offshore disclosure program

How Do I Know Which Offshore Voluntary Disclosure Option to Use?

December 4, 2017 | by Dennis N. Brager

You will need to get a tax litigation attorney’s opinion on whether or not you willfully failed to file Foreign Bank Account Reports (FBARs) and report foreign income on your tax return. The answer to this question has several consequences, including the following:

Non-willful FBAR violations carry a $12,459 penalty per violation, while willful violations result in a penalty that is the greater of $124,588 or 50 percent of the balance in the account at the time of the violation
Taxpayers who failed to file FBARs non-willfully are eligible for the Streamlined Filing Compliance Procedures, which allow you to amend previous year tax returns for the previous three years, and disclose your unreported foreign bank accounts

Repatriating Funds: What to Do if You Have Delinquent FBARs

August 1, 2017 | by Dennis N. Brager

Taxpayers with funds in offshore accounts may wish to repatriate their funds by bringing them back to the U.S. and avoid any future Foreign Bank Account Report (FBAR) compliance issues. While this may prevent any future offshore bank account problems, it does not stop the IRS from discovering any past delinquent FBARs and assessing severe civil and/or criminal penalties.

A transfer of funds from overseas into a domestic account can easily be traced, and may raise suspicion that will cause an investigation into whether the funds have been properly reported on the taxpayer’s return, and whether all necessary FBARs have been filed. An attempt to repatriate funds could also be seen as evidence of willful FBAR non-compliance, if the accounts were not properly reported in previous tax years. Rather than attempting to bring funds back to the U.S. and hoping no one will notice, taxpayers should use one of the delinquent FBAR submission procedures to mitigate the risk of substantial penalties and possible criminal prosecution.

Do You Have Delinquent FBARs?

How to Choose an FBAR Attorney

July 3, 2017 | by Dennis N. Brager

There is no specific designation as an “FBAR attorney”, but many taxpayers with undisclosed foreign financial accounts need to talk to someone with FBAR experience about their potential liability and what actions they can take to mitigate risks. A good FBAR attorney is really just a tax attorney who has experience with Foreign Bank Account Reports (FBARs), and is familiar with tax litigation, criminal tax defense, and the various voluntary disclosure options that can be used to come into FBAR compliance.

FBAR Experience

You have an FBAR problem if you are a U.S. person who failed to file an FBAR and/or report income from foreign financial accounts on your tax return. You are required to file an FBAR if you meet the following two requirements:

What is Reasonable Cause for Failure to File an FBAR?

May 19, 2017 | by Dennis N. Brager

The IRS has the authority to impose civil and criminal penalties for the failure to file Foreign Bank Account Reports (FBARs), but it is has the authority to impose lesser penalties, or none at all, in certain cases. If there is a reasonable cause for your FBAR violations, and your conduct was non-willful, you may not have to pay any penalties at all.

Internal Revenue Manual (IRM) 4.26.16.6 states that when an FBAR violation is found, the IRS examiner must either issue a Letter 3800 or issue a penalty. The Letter 3800 is warning letter notifying you of your apparent FBAR violations. Some taxpayers may get lucky and receive a warning without any FBAR penalties.

The civil penalties for non-willful FBAR violations are up to $10,000 per account per year, for up to six years. However, these are the maximum penalties allowable. The IRS has the discretion to reduce or eliminate the penalties in some cases.

Is My FBAR Non-Compliance Considered Non-Willful?

May 15, 2017 | by Dennis N. Brager

The failure to file Foreign Bank Account Reports (FBARs) can result in large penalties, but there are two separate penalties structures for willful and non-willful conduct. If your conduct is determined to be willful, you could have to pay $100,000 or 50 percent of the balance of the offshore account. For non-willful violations, the penalty is $10,000 per account per year.

Another situation where you must determine whether your conduct is willful is when attempting to disclose your unreported offshore bank accounts. You have different options depending on whether or not your failure to report these amounts was willful or not. Non-willful FBAR violations may be eligible for the streamlined filing compliance procedures, while willful FBAR violations are not.

Options for Disclosing Unreported Foreign Income

The Difference Between Streamlined Filing and the Offshore Disclosure Program

April 27, 2017 | by Dennis N. Brager

The IRS streamlined filing compliance procedures and the Offshore Voluntary Disclosure Program (OVDP) are two different methods that can be used to resolve your offshore bank account problems. Taxpayers who have not filed a Report of Foreign Bank and Financial Accounts (FBAR) or reported their income from overseas financial accounts may be eligible to use one of the procedures to eliminate the risk of large criminal or civil penalties.

A non-willful failure to file an FBAR can result in penalties of $10,000 per violation, while willful violations can result in criminal penalties of up to $250,000 and five years in prison, plus civil penalties in excess of $100,000 per violation. Because of these onerous penalties, many taxpayers who have failed to file FBARs either intentionally or due to ignorance should consider “coming clean” using the OVDP or Streamlined Filing procedures.

While both programs can reduce or eliminate the risk of criminal prosecution, they do have important differences. Taxpayers can not participate in both programs, so consult your tax attorney to determine which one is the better choice for your situation.