Hiding Money Overseas Makes IRS “Dirty Dozen” Tax Scam List
Annually, the IRS lists a variety of tax scams known as the “Dirty Dozen” that taxpayers may encounter. Avoiding taxes by hiding money in offshore accounts made the list again for the 2016 filing season.
Over the years, tax avoidance tactics have included hiding income in offshore banks or brokerage accounts and then using a variety of mechanisms such as debit cards, credit cards, or wire transfers to access the funds. The IRS states that another strategy others have is the use of foreign trusts, employee-leasing schemes, private annuities, or insurance plans for the same purpose.
Michael Wastvedt, managing partner of Wastvedt & Co. CPA firm in Carmel Valley, says, “While there are legitimate reasons for maintaining accounts abroad, there are reporting require-ments which must be fulfilled.”
U.S. taxpayers who maintain foreign accounts with balances above certain thresholds who do not comply with the reporting requirements are in violation of the law and risk significant penalties and fines, as well as criminal prosecution. “The risks do not outweigh the reward,” states Wastvedt, “especially when legitimate methods of tax planning strategies offer significant methods to reduce taxes.” 858.201.6850, wastvedtco.com