IRVINE, Calif., Nov. 16, 2019 /PRNewswire/ -- The Jerusalem Post recently reported that "Israeli and foreign banks have sent threatening letters to new immigrants, foreign residents or those who are financially involved in foreign operations," referring in the first instance to FATCA bank letters, which foreign banks may issue to American account holders to provide warnings and/or request information. This increased wave of enforcement stems, at least partially, from an agreement last year between Israel and nearly five dozen other nations (though Israel and the United States have been entered into FATCA agreements since at least 2014).
The IRS coordinates with global banking and foreign governments to discover when U.S. taxpayers have failed to report foreign investments, foreign business or investment income or bank / financial accounts. Foreign financial institutions routinely cooperate with the IRS and identify U.S. account holders, as failure to do so can trigger enormous fines under the Foreign Account Tax Compliance Act (FATCA). To avoid these fines, various foreign banks have entered agreements and treaties with the IRS – and many have already delivered mass batches of customer data to the U.S. government.
Our international tax attorneys have repeatedly cautioned taxpayers about the legal and financial perils of failing to report foreign bank accounts by filing an FBAR (FinCEN Form 114); filing Form 8938 (Statement of Specified Foreign Financial Assets); and/or satisfying other offshore reporting requirements, such as filing Form 5471 (Information Return of U.S. Persons With Respect to Certain Foreign Corporations). Thanks to technological advancements, the aggressive prioritization of FATCA enforcement, and cooperation from hundreds of foreign banks and governments, the IRS is increasingly able to locate and trace offshore funds – to the point where noncompliance is virtually guaranteed to be detected. In most cases, it is merely a matter of time before a foreign account audit or IRS criminal tax investigation will reveal tax compliance errors; yet by acting quickly and taking appropriate steps before the IRS launches an investigation or tax audit, it may be possible to limit penalties and prevent criminal tax prosecution, reentering the tax system with a degree of safety.
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Public Contact: Dave Klasing Esq. M.S.-Tax CPA, [email protected]
SOURCE Tax Law Offices of David W. Klasing, PC