Get your “whoops!” defense ready.
The Internal Revenue Service is sharply increasing the penalties on U.S. taxpayers who hide assets abroad, while lowering or eliminating fines on taxpayers if their failure to disclose offshore accounts was unintentional, the agency said Wednesday….
Yet record numbers of U.S. taxpayers are cutting official ties with the U.S. amid the campaign, by renouncing their citizenship or turning in their green cards. Experts say the spike is a response to tougher enforcement and stiff penalties that can equal half the balance of a foreign account for each year a required disclosure form isn’t filed—even if no tax is owed.
The IRS has been accused of coming down disproportionately hard on taxpayers with small accounts, and unfairly burdening people who didn’t understand the filing requirements….
Experts said the new rules could make it easier for taxpayers to approach the IRS if they weren’t violating the law willfully….
Yet some lawyers cautioned that the IRS would have the final say on whether a taxpayer’s failure to comply with the law was unintentional.