I reported in a post earlier this month that as an IRS amnesty deadline approached, more than 7,500 U.S. taxpayers had voluntarily disclosed their secret offshore accounts. Lynnley Browning reports in a November 18, 2009 New York Times article that the IRS received a flood of additional disclosures just before the deadline expired. The final number of U.S. taxpayers disclosing secret offshore accounts almost doubled as the deadline approached– from 7,500 to 14,700. IRS commissioner Douglas H. Shulman has indicated that billions of additional dollars will come into the U.S. treasury as a result of this IRS program.
It is important to realize that U.S. taxpayers who use legitimate asset protection techniques should have no concern whatsoever about the recent IRS actions. The IRS is simply aggresively going after U.S. taxpayers who are not reporting income as required by applicable law. Offshore accounts can have numerous advantages (both from a financial perspective and from an asset protection standpoint). You should not be afraid of using offshore accounts or offshort trusts, as long as they are being properly reported and administered.
A big lesson from the recent IRS actions is to carefully choose your financial and legal advisers. Americans who opened secret offshore accounts and then failed to report income taxes were foolish and/or got very poor advice. A reputable asset protection attorney would have never recommended the course of action that has now landed many Americans in deep trouble with the IRS.