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IRS: Declare Your Offshore Income

Do you own an interest in one or more offshore accounts? If so, you’re approaching an important deadline the end of June.

Besides declaring your ownership on your tax return (and ensuring your CPA knows), if the funds in the account equal $10,000 or more any time during the year, you must also share that balance information with your government each year. 

June 30 is the deadline for filing your FBAR – Report of Foreign Bank and Financial Accounts. No extensions exist for this one—and good luck if you hope Uncle Sam buys your excuse for not filing.

In a recent civil case, a Florida taxpayer was judged to have willfully failed to file an FBAR for three years, 2004 through 2006. The Treasury assessed penalties of 50% of the maximum amount in his offshore account for each of the three years—a total of almost $2.25 million! 

(This fine may not stick as the district court will set the final amount after further proceedings. But even if the final judgment is different, it’s not likely to be pocket change.)

In 2009 the taxpayer filed delinquent FBAR forms and amended returns declaring his financial interest in the account. His fault was in not declaring his offshore account ownership on the original returns, so his tax evasion was “willful.”

More than 75,000 foreign banks now agree to share tax information with the IRS. Clearly our government is serious about its crackdown, and hiding money offshore will become increasingly more difficult. As you see, the penalties for evading taxes are significant.

The knowledgeable team at Patrick & Robinson CPAs always encourages clients to pay the tax due, while continuously seeking ways to minimize clients’ tax burdens legally.

It’s not too early to think about tax planning for 2014, and the summer – while we’re less busy – is a perfect time to come in.  Contact us if we can help you: Office@CPAsite.com or 904-396-5400.

 

 

June 2014

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