The Internal Revenue Code (IRC) requires that U.S. resident aliens or U.S. citizens (collectively U.S. taxpayers) are required to report their worldwide income to the IRS. This includes any interest income or earnings from savings or investment accounts held in any foreign account, and any other foreign asset-producing income.
The Currency and Foreign Transactions Reporting Act of 1970, Pub. L. 91-508, 84 Stat. 1118 (1970), generally known as the Bank Secrecy Act (BSA), requires U.S. taxpayers to report their foreign accounts to the Financial Crimes Enforcement Network (FinCEN). Holders of foreign accounts who have deliberately or unintentionally failed to accurately report their foreign accounts have two options: do nothing and hope not to get caught, or file under one of the currently available programs and pay certain penalties but avoid a myriad of others. The first option—do nothing—is a very bad option, especially following a recent Third Circuit decision.
The “Do Nothing” Option
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