What Are The Penalties Of Not Disclosing Offshore Accounts?

If you have undisclosed offshore accounts or assets, and choose not to participate in the Offshore Voluntary Disclosure Program (OVDP), you could be facing serious penalties, both civil and criminal, if the IRS chooses to examine your accounts. If you are worried about an IRS audit and want to learn more about the OVDP in a strictly confidential, professional environment, then call our local, Washington, DC tax lawyers. We will help you understand your rights, the international tax law, and the risk associated with opting in or out of the OVDP.

While each case may be different, the federal government uses the following guidelines when dealing with those who have illegal foreign accounts and did not opt into OVDP.

Civil Penalties


The civil (monetary) penalties vary depending on which form you failed to file, claiming foreign assets. There are a dozen forms and varying penalties, so we will only list the most severe punishments here. For a more comprehensive look at the penalties associated with failing to comply with federal tax law, call our Maryland attorneys today.

Failure To File a Foreign Bank Account Report (FBAR)

Every American resident is required by federal tax law to report offshore accounts every year. This includes both direct and indirect interest in a foreign account as well as ownership of an offshore assets. If your unreported foreign accounts or assets exceeded $10,000 at any one time during the fiscal year, you may be subject to a monetary penalty of $100,000 or half of your total foreign financial account balance, whichever is greater. This penalty applies per undisclosed foreign account.

Failure To File Form 926

This form discloses any transfer of property from the U.S. to any foreign corporation. A failure to file this form results in a penalty that is 10 percent of each property. If the transfer and failure to disclose it was intentional, there is no maximum charge.

Failure To File Tax Return

Failing to file a tax return is classified as tax fraud, and the taxpayer is subject to a penalty of 75 percent of the unpaid tax.

Criminal Penalties


Criminal charges relating to tax fraud or tax evasion will result in prison time as well as a hefty fine. This varies depending on the crime, but in general, follows these guidelines:

Tax Evasion: Up to $250,000 fine as well as up to five years in prison.

False Tax Returns: Up to $250,000 fine as well as up to three years in prison.

Failure To File FBAR: Up to $500,000 fine as well as up to 10 years in prison.

Conspiracy To Defraud: Up to $250,000 fine as well as up to 10 years in prison.

Learn the facts about OVDP with your Washington DC tax lawyers and contact our experts today!

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