes criminal, penalties.

On June 18, 2014, in an attempt to allow more taxpayers with offshore bank accounts to "get right with the government," the Internal Revenue Service announced major changes to its offshore voluntary compliance programs.