Clock Winds Down to Come Clean on Foreign Assets
IRS Deadline Hits August 31
In a globalized economy, international banks may be at your fingertips with the click of a mouse, but the long arm of the taxman has a deadline looming for U.S. taxpayers who make money overseas.
If you have income in undisclosed offshore accounts, the IRS is giving you until August 31 to report it. That’s when the 2011 Offshore Voluntary Disclosure Initiative (OVDI) expires. The goal is to encourage American taxpayers to come clean on their foreign assets rather than try and game the system and risk the IRS finding out themselves.
Coming clean can save you from a world of trouble. While you’ll have to pay a penalty of 5 to 25 percent of the foreign accounts’ highest aggregate balance from 2003 to 2010, the penalties will be higher if the IRS finds out – and that doesn’t include possible criminal charges.
The IRS is taking hidden foreign income seriously, with new foreign asset reporting requirements and a focus on the banks and the bankers known for helping Americans stash their cash outside the U.S. The sun used to never set on the British Empire, and the IRS is looking to make their reach just as vast.
So if you’re one of thousands of American taxpayers with an unreported foreign bank account, the clock is ticking. Make sure you have a tax attorney on your side when time is up.