If you fail to include your foreign assets the statute of limitations for the IRS to audit your tax returns may be longer than your expected
Jeffrey S. Freeman, J.D., LL.M
The Department of Justice (DOJ) has done an excellent job urging and convincing over 100 Swiss banks to come forward and participate in an amnesty program. In exchange for lesser penalties the banks provide account holder information to the DOJ.
This presents a dilemma for taxpayers that did not include the contents of these foreign bank accounts in their tax returns. Are they protected under the standard three year statute of limitations? Don’t hold your breath, special rules are the IRS’s specialty.
- If you omitted more than 25% of your income on your return the statute of limitations doubles to six years.
- If you omitted more than $5,000 of foreign income the statute of limitations also doubles to six years
- If you never filed a return then there is no time limit for the IRS to audit you.
- If you committed fraud there is also no statute of limitations.
Rather than waiting for the statute of limitations to expire hoping that the IRS does not audit your taxes, it may be in your best interest to come into compliance. Additional account information from Swiss banks and complex reporting software will make it easier for the IRS to quickly connect the dots on funds that were not originally reported. You may be able to amend your existing tax returns or take advantage of voluntary disclosure programs. The timeline is tight and the tax law complexity is high. Seek expert legal counsel today if you are concerned with your undisclosed cross-border banking or your previous tax return filing with the IRS.
About Freeman Tax Law
Freeman Tax Law is equipped to handle all domestic and international tax law matters. At Freeman Tax Law, the attorneys and professional staff have vast experience with foreign tax compliance, international tax planning, and resolving tax controversies involving offshore banking matters. Freeman Tax Law helps taxpayers and foreign entities become in compliance with laws such as Foreign Account Tax Compliance Act (FATCA) and Offshore Voluntary Disclosure Program (OVDP). In addition to handling complex tax controversies, the Freeman Tax Law team has extensive expertise in assisting clients with wealth management and estate planning.
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