US Courts Support IRS Efforts Regarding FBAR & OVDP

by Harry Galstian

December 16, 2013

Direct Tax Relief assists more taxpayers with their Foreign Bank Account (FBAR) and Offshore Voluntary Disclosure Program (OVDP) issues as the IRS increases its offshore compliance efforts.

On November 12, 2013, the U.S. Department of Justice announced that a New York judge entered an order on November 7, 2013, authorizing the Internal Revenue Service (IRS) to issue summonses requiring foreign banks to produce information about the U.S. taxpayers who may be evading or have evaded federal taxes by having funds in undisclosed accounts at foreign banks. The decision is another indication that the IRS is increasing its efforts to bring taxpayers with offshore accounts into compliance one way or another and that the government’s actions have the backing of the courts.

The IRS is making a concerted effort to enforce the reporting of Foreign Bank and Financial Accounts (FBAR) and to root out those supposed tax evaders and bring them into compliance where they might face serious tax debt along with penalties, interest, and even criminal prosecution. Many taxpayers who have participated in the Offshore Voluntary Disclosure Program (OVDP) have prevented criminal prosecution.

One such case was noted by the Department of Justice in the case of Alexi Iazlovsky of Potomac, Maryland (Case Number: Case 2:13-cr-00344-GHK). The Justice Department and Internal Revenue Service, Criminal Investigation announced that Iazlovsky pleaded guilty July 1, 2013, in the U.S. District Court for the Central District of California to file a false tax return for the tax year 2008.

“The IRS takes foreign banking and offshore compliance very seriously,” stated Maurice Rosaler, an enrolled agent with Direct Tax Relief with over 26 years of tax resolution experience, including almost two decades with the IRS that included an assignment in the IRS International/Offshore Compliance Division.

“It is much better,” continued Rosaler, “to volunteer the information to the government than to hide and wait until the IRS finds you out, and trust me, the IRS has the tools to do so. But this is complicated stuff, and if one decides to disclose, then they should get the help of a tax professional with experience in this field as we do here at DTR.”

As recently as October of this year, the IRS revised their manual giving their agents new guidance and clarification concerning the review of FBAR penalties and appeals (Internal Revenue Manual Part 8, Chapter 11, Section 6).

As penalties for FBAR violations can be quite severe, sometimes actually exceeding the funds held in the foreign bank accounts, it’s again important to get professional assistance with a specialist who keeps up with the changes in IRS policy and procedures.

“The bottom line,” concluded Rosaler, Direct Tax Relief’s senior enrolled agent, “is that the Internal Revenue Service is getting even more aggressive and that what was once considered the secret to the government is no longer so. With the court approving summonses on foreign banks and the expectation those banks will comply, the days of hidden ‘Swiss bank accounts is over.

Better to be proactive and have a tax professional contact the IRS on your behalf than to have the IRS knocking at your door. If the IRS has already contacted you, then retain expert help as quickly as you can.”

Direct Tax Relief has extensive experience in the foreign tax field and has represented numerous clients since 2007. We have provided professional tax advice on foreign bank accounts and offshore compliance and how to avoid criminal prosecution, appeal penalties, and establish minimal payment plans to the government.

Do you have an offshore or a foreign bank account and owe back taxes? You have options. Contact us and inquire about the IRS Streamline Filing Compliance Procedure. As a tax debt relief company, Direct Tax Relief offers a free tax consultation to individuals or companies that owe more than $10,000 in state or federal taxes.

UPDATE FOR HISTORICAL PURPOSES:

The IRS closed the Offshore Voluntary Disclosure Program in early 2018. Since the program started, over 56,000 taxpayers have utilized the program to voluntarily comply and pay over $11 billion back taxes, interest, and penalties.

Sources:

  • Offshore Voluntary Disclosure Program: https://www.irs.gov/newsroom/irs-to-end-offshore-voluntary-disclosure-program-taxpayers-with-undisclosed-foreign-assets-urged-to-come-forward-now
  • Streamlined Filing Compliance https://www.irs.gov/individuals/international-taxpayers/streamlined-filing-compliance-procedures
  • https://www.justice.gov/opa/pr/maryland-businessman-pleads-guilty-concealing-foreign-bank-account-israel-based-bank-his-tax
  • https://www.justice.gov/sites/default/files/tax/legacy/2013/07/02/Iazlovsky_Information.pdf