For years it has been difficult for the IRS to track individuals who invest or deposit their money in offshore bank accounts to avoid paying U.S. taxes. A similar problem exists in other nations as well. However, a new partnership between the U.S., the United Kingdom and Australia is going to make evading your taxes much more difficult.
All three nations announced a plan to share tax data regarding individuals and companies that have assets in other parts of the world. Each country claims to have recently gathered a large amount of data regarding accounts in Singapore, the British Virgin Islands, the Cayman Islands and the Cook Islands, all popular offshore account destinations. The information gathered includes the names of the account owners and the financial advisors that set up the trust or account.
The U.S., U.K. and Australia have been collaborating in their analysis of the data, and they are open to the idea of sharing their data with even more countries that may be affected.
It’s certainly legal for any person or company to hold assets through offshore accounts or trusts. However, these entities are frequently used to avoid paying taxes on the interest from the principal or the gains from the offshore assets. Individual account owners are held legally responsible for such actions. However, financial advisors can also be prosecuted under criminal or civil law for facilitating the tax evasion.
While this coordinated effort only involves a handful of nations right now, it’s expected that the data gathered will help many more countries punish international tax evasion. The IRS is encouraging taxpayers with offshore entities to participate in their IRS Offshore Voluntary Disclosure Program. At the very least, account owners should review their assets, ensuring they are in compliance. If in doubt, seek professional advice. Roberts Tax Advisory is experienced in all matters of accounting and taxation. Contact us for your assessment.