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.

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.