Hiding Income in Offshore Accounts Can Cost You

INDIANAPOLIS – The Indiana Department of Revenue (DOR) continues to partner with the Internal Revenue Service (IRS) to share the top tax filing season concerns referred to as the “IRS Dirty Dozen” tax scams for 2018.

Avoiding paying taxes by hiding money or assets in unreported offshore accounts is the eleventh scam in the 12-part series.  Offshore tax cheating is a long-running scheme to evade paying taxes by hiding income in offshore banks, brokerage accounts, foreign trusts, employee leasing schemes, private annuities or insurance plans. Individuals then access these funds through debit cards, credit cards or wire transfer.

While there are legitimate reasons for keeping financial accounts abroad, this income must still be reported when filing taxes.

“It is imperative taxpayers report all income or assets when filing both state and federal taxes,” said DOR Commissioner Adam Krupp. “Attempting to hide income in offshore accounts, may lead to fines or criminal prosecution.”

The IRS has the Offshore Voluntary Disclosure Program (OVDP) that allows individuals to come forward to voluntarily disclose their foreign financial accounts to comply with U.S. tax laws and resolve their tax obligations. 

The OVDP has processed more than 56,400 disclosures since its inception in 2009, collecting over $11.1 billion in taxes. With applications to OVDP declining in recent years, the IRS has announced the voluntary program will end on September 28, 2018. 

More on this program can be found on the IRS website at https://www.irs.gov/newsroom/2012-offshore-voluntary-disclosure-program.

Each year the IRS receives information regarding potential non-compliance by U.S. taxpayers through the Department of Justice’s Swiss Bank Program. This information aids in the discovery of offshore financial accounts that need to be reported. With the OVDP coming to a close soon, taxpayers are reminded there is a limited time to take advantage of this option to resolve tax obligations.

To view the first ten of “IRS Dirty Dozen” tax scams of 2018, visit http://www.in.gov/dor/6137.htm.