U.S. Tax laws
The United States generally taxes its citizens and resident aliens on their worldwide income. For years, the solution to hiding money from the government was to deposit those funds at offshore banks or similar financial entities. U.S. taxpayers can hold offshore accounts and foreign assets for a number of nontax reasons, including access to funds while living or working overseas, asset protection, investment portfolio diversification, enhanced investment opportunities, and to facilitate international business transactions. Taxpayers must report annually whether they have offshore accounts and pay taxes on any income earned from them . Taxpayers who intentionally fail to report income earned on offshore accounts or who neglect to disclose foreign assets as required by law face significant penalties and possible criminal prosecution if discovered by the Internal Revenue Service (IRS).