The Panama Papers refer to documents leaked from a Panama law firm which provide insider details about how offshore accounts are used to move money around, protect financial privacy, and sometimes evade taxes.  The Panama Papers contain more than 11.5 million documents from a Panama law firm. The data in the documents was leaked from a source who remains anonymous, but who indicates that the leak created substantial personal risk.

Many U.S. citizens opened offshore Swiss accounts because of the strong privacy laws in Switzerland that were supposed to help these accountholders keep their identities confidential and their information from the Internal Revenue Service. Unfortunately, the Swiss privacy laws turned out not to have really provided much protection at all. As the IRS and Department of Justice have begun aggressively cracking down on banks and bankers, many are entering into plea deals that often involve giving up information on their clients.

U.S. citizens who have $10,000 or more total across all foreign accounts at any point during the year must file annual Reports of Foreign Bank and Financial Accounts (FBARs). Offshore accounts and money earned from those offshore accounts must be declared to the IRS, or serious consequences can arise.

If you are a U.S. citizen and you have foreign accounts, you have to file tax returns and report those accounts to the IRS. U.S.-connected individuals, including those who reside abroad, can face consequences for failure to file tax returns, report foreign and U.S. sourced income, and report their offshore accounts.

U.S.-connected individuals must tell the IRS about foreign accounts held at offshore banks if they have a total of $10,000 or more across all of their accounts at any point over a one-year period. Taxpayers have to tell the IRS about these accounts by filing an annual Report of Foreign Bank and Financial Account (FBAR). The deadline for filing FBARs was June 30, 2016 this year and forms could be filed electronically.