Undeclared Offshore Bank Accounts and International Tax Compliance
Under the recently-enacted Foreign Account Tax Compliance Act (FATCA), banks and financial institutions, in virtually every country in the world, must provide foreign bank account information directly to the Internal Revenue Service. U.S. citizens, green card holders and residents must annually report foreign accounts with a cumulative balance exceeding $10,000.00 on a Foreign Bank Account Report (FBAR) known as FinCen Form 114 (formerly known as Form TDF 90-22.1) by April 15th of each year.
The failure to file an FBAR or report interest from a foreign bank account or gains from a foreign securities account can result in both severe civil penalties and criminal prosecution. Any taxpayer who willfully fails to disclose foreign accounts can be subjected to a maximum penalty equal to the greater of $100,000 or 50 percent of the entire cumulative foreign account balance. There is a six year statute of limitations on the assessment of the penalty. Even if the failure to file an FBAR is non-willful and non-negligent, the penalty is $10,000 per account per year.
Our law firm has experience negotiating and resolving foreign account compliance and reporting cases. The IRS has various programs to address compliance issues including the Offshore Voluntary Disclosure Programs (OVDP), the Streamlined Foreign Compliance Procedures, the Streamlined Domestic Offshore Compliance Procedures, and the Delinquent FBAR Submission Procedure which may result in lower penalties but have substantial risks that need to be evaluated with an experience tax attorney in this complex area of the law.
We often provide legal assistance to other tax professionals, financial advisors, bankers, and lawyers to assist the client in obtaining the best possible outcome and averting criminal prosecution.