Hyden, Miron & Foster, PLLC Law Blog

Sunday, August 28, 2016

Don’t Get Caught in the Next Panama Papers Scandal

Earlier this year, private data from the Panamanian law firm of Mossack Fonseca was released to the International Consortium of Investigative Journalists via an anonymous informant. This data revealed the firm had helped many politicians and business leaders from around the world set up shell companies and off shore accounts in tax havens.

The impact of the release of what are now known as the “Panama papers” has been widespread. 12 current or former heads of state have been linked to secret offshore accounts. Icelandic Prime Minister Sigmundur Gunnlaugsson was actually forced to resign after his accounts were revealed to the public. Beyond the government-related scandals are the private ones, many business owners in the United States have had their most secret dealings revealed.

All of this has been a wake-up call to Americans using foreign accounts. Now is the time to make sure any and all off-shore holdings are properly accounted for. At Hyden, Miron & Foster, PLLC, we have numerous clients with overseas accounts, so we are familiar with all of the current reporting requirements. We are happy to help clients audit their accounts to ensure they are in compliance, and we are equipped to assist clients who know or suspect they aren’t currently in compliance.

Individuals and organizations with overseas accounts valued at over $10,000 that have not filed a Foreign Bank Account Report (FBAR) actually have several options available to them.

Quiet Disclosure

Individuals and organizations that have not been contacted by the IRS in relation to the offshore account, and are not currently being investigated, can take advantage of what is known as the Quiet Disclosure program if they have a good reason for not previously filing a FBAR.

If the IRS agrees that the reason for non-disclosure is reasonable, they can waive any penalties that would otherwise apply.

Streamlined Filing

Those who have failed to file an FBAR because they didn’t know they needed to file one may be eligible for Streamlined Filing. This process allows unintentionally delinquent filers to quickly pay back taxes owed, and allows the IRS to waive certain penalties.

Offshore Voluntary Disclosure Program

Individuals and organizations who know they should have been filing a FBAR, and don’t have a good reason for why they weren’t filing one, can participate in the Offshore Voluntary Disclosure Program. Voluntarily participating in this program can lessen the chance the delinquent filer will face criminal prosecution.

Don’t Wait for the Next Panama Papers Scandal

The Panama Papers scandal has been an embarrassment to those involved, and to the IRS, which is determined to bring foreign account holders into compliance. Individuals and organizations with access to foreign accounts should act now to ensure they are in full compliance with the law rather than waiting to be made examples of in the future. Paying back taxes and negotiating a fair penalty is a much better option than risking criminal prosecution.  


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