The Internet and instant global communications have made international banking very easy.  You can sit comfortably in your home and deal online with a bank in Europe, Asia, or anywhere.  Some unscrupulous promoters have even advertised the "tax-free" benefits of using foreign banks, an approach that is not only wrong, but criminal. 

The United States taxes its citizens, as well as resident aliens, on their worldwide income, regardless of the location from which the income is derived.  Additionally, all U.S. taxpayers are required to file an annual statement (Report of Foreign Bank and Financial Accounts) disclosing the existence of any foreign bank account(s) with respect to which the taxpayer has either a financial interest in or signature authority over.  If the required annual reports are not filed, severe penalties, and possibly criminal charges, may be imposed.  These penalties can apply even in situations where the related income has been fully reported on your return.

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If you have any questions about foreign bank accounts, or about our comprehensive tax services, please email Al Cappelloni or call (617) 241-1353 or email Aliza Cooperman or call (617) 241-1290.  We would also be happy to assist you in preparing or amending any returns that may be necessary as part of the IRS’s current offshore voluntary compliance initiative.