The IRS has stated that, "Taxpayers with
undisclosed foreign accounts or entities should make a voluntary
disclosure because it enables them to become compliant, avoid
substantial civil penalties and generally eliminate the risk of criminal
prosecution. Making a voluntary disclosure also provides the
opportunity to calculate, with a reasonable degree of certainty, the
total cost of resolving all offshore tax issues.
Taxpayers who do not submit a voluntary disclosure run the risk of
detection by the IRS and the imposition of substantial penalties,
including the fraud penalty and foreign information return penalties,
and an increased risk of criminal prosecution. The IRS remains actively
engaged in ferreting out the identities of those with undisclosed
foreign accounts. Moreover, increasingly this information is available
to the IRS under tax treaties, through submissions by whistleblowers,
and will become more available as the Foreign Account Tax Compliance Act
(FATCA) and Foreign Financial Asset Reporting (new IRC § 6038D) become
effective."
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