Articles Posted in FBAR Violations

Considerations When Submitting Delinquent International Information Returns
The IRS procedure for submitting delinquent international information returns such as Forms 3520, 3520A, Form 5471, or Form 8938,  along with a reasonable cause statement is one of four options the IRS allows for taxpayers wish to come into compliance with their offshore filing requirements. This procedure has some benefits over the Offshore Voluntary Disclosure Program (OVDP) and the Streamlined Filing Procedures, but it also has its drawbacks.

The main benefit is that if the IRS accepts your reasonable cause statement and submission of delinquent international information returns, you will have all penalties waived. Both the OVDP and the Streamlined Procedures (at least for domestic taxpayers) involve paying penalties, with the OVDP requiring much higher penalties and eight years of tax returns.

The drawback is that if your reasonable cause statement is rejected, you may be responsible for the full amount of the international reporting forms penalties.

Man Pleads Guilty After Hiding Swiss Bank Accounts
A case from a few years ago involving undisclosed Swiss bank accounts demonstrates the pitfalls of failing to disclose foreign financial accounts, as well as what happens when you lie to IRS special agents.

A New York resident pleaded guilty to corruptly endeavoring to obstruct and impede an investigation by the Internal Revenue Service after repeatedly lying about his assets in Swiss bank accounts. Not only did the taxpayer fail to report his foreign financial assets, but he also told several IRS agents that he had no foreign financial assets.

For the tax years 2001 through 2010, Georges Briguet, the owner of now defunct famed French restaurant Perigord, failed to report his foreign financial accounts on his tax return. He did not report the income from these accounts or pay taxes on this income. He had placed around 7 million Swiss Francs in a Swiss bank account in 1992.

Do I Have to File an FBAR If I'm Not a U.S. Citizen?
The Bank Secrecy Act may require you to file a FinCEN 114, Report of Foreign Bank and Financial Accounts (FBAR), even if you are not a U.S. Citizen. The FBAR must be filed annually by all “United States Persons”, which includes U.S. citizens, U.S. residents, and certain entities. The FBAR must be filed if your total interest in foreign accounts exceeds $10,000 at any point during the calendar year.

FBAR Filing Requirements for Non-Citizens

The IRS has its own rules for determining if you are a resident for tax purposes. If you meet either the green card test or the substantial presence test, the IRS considers you a resident, and you must comply with all tax filing requirements, including filing an FBAR.