The IRS recently warned that the agency has collected $8 billion in taxes and fines collected from offshore bank account penalties which were a result of not conforming to the Foreign Account Tax Compliance Act. According to a report by Forbes contributor and tax lawyer Robert Wood, the IRS has begun to warn taxpayers, both U.S. citizens and residents, with offshore accounts that if they have not properly disclosed their financial information, they will be subject to taxes and penalties unless they join the Offshore Voluntary Disclosure Program or the streamlined procedures.
Taxpayers have two options
Individuals with offshore bank accounts can join the OVDP or apply for its streamlined program to mitigate past errors or omissions on their tax returns disclosures. These programs will afford taxpayers the opportunity to avoid potential penalties for not complying with the FATCA. This is crucial for taxpayers because under the FATCA, there is now an intergovernmental network between the U.S. and various partner jurisdictions to share foreign account information. As a result, the IRS warned that more thorough investigations into offshore accounts will be conducted this year.
For taxpayers who may be in violation
For most taxpayers, the offshore account penalties under the OVDP is 27.5 percent, as compared to the normal fine that is 50 percent of the foreign account balance. It is important to note though, that the IRS now pursues all taxpayers with accounts at financial institutions overseas, so the offshore account penalties will be universally applicable. Further, for those who are not compliant with reporting worldwide income on U.S. tax returns, taxpayers should apply for eligibility in the OVDP. The IRS has warned taxpayers that along with the potential criminal liabilities for failing to disclose foreign accounts, the civil penalties could be staggering for individuals who have not properly disclosed their financial information.
The significance of the new initiative
As always, willful civil violations for failing to disclose foreign accounts will be subject to penalties, but now the IRS has implemented a more diligent approach with third party investigators. These offshore account penalties include the same level at $100,000, or 50 percent, of the account balance for each taxpayer violation.
Non-disclosure agreements (NDAs) remain a critical tool for protecting sensitive business information. However, New York NDA requirements have evolved, and businesses must ensure these agreements are carefully drafted to remain enforceable. In a competitive market like New York City, NDAs are commonly used to protect proprietary information, client relationships, and strategic plans. At the same […]
How Courts Evaluate Testamentary Capacity and Undue Influence Will contests in New Jersey are difficult to win, given the strong presumption that a properly executed will reflects the testator’s intent. However, challenges based on lack of testamentary capacity and undue influence remain common, particularly where there are concerns about mental capacity or the involvement of […]
Bringing on outside investors can provide the capital and strategic support a business needs to grow. However, raising capital also introduces important legal, financial, and operational considerations. Before bringing on investors, businesses should address key legal issues to reduce risk, streamline investor due diligence, and position the company for long-term success. Early preparation signals that […]
How the Updated Law Shapes Retirement and Estate Planning The SECURE 2.0 Act of 2022 materially reshapes the required minimum distribution (RMD) landscape, extending tax deferral opportunities while accelerating distribution requirements for many beneficiaries. For high-net-worth individuals and families, these changes are not merely technical. They require a reassessment of retirement income strategies, beneficiary planning, […]
Buying Commercial Property in New Jersey: Legal Guide for Small Businesses
Small businesses considering buying commercial property in New Jersey must evaluate a range of legal, financial, and operational factors. While ownership can offer long-term value and control, it also introduces significant risks if not properly structured. This guide outlines key considerations to help New Jersey business owners make informed decisions, minimize legal exposure, and successfully […]
The SEC’s Latest Guidance on Applying Federal Securities Laws to Tokenized Securities
On January 28, 2026, staff of the U.S. Securities and Exchange Commission’s Divisions of Corporation Finance, Investment Management, and Trading and Markets issued a joint statement clarifying how existing federal securities laws apply to tokenized securities. The SEC’s “Statement on Tokenized Securities” does not establish new law, but it does provide greater clarity on the […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
