Across the globe, there are certain locations that have favorable banking, finance, and tax laws. Historically, many investors have put their money into financial institutions in these locations. There are a wide variety of motivations for investing in these different jurisdictions, but one of the reasons why people have put their money into these offshore locales is to hide their funds from taxing authorities.

Individuals with offshore funds have had a lot to be concerned about in recent years as the IRS has been aggressively going after people with accounts at foreign financial institutions who failed to comply with reporting requirements.

If you are obligated to file tax returns and pay taxes in the United States, you have certain obligations with respect to any foreign accounts you maintain. U.S. affiliated taxpayers are expected to declare all of their offshore accounts to the IRS. Taxpayers also must pay taxes on the income they earn through investments in offshore accounts.

The Paradise Papers included 13.4 million documents about offshore financial accounts that were turned over to reporters. The Paradise Papers followed other leaks of financial information, including the Panama Papers. All of the leaks of offshore accounts are intended to shed light on how wealthy individuals hide their funds and move money around the world in order to avoid paying taxes.

If you are a taxpayer with investments in Bitcoin, it's important to follow the IRS reporting rules. The IRS has begun to crack down on undeclared Bitcoin transactions and those who are concerned they could come under IRS investigation should talk with a New Jersey tax attorney about their options.