The Offshore Voluntary Disclosure Program (OVDP) was created by the IRS in 2009 to try to convince U.S. connected individuals to voluntarily come forward and report foreign accounts which they had not declared before. Those participating in OVDP would have their penalties limited in exchange for coming forward and reporting funds, and would be provided with protection from criminal prosecution.

If you are a U.S.-affiliated person and you have accounts offshore with funds totaling $10,000 in aggregate at any point over the year, you are supposed to file an annual Report of Foreign Bank and Financial Account (FBAR). June 30, 2016 was the deadline for filing this year. Many taxpayers have discovered this requirement only recently, which left taxpayers who wanted to comply with the law wondering what their best options were.

The IRS and the Department of Justice have been on a long campaign of trying to get banks to turn over information on U.S. accountholders. A program called the Swiss Bank Program divided financial institutions into four different categories, with Category 3 and 4 banks in compliance with U.S. tax laws and Category 1 and 2 banks suspected of aiding U.S. citizens in evading tax obligations.

In 2010, the Securities and Exchange Commission (SEC) brought charges against a billionaire named Sam Wyly. The SEC charges ended up resulting in a $300 million judgment in 2014.  Sam Wyly filed for protection from the bankruptcy court after the $300 million judgment. Unfortunately, the problem for Sam Wyly was that his SEC judgment and subsequent filing triggered a tax assessment for failure to pay taxes on the income he happened to have held offshore.

The U.S. tax system is a pay-as-you-go system, but most individual employees do not actually pay as they go. Instead, the responsibility falls on employers to withhold federal taxes and FICA taxes from employees. Federal income tax, as well as taxes used to fund Medicare and Social Security, are supposed to be taken out of an employee's paycheck. Employers have to file tax returns and pay the IRS with money that has been withheld, as well as make required employer contributions (employers pay half of a worker's Social Security taxes).