Yes, the IRS can levy your foreign bank account. Don’t believe that your money is safe just because it is offshore. If you have an IRS debt, the reach of the U.S. government is longer than you think.
First, I would like to point out that it is a crime to send money out of the United States with the intent of keeping it away from the IRS. In this article, I will assume you already have a foreign bank account.
With that said, the IRS can issue a levy to any bank with a branch in the United States. So, if your bank in Mexico has a branch in the U.S., the IRS can issue a levy notice to that U.S. office and empty your account in Mexico. Having a foreign bank account at a bank with a branch in the U.S. offers little or no more protection than keeping your money in the U.S…. assuming the IRS knows of the foreign bank account’s existence.
Issuing a levy to a foreign bank account when the bank has an office in the U.S. requires no special effort on the part of the agent assigned to your case. They just hit a few keys and the cash is gone.
The U.S. also has the power to seize bank accounts and assets (real estate and safety deposit boxes most commonly) in certain foreign countries. This does require some effort on the part of the agent, but these takings are becoming more common.
Specifically, the IRS can seize assets in any country with which the U.S. has a Mutual Collection Assistance Request Agreement. Nations that have signed on to this agreement are Canada, France, Denmark, Sweden, Netherlands and the U.K. Any assets in these countries are at risk of IRS attack.
I hope this post on foreign bank accounts and the IRS has been helpful. I suggest you read this post on How to Open an Offshore Bank Account before you form an offshore company or do anything to get you in trouble with the mighty IRS. Remember that you must report all foreign bank accounts if your balance is over $10,000 and may also be required to report your foreign assets.