Are you wondering when a US taxpayer should consider the IRS Voluntary Disclosure Program or VDP? Are you concerned about unreported or under-reported income, financial accounts, assets, investments, cryptocurrency or business assets or interests? What must you know about FATCA-based reporting to the IRS and how the agency will likely discover your "hidden" secrets?

US taxpayers are required to come into and maintain compliance with FBAR reporting and full disclosure of all offshore assets, income, financial accounts, investments or business interests. Failure to fully and accurately disclose all income worldwide exposes US taxpayers to steep fines, penalties, interest, and back taxes as well as the genuine risk of criminal prosecution.

What has changed? Why should a US taxpayer consider the IRS Voluntary Disclosure Program or VDP at this point?

Why should a US taxpayer begin to consider the IRS Voluntary Disclosure Program or VDP this late in the process? The old saying "follow the money" applies. The IRS is following the money. Your money. And a lot more.

Due to the success of FATCA and pressure brought to bear on offshore banks and Foreign Financial Institutions (FFIs) by the US Department of Justice, the IRS receives automated electronic reporting from thousands and thousands of institutions and sovereign tax authorities around the world.

The IRS no longer needs to search to find your offshore accounts. Your own bank, investment house, cryptocurrency exchange, tax agency, or FFI has been forced to disclose the activities of US taxpayers with accounts and interests worldwide. This electronic information includes not only your personal information, including the associated Taxpayer ID Number (TIN) or Social Security Number, but specific account numbers, balance information, income, interest, dividends, and even transactions such as deposits and withdrawals, all provided directly to the IRS.

Business owners and those who hold any substantial interest in a foreign corporation are also easy targets. FATCA reporting includes the name, address, and identification number of any entity, financial activities, account data, and personal information on any US taxpayer associated with the company and its accounts, including the individual's name, address, and Social Security Number or TIN.

In previous years this may have been literally too much information for the agency to process. However, the recent implementation of advanced computer technology and the deployment of Artificial Intelligence (AI) has provided the agency with new and effective weapons to identify non-compliance. All the AI programs have to do is compare the substantial information streams coming in from FFIs and tax agencies around the world to the information contained within your own tax returns.

When they don't match up, the US taxpayer can expect an IRS audit.

In addition, the IRS has become much more sophisticated in its understanding of the schemes, entities, accounts, trusts, foreign investments, and debit and credit card accounts US taxpayers have used in the past to shelter income from US taxes. In many cases, the voluntary disclosures of tens of thousands of US taxpayers have actually exposed common strategies.

The time is now to come into FBAR compliance and consider the IRS Voluntary Disclosure Program or VDP, or the Streamlined Procedures to correct previous filings and eliminate financial risk and criminal exposure. There are several factors that will inform your choice(s) as a US taxpayer.

Ask about the benefits of transactional planning going forward. Develop a legal strategy designed to protect your investments and assets while minimizing associated risk and tax exposures.

The IRS is receiving electronic data from around the world and has the technology and resources to identify and pursue US taxpayers who have unreported or under-reported income and assets.

Ask about the important protections of the attorney-client privilege as you approach these difficult but important decisions.