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IRS audits of offshore accounts can lead to substantial penalties; and, if an audit reveals evidence of willful misconduct, the federal government can pursue criminal charges carrying the potential for exorbitant fines and years behind bars.

If you live in Maryland or own a company that does business in Maryland, you owe obligations to the Internal Revenue Service (IRS). Even if you don’t owe any tax, you still have reporting obligations, and failing to submit the necessary annual filings is one of the surest ways to draw the IRS’s ire. However, there are various other issues that can expose Maryland taxpayers to IRS scrutiny as well – and we covered many of these issues on our blog during 2019.

The U.S. tax laws on offshore bank accounts are complex and demanding for offshore account holders. Many taxpayers with previously undisclosed offshore accounts will want to come into compliance with tax reporting laws. Others may already be facing tax issues on their foreign accounts, such as IRS audits.

For Maryland residents with offshore holdings, keeping up with the federal reporting requirements and the options that are available for maintaining compliance can be a challenge. The Offshore Voluntary Disclosure Program (OVDP) expired in 2018, so U.S. taxpayers who own foreign financial assets must choose a different alternative in 2019. Due to the severe consequences of non-compliance, taxpayers must be extremely careful to avoid mistakes, and we encourage anyone with questions to contact US International Tax Advisors promptly.

Offshore account holders who are also U.S. taxpayers have many reporting requirements for those accounts. These offshore accountholders also face significant civil penalties for failing to make these disclosures. If these taxpayers do not avail themselves of the IRS offshore voluntary disclosure programs, they could be in severe financial trouble.