- Holland & Knight's Offshore Tax Compliance Team counsels individuals and institutions on the unique tax consequences associated with their foreign investments. Similarly, we assist corporate fiduciaries with tax compliance issues associated with their foreign beneficiaries.
- When clients engage our team in advance of making an offshore investment, we provide counsel on how to properly structure and report the investment to minimize the associated tax obligations while complying with current tax laws. If we are engaged subsequent to the investment being made, we assist clients in resolving any potential problems with the investment, such as noncompliance with reporting requirements and, where appropriate, restructuring the investment to achieve greater tax efficiency.
- We advise foreign fiduciaries about the tax consequences associated with maintaining United States investments, as well as compliance issues related to their United States beneficiaries. We similarly assist domestic fiduciaries with the tax consequences associated with maintaining foreign investments as well as the compliance issues related to their foreign beneficiaries.
- We regularly represent taxpayers before the IRS and help them achieve favorable outcomes.
From a United States perspective, the world of offshore banking changed in June 2008 when a former UBS banker pled guilty to helping clients evade U.S. reporting requirements. Since that time, the Internal Revenue Service (IRS) and U.S. Department of Justice (DOJ) have stepped up efforts to stem tax evasion by taxpayers who fail to disclose foreign bank accounts and other offshore investments. Investigations of foreign banks are ongoing and have broadened beyond Switzerland to presently include India, Israel, Panama and Hong Kong. The IRS Criminal Investigation Division now has a presence in 11 foreign countries and DOJ has indicted countless financial advisors, bankers, taxpayers and even a foreign bank for their roles in either evading or helping U.S. taxpayers avoid their tax obligations.
U.S. law requires taxpayers who own foreign assets, have a connection to foreign entities and who engage in foreign activities to report such assets, entities and activities to the IRS. Taxpayers who fail to file the appropriate informational forms risk being subjected to significant monetary penalties.
Take Action to Minimize Penalties
In response to the UBS ordeal, the IRS has launched three voluntary disclosure programs, the first in March 2009, and the most recent in January 2012, for taxpayers with undeclared foreign income and bank accounts. The current program, the IRS Offshore Voluntary Disclosure Program (VDP), grants taxpayers an opportunity to report their noncompliance while minimizing civil penalties and potentially avoiding criminal prosecution.