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Offshore Banking

Despite popular misconceptions within the media, it is not illegal for U.S. citizens to have a foreign bank account. There are many legitimate reasons why a U.S. taxpayer would maintain a foreign bank account including asset protection, confidentiality, and portfolio hedging. The act is legal, but in order to maintain an offshore bank account legally it must adhere to certain requirements. If the existence of these accounts is not correctly reported to the IRS, then the owner of the account could be criminally charged.

In order to lawfully have an offshore bank account, the account owner must report the existence of it through their U.S. income tax return. In addition, they must also declare any offshore or foreign bank accounts over which they have signature authority, regardless of if they receive any type of income from that bank account. Failure to complete these or any other regulations related to foreign bank accounts could have serious consequences including time in jail/prison and expensive conviction fines.

Texas Offshore Banking Defense Lawyer | San Antonio

For decades, many taxpayers used offshore and foreign bank accounts and did not disclose the existence of these accounts to the IRS. However, things have changed significantly since then. The IRS and U.S. Department of Justice are now focusing their efforts on ensuring offshore compliance and investigating against those who have failed to lawfully disclose the account to the government. That is why it’s crucial you hire an experienced defense lawyer if you have an offshore bank account you have not previously disclosed to the IRS.

The federal white collar crime attorneys at Goldstein & Orr have over 70 years of combined experience handling white collar and financial crimes. We can assess your situation and determine the best possible defense for your case. To speak to a qualified defense lawyer as soon as possible, call our number at (210) 226-1463 or simply submit an online contact form. Goldstein & Orr has offices in San Antonio, but we accept clients throughout the State of Texas including Bexar County, Austin County, San Patricio County, Williamson County, Travis County, Sutton County, Bastrop County, Kendall County, Fayette County, Guadalupe County, and Hays County.

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Penalties for Failing to Report an Offshore Bank Account

The majority of people who have offshore bank accounts do not own them with an intent to defraud the government. Instead, most account holders use these foreign financial institutions so they can protect assets, diversify their assets, and for a number of other benefits. Although maintaining an offshore bank account is technically legal, failure to report it to the IRS will lead to criminal penalties.

Listed below are several crimes a person may face for failing to report an offshore bank account to the Internal Revenue Service.

  • Criminal charges of tax evasion
  • Failure to report offshore bank accounts
  • Failure to file a tax return
  • Failing to file a foreign bank and financial account (FBAR)

The penalties for the crimes above will depend on the facts of the case. If convicted of these crimes, an individual could face upwards of five years in prison and $250,000 in fines for tax evasion. Failing to file an FBAR could result in up to 10 years in prison and a expensive fine of up to $500,000.


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IRS Voluntary Disclosure Program

Years ago, the IRS created the Offshore Voluntary Disclosure Program, which allowed individuals to disclose the existence of their offshore bank account so they could face reduced penalties. The main benefit of completing an OVDP is that once a closing agreement has been reached, any criminal prosecution the individual may have faced will no longer be a risk.

Instead of criminal charges, the individual will face a maximum civil penalty of 50% of the highest aggregate balance of accounts, which includes any value of income-producing assets within their offshore bank account.

The original 2009 program has ended, but in 2019 the IRS updated it and renamed the program as the New IRS Voluntary Disclosure Program (VDP). If individuals follow what the program asks for including full disclosure, then the account holder can get into compliance and regain their peace of mind. If the person can qualify as non-willful, then they may qualify for streamlined filing compliance as well.


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Additional Resources

Reporting Foreign Bank & Financial Accounts – Visit the official website for the Internal Revenue Service to learn more about how FBAR, what’s required, FBAR resources, filing delinquent FBARs, and penalties for failing to file FBAR.

Code on Offshore Banking – Visit the official website for the U.S. Code to read Chapter 31 Section 53114 about records and reports on foreign financial agency transactions. Access the site to learn more about offshore banking regulations and what could happen if you violate them willfully or non-willfully.


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Foreign Bank Account Defense Lawyer | San Antonio, TX

If you or someone you know has been investigated for arrested for not following offshore bank account regulations, contact Goldstein & Orr. The attorneys at Goldstein & Orr have decades of experience we can utilize for your case. We urge you to contact our law firm so you can finally move on from this and no longer fear the IRS looming over you.

Call our offices today at (210) 226-1463 to set up your first consultation or simply submit an online contact form.


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