So many people got caught off guard with the recent attention the Internal Revenue Service is giving holders of offshore foreign bank accounts. With the off-the-shelf deals previously offered, the terms of the settlement were known and predictable. Now that the 2009 and 2011 offshore voluntary disclosure initiatives (OVDI) have ended, the IRS has not yet issued a new OVDI, so many non-compliant people are wondering if they should come forward and what the cost of coming forward will be. These are the four options still available.

Option One: Do nothing. You could do nothing and hope that the IRS does not uncover the account. Perhaps your foreign foreign bank account is at a foreign bank that you think to be "off the radar" or is in a quiet jurisdiction, or under a friend's name, or opened with a non-American passport. Well, it used to be that a foreign bank account's true owner could be kept anonymous. However, now, the IRS has vastly many more tools than it did previously to find undisclosed accounts.

Here's the thing every global banking and financial institution must be in the American market otherwise it would turn into such a minor league player that the bank's corporate board would revolt. Despite everything you may have heard, the American is still by far the largest economy in the world and every global bank must be on the good side of the IRS otherwise that bank will be shut out of getting American capital or customers! Part of being on the good side of the IRS is to cough up what the IRS says to disclose. As a result the bank is really at the mercy of the Internal Revenue Service.meaning so are the banks' foreign account holders. So you see, hiding becomes riskier and riskier. And once the IRS starts seeking a criminal indictment, there is only one option leftpay outrageous taxes and the highest penalties and face the significant possibility of real jail time.

The second option is to renounce nationality and leave the country --- as there is no other way to escape the power of the Internal Revenue Service. But be warned --- this only works to dodge upcoming tax debts and conformity troubles. The only method to correctly renounce is to effectively come forward about all offshore bank financial accounts and actually pay an expatriation tax (in many ways it was easier to leave Soviet Block country than to leave the USA completely intact with your wealth.)

Option 3: Soft (or quiet) disclosure. An option that some taxpayers tried is to file amended tax forms 1040X's and mail them to the Internal revenue service just think "regular" 1040X's, pay the taxes, and hope the Internal Revenue Service won't figure out what was going on. Sounds like a good strategy, right? Perhaps one could avoid all those excessive penalties of the OVDI programs?

The IRS says that these 1040X's are "red flags." Even though the tax returns are amended and back taxes paid, the Internal revenue service tells says that foreign account holders will still face penalties and criminal charges. In addition to charging and prosecuting people with undeclared foreign income, the DOJ claims that it has also begun prosecution of citizens whose "Quiet Disclosures" were discovered by the Internal revenue service.

The "soft" disclosure option is incredibly risky for several reasons. One massive failing is that a soft disclosure does not remedy the problem of the taxpayer's non-compliance in FBAR filing; as a willful failure to file an FBAR is a criminal charge. As a result filing a quiet disclosure 't go far enough to eradicate any likelihood of criminal charges. In fact, the 1040X may --- well here's the terrific dilemma with this option --- it does nothing about the failure to FBAR forms. There are still criminal and civil investigations that may be pending for failing to file an FBAR, but simply give the IRS a very handy to locate you.

Option 4: Pre-emptive Disclosure and Negotiation (" Offshore Voluntary Disclosure Initiative") If enjoying the rest of your life is chief importance, there can be no question that this alternative is the best option. Yes, the 2011 initiative expired, but that does not mean a voluntary disclosure can not be filed. The IRS always welcomes offshore disclosures. The only deadline that was missed was the particular stipulations of the 2011 OVDI which capped certain penalties.

There are 2 main requirements. First, the taxpayer cannot already be under audit or criminal investigation. And next, the foreign accounts can't be connected to any criminal activity like money laundering or drug trafficking. Once these prerequisites are satisfied, criminal crimes are removed from the continuum of possibilities and the taxpayer's is sent to the regular civil assessment division for assessment of taxes, interest and penalties. A successful OVDI offers reduced penalties and a promise of no criminal prosecution. Even though fines and penalties may be substantial, they are meaningless compared to an .

If someone is still wondering what the suitable course of action is, it is critical that they only talk to a qualified offshore tax attorney. The attorney-client privilege only applies in communications to an lawyer. The IRS can subpoena a CPA or nearly anyone else to testify against a taxpayer.