In early April, news reports began to lay bare the contents of approximately 11.5 million documents leaked from the Panamanian law firm Mossack Fonseca. These documents apparently contain attorney-client information for more than 200,000 offshore companies and trusts, and information on individuals associated with those offshore companies, including heads of state, government officials, celebrities and business figures. The lid on offshore secrecy continues to be pried open.
What might this mean for you?
The Department of Justice, IRS, FBI and other agencies are assuredly reviewing materials as they are disclosed from the Panama Papers and will make every effort to use that information to develop criminal cases. U.S. citizens, resident aliens, and legal permanent residents are required to report all income earned from foreign accounts and investments on their income tax returns. They are also required to report the existence of foreign accounts over which they have signature authority or in which they have a financial interest on their income tax returns and file a Report of Foreign Bank and Financial Accounts, FinCEN Form 114, if the value of those foreign accounts exceeds $10,000 at any time during a particular year. Other complex reporting obligations are associated with foreign entities and investments. Failure to comply with these reporting obligations could result in substantial civil penalties and criminal prosecution. Programs remain in place for taxpayers to come into compliance and avoid criminal prosecution, but the window to do so without facing criminal charges is closing rapidly. Rosenberg Martin Greenberg is well equipped to assist you with offshore reporting issues.