Foreign Accounts – Know The Important Info To The Non Disclosure
Disclosing Foreign Bank Accounts
Unless you have complied with the FBAR reporting requirements to report your foreign accounts or entered into the Offshore Voluntary Disclosure Program (OVDP), you risk being criminally prosecuted and subject to very significant penalties.
Foreign banks have been cooperating with the IRS and Department of Justice in providing information US citizens having foreign accounts in foreign banks. Many promoters and thousands of US account holders have been charged criminally or currently are under criminal investigation and these criminal investigations will continue for the foreseeable future.
FBAR Disclosure Requirements For Foreign Accounts
While there are many legitimate reasons to having foreign accounts, there are also serious responsibilities that go along with owning such accounts. Owners and signers of foreign accounts must remember that they may have to report their accounts annually on the FinCen Form 114 (FBAR), if the filing requirements are met. This is true even if the accounts do not generate any taxable income.
What Is The Purpose Of The FBAR
The FBAR is a tool to help the U.S. government identify persons who may be using foreign financial accounts to circumvent U.S. law and evade taxes. The FinCen Form 114 is not an income tax return and should not be mailed with any income tax returns. The FBAR must be filed electronically on the FinCen Form 114. Unlike your federal income tax return, an extension of time to file an FBAR to disclose your foreign accounts in not available.
Also, there are serious consequences for holders of foreign accounts who choose not to comply with their FBAR filing requirements. Account holders who do not comply with the FBAR reporting requirements may be subject to civil penalties, criminal penalties or both.
In addition, the IRS cautions people who try to fix it quietly without going into one of the IRS programs (the OVDP or Streamlined Filing Compliance Procedures ). The IRS view is that “quiet disclosures” will be dealt with severely.
Irrespective of the total amount of your foreign accounts, whether large or small, there’s no potential small issue if your foreign accounts have not been disclosed. It’s best to address these issues and get back into compliance.
All About Randall Brody
Randall is the Founder of Tax Samaritan, a boutique firm specializing in the preparation of taxes and the resolution of tax problems for Americans living abroad, as well as the other unique tax issues that apply to taxpayers. Here, they help taxpayers save money on their tax returns.