Over the past several, years, the U.S. government has signed intergovernmental agreements (IGAs) with dozens of partner countries (83 altogether at latest count), which are designed to promote the implementation of the FATCA law requiring financial institutions (mainly banks and investment houses) outside the U.S. to report information on financial accounts held by their U.S. customers to the IRS.
Most U.S. taxpayers who enter the IRS Offshore Voluntary Disclosure Program must pay an offshore penalty equal to 27.5 percent of the highest year’s aggregate balance of their offshore accounts during an eight-year look-back period. On August 4, 2014, the IRS increased this penalty from 27.5% to 50% if the following conditions exist:
(1) At the time the taxpayer initiated their disclosure, one or more of the following applies:
a. A foreign financial institution at which the taxpayer had an account had been publicly identified as being under investigation, the recipient of a John Doe Summons or is cooperating with a government investigation, including the execution of a deferred prosecution agreement or non-prosecution agreement; or Read More