Please read this first – https://www.mooresrowland.tax/2019/04/new-form-14457-voluntary-disclosure.html
On April 16th, the IRS identified 3 additional compliance campaigns. One of them is the – Offshore Private Banking Campaign
Practice Area: Withholding & International Individual Compliance
Lead Executive: John Cardone, director of Withholding & International Individual Compliance
U.S. persons are subject to tax on worldwide income from all sources including income generated outside of the United States. It is not illegal or improper for U.S. taxpayers to own offshore structures, accounts, or assets. However, taxpayers must comply with income tax and information reporting requirements associated with these offshore activities.
The IRS is in possession of records that identify taxpayers with transactions or accounts at offshore private banks. This campaign addresses tax noncompliance and the information reporting associated with these offshore accounts. The IRS will initially address tax noncompliance through the examination and soft letter treatment streams. Additional treatment streams may be developed based on feedback received throughout the campaign.
Through IRS programs, including the former IRS Offshore Voluntary Disclosure Program (OVDP), and the Foreign Account Tax Compliance Act (FATCA), the IRS has collected over a billion records concerning US persons with foreign bank accounts and assets.
In recent years, the IRS and the Department of Justice have used voluntary compliance and litigation against taxpayers who fail to file the necessary forms reporting foreign assets and transactions.
Further, earlier this month, the Government Accountability Office (GAO) released a report titled “FOREIGN ASSET REPORTING, Actions Needed to Enhance Compliance Efforts, Eliminate Overlapping Requirements, and Mitigate Burdens on U.S. Persons Abroad.”
The GAO report is critical of the IRS’s progress in pursuing a comprehensive plan to leverage FATCA data to improve taxpayer compliance. Although the former OVDP program has concluded, there exists an expanded four-part compliance initiative―including a revised disclosure policy―for offshore and domestic disclosures.
This campaign, combined with the sheer volume of records collected, suggests the IRS has renewed its commitment to leverage FATCA through the use of data analytics, and that the IRS will prioritize its scrutiny of US persons with foreign bank accounts and assets.