A redacted letter from HSBC to a customer with accounts at HSBC's private bank in Geneva, Switzerland is raising new concerns about financial institutions turning over offshore accountholder information to the Internal Revenue Service (IRS).

During bankruptcy proceedings, a bankruptcy court judge ruled that Sam Wyly and his brother Charles had committed tax fraud and should be subject to penalties for an attempt at tax avoidance. The attempt at tax avoidance involved a very complicated scheme which used offshore non-grantor trusts to provide ready access to funds which were not properly reported.  Taxes, of course, were not paid on the funds that were owned by offshore entities, and the brothers reportedly engaged in a sustained course of tax evasion for close to 15 years.

A failure to pay employment taxes can have serious consequences, not only for the business that does not pay, but also for individuals like accountants, bookkeepers, and corporate executives who have a responsibility for making sure payroll taxes are paid on time. There are options for authorities to pursue both civil and criminal penalties, and the consequences can range from jail time to fines to an injunction preventing the payment of other creditors, the transfer of property or the formation of a new business.

The Offshore Voluntary Disclosure Program (OVDP) allows people who did not file a required Report of Foreign Bank and Financial Account (FBAR) to voluntarily report their offshore accounts. Voluntarily reporting a previously undeclared offshore account can allow you to reduce financial penalties and to avoid the possibility of being criminally prosecuted.

Mossack Fonseca is the fourth largest offshore firm in the world. Recently, the firm's database was hacked and extensive details were leaked about investors with offshore accounts. The leaked information is being referred to as The Panama Papers, and the papers provide an unprecedented glimpse into how money moves around the globe.