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Top 10 Things to Avoid for IRS Audits of Offshore Accounts

Offshore Account Update

Posted in on January 31, 2020

IRS audits of offshore accounts can lead to substantial penalties; and, if an audit reveals evidence of willful misconduct, the federal government can pursue criminal charges carrying the potential for exorbitant fines and years behind bars. If you are being audited in relation to an offshore bank account (or other foreign financial holding), here are 10 tips for protecting yourself from experienced Maryland international tax attorneys:

1. Don’t Go Into the Audit Unprepared

If you are being audited by the IRS, you need to make sure you know what the agents are going to find before they find it. In other words, you need to be prepared. Once you know your potential exposure, if any, then you can develop an effective strategy for pursuing a favorable outcome.

2. Don’t Let the IRS Control the Process

When you are being audited by the IRS, you need to take an active role in the process. Hiring an experienced international tax attorney to intervene and deal with the IRS on your behalf will help ensure you achieve a just result.

3. Don’t Improperly Withhold (or Unnecessarily Disclose) Information

Withholding information from the IRS can be dangerous, but so can unnecessarily disclosing potentially-damaging information. Your attorney should be able to help you decide what you need to disclose.

4. Don’t Acknowledge Willfully Failing to Disclose Your Offshore Accounts

When dealing with matters pertaining to offshore accounts, “willfulness” is the key distinguishing factor between being at risk for civil penalties and facing criminal prosecution. Under no circumstances should you acknowledge that you willfully failed to disclose your offshore accounts to the IRS.

5. Don’t Assume You are Liable for Penalties

Not all IRS audits result in penalties. You should work with your lawyer to assess the veracity of the IRS’s allegations against you, and then you should structure your defense strategy accordingly.

6. Don’t Assume that You Will Escape the Audit Unscathed

At the same time, you cannot assume that the audit will be resolved in your favor. If you get complacent, you may find yourself facing penalties or charges that could – and should – have been avoided.

7. Don’t Make Mistakes that Could Jeopardize Your Appeal

If you receive an unfavorable audit determination, you have the right to file an appeal. As a result, you need to avoid mistakes that could jeopardize your ability to challenge the IRS’s methodologies and conclusions.

8. Don’t Overlook Your Options for Voluntary Disclosure

The IRS’s voluntary disclosure programs provide relief from the full penalties for offshore account disclosure violations. If you can work with the IRS to submit a streamlined filing, this can substantially reduce your overall liability.

9. Don’t Overlook Additional Risks for Federal Prosecution

In cases involving offshore reporting violations, the IRS will often pursue additional charges as well. If you are being audited, you need to be conscious of the risk of prosecution for money laundering, Foreign Corrupt Practices Act (FCPA) violations and various other federal crimes.

10. Don’t Try to Deal with the IRS on Your Own

The best way to protect yourself during an IRS offshore account audit is to hire a team of Maryland international tax attorneys to represent you. Trying to deal with the IRS on your own is a mistake. To learn more in a confidential initial consultation, call Attorney Kevin E. Thorn, Managing Partner at Thorn Law Group at 240-235-5096 or contact us online today.

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