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Big Brother is looking for you and he intends to find you. 

When he does find you there could be consequences.  You don't believe me?  Well please consider the Foreign Account Tax Compliance Act (FATCA) which was enacted in 2010.  The IRS says on its website that the FATCA is "...an important development in U.S. efforts to combat tax evasion by U.S. persons holding investments in offshore accounts."  The FATCA will require offshore banks to report to the IRS certain information to include an annual report of account holders who are U.S. taxpayers.  The mechanics of how this will work have yet not been implemented, but rest assured that the IRS is skilled at creating regulations.

Who should be worried?  The obvious answer is those individuals who are attempting to evade U.S. income taxes by holding assets offshore and not reporting the associated income on their individual tax returns.  There are of course some innocent bystanders who might be affected by this Act.  For instance, there are businesses with international operations which may have foreign bank accounts and may not have complied with reporting requirements because they were unaware of the rules.

If you are one of the innocent bystanders (or one of the individuals who knowingly chose not to report foreign accounts), please take this opportunity to contact your tax advisor.  The IRS's Offshore Voluntary Disclosure Initiative, related to foreign bank and financial accounts, closes August 31, 2011.  Under this program tax payers who disclose previously undisclosed foreign accounts and comply with the terms of the program can avoid otherwise applicable civil penalties and possible criminal prosecution.  All of the required forms and yes, the associated taxes, must be remitted to the Treasury by this date in order to qualify for reduced penalties. The taxes and related penalties are not insignificant, but they are much less severe than the consequences which await those of you who are eventually identified through the FATCA.

Please contact Rubino & McGeehin for more information.  Mr. Curtis can be reached at 301-564-3636, or at pcurtis@rubino.com.