Why is the IRS cracking down on the international evasion of taxes at this point in time? How can the foreign banks involved be forced to turn over information about people, adversely affecting even those who have already been accepted into the Offshore Voluntary Disclosure Initiative/Program?
Why the crackdown?
Many governments around the world are in dire straits financially. That's pretty much the news every day, governments defaulting here and there, with others bailing them out. So the governments are in sympathy for each other's woes in this regard, and have been forming bilateral agreements with each other. They agree to support each other’s efforts at tax collection. One such agreement is FATCA, and this leads us to the "how can they get away with this?" part.
FATCA
It stands for the Foreign Account Tax Compliance Act, and the US Treasury department is actively negotiating bilateral agreements with countries around the world. If these governments sign up, they agree to allow the USA (IRS) to require their banks to report U.S. account holder information, and to punish them (the banks) soundly if they do not comply. Why would countries agree to this? Because they need to be able to continue to do business with the United States.
The IRS won big in Switzerland. Is Israel next?
Nowadays, it seems to be a couple of Israeli banks that are on the hot plate. Not surprisingly, they're a bit hot under the collar about it. The problem is that some of the people who had done business with those Israeli banks had already begun the process of the Voluntary Disclosure. They have been accepted into the FBAR amnesty program, when this past March, there was a sudden notice given to the attorneys of those people that the amnesty deal was off.
So what do the tax attorneys of these disqualified FBAR amnesty seekers think about it? They've been calling the move scary and extraordinary. They have confirmed that many of their clients have been affected by the sudden reversal. The good news is that it may still be challenged, possibly reversed. If you need assistance, contact us to set up a free, confidential consultation. We can advise you on how to proceed in such unusual circumstances.
