On February 26, 2014, the U.S. Senate's Permanent
Subcommittee on Investigations will hold a hearing on
"Offshore Tax Evasion: The Effort to Collect Unpaid Taxes on
Billions in Hidden Offshore Accounts."
This hearing is another step in an ongoing effort by U.S.
authorities to identify U.S. taxpayers who have failed to pay
income taxes on income derived from assets kept secretly in foreign
accounts, and the bankers and brokers who have aided or facilitated
those taxpayers.
As part of its efforts, the government is also — through the
Offshore Voluntary Disclosure Program (OVDP) — affording
taxpayers the opportunity to come forward, reveal the existence of
their previously secret accounts, and come into compliance without
exposure to criminal prosecution. The cost of this protection can
however be substantial, as participants in the program often are
required to consent to significant penalties.
The benefits of OVDP are not available to taxpayers whose identity,
and the existence of whose offshore assets, has already come to the
attention of the Internal Revenue Service. Given the wide net cast
by this government inquiry, and the cooperation of foreign
governments, banks and other institutions, taxpayers who have not
yet come into compliance, whether through OVDP or otherwise, should
seriously consider doing so before they otherwise become targets of
the IRS, and their options are limited.
Herrick's team of professionals have significant experience in
assessing the options available to taxpayers in a variety of
circumstances, and in dealing with a wide range of significant
government investigations. We will be monitoring Wednesday's
hearing and will provide clients with updates on the substantive
and strategic issues that arise in connection with this difficult
area.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.