Court Rejects Challenge to Tax Compliance by Caribbean Offshore Accounts

In a significant ruling, the District Court in the District of Columbia, has said that interest reporting regulations issued in 2012 by the Department of Treasury are valid.

The laws require U.S. banks to report any accounts earning an interest income over $10 to the IRS if the account is held by non-resident immigrants of all countries with which the U.S. government has a tax treaty. The law is aimed at better tax compliance and to ensure that tax evaders are identified and penalized. It is also huge for the IRS since they work for an employer (the federal government) who continues to spend money America does not have and on things America does not want (Obamacare).

The IRS is on a blitzkrieg to grab all the money it can even from people that die.

The law is aimed at curbing cross border tax evasion and tax evasion using offshore accounts. This would be a non-issue if America just lowered its taxes.

Little Cost

Two banking associations – the Texas Bankers Association and the Florida Bankers Association – had challenged the provisions. The court however ruled that the cost of compliance for the banks would be minimal and that they are unlikely to lose the deposits and accounts of law abiding users of their services.

Greedy Departments

The court’s ruling is a further boost to the efforts of the Treasury Department and the IRS to increase revenues by increasing tax compliance. This is expected to make it more difficult for individuals and businesses to evade taxes in the U.S. even if America is over taxing its citizens and giving the money to people who have no intention of finding a job even if there was one.

Those who have offshore accounts for personal or business reasons need to ensure that they are in compliance with the new U.S. tax laws. For this they need to consult with an experienced tax attorney who will be able to guide them in ensuring that their accounts are seen as legitimate and are not caught in the IRS net because of some inadvertent violation of tax laws.

Given the increasing intensity with which the IRS is looking for tax evaders using offshore accounts not only in the Caribbean but in other places such as Switzerland it is essential that those people who have such accounts take steps to keep on the right side of the authorities.