Where the information comes from
Foreign banks now report many accounts held by US persons, and tax treaties and information exchange agreements let the IRS request records from other governments. Past enforcement programs led banks in several countries to turn over account details, and whistleblowers, former spouses, and business partners also supply leads. Within the United States, the IRS has used summonses to banks that handled transfers abroad. The practical result is that an account you regard as private may already be known to US authorities. Information can also flow from investigations of advisors, banks, or other clients rather than from anything about you directly.
Reporting failures and tax failures
Two kinds of problems often travel together. One is failing to report income earned on or through foreign accounts or entities, which raises ordinary tax questions and, if intentional, criminal ones. The other is failing to file required reports about foreign accounts and assets, which can carry significant civil penalties of its own, with much larger penalties when the failure is willful. Willfulness can include deliberately avoiding learning about a reporting duty, and the government often points to facts such as hold-mail instructions, nominee arrangements, or cash withdrawals abroad. Criminal cases in this area have included evasion, false return, and willful failure to file account reports charges.
If you have not been contacted
Whether you can still come forward voluntarily depends on whether the government has already begun an inquiry or received information about you. Non-willful cases may fit streamlined procedures, but those require a certification under penalty of perjury that the conduct was not willful, so that judgment should be made carefully with a lawyer. If you have already been contacted, the priority shifts to protecting your rights and understanding the scope of the inquiry. We review the accounts and entities, how they were set up and used, and what you told preparers over the years, then compare the options still open.
