Disclosing your unreported offshore accounts can give you peace of mind because you no longer have to worry about massive penalties or IRS criminal investigation. There are several reasons to act quickly and take advantage of the current IRS offshore disclosure options.
Key Insights We Will Discuss:
- How you can limit your tax penalties by making an offshore disclosure as soon as possible
- How the IRS can find out about your foreign bank accounts
- Why you should not wait to make an offshore disclosure
An Offshore Disclosure Can Reduce Your Tax Penalties
The penalty for failing to file an FBAR is up to $10,000 per non-willful violation. Willful violations can lead to penalties of up to $100,000 or 50% of your aggregate offshore account balance.
These penalties can be assessed for each unreported account and for each year you failed to file an FBAR. On top of that, you could face other penalties, such as a penalty for failing to file Form 8939, Report of Specified Foreign Financial Assets.
If you’re eligible for the Streamlined Compliance Procedures, you could avoid all of these penalties. Instead, you may only need to pay a miscellaneous offshore penalty 5% of your highest aggregate foreign account balance. This could easily save you tens of thousands of dollars if you qualify.
The IRS Has Ways to Find Your Foreign Accounts
The Foreign Account Tax Compliance Act (FATCA) requires certain foreign financial institutions to collect and report information to the IRS about accounts owned by U.S. taxpayers.
If you don’t voluntarily report your foreign accounts when you are required to, the IRS may find out about them on their own.
Once the IRS decides to examine your tax returns or begin a criminal investigation, you’re automatically disqualified from making a voluntary disclosure. This is the case even when the IRS examination is unrelated to your foreign bank accounts.
The IRS May Change the Current Offshore Disclosure Rules
The IRS doesn’t have to continue the Offshore Disclosure Program or the Streamlined Procedures. In fact, the old Offshore Voluntary Disclosure Program (OVDP) was permanently closed in 2018. The IRS could one day close the Streamlined Procedures or increase the required penalty payments.
Contact an Attorney
Get help with offshore account problems by calling Ayar Law at 800-571-7175 to get free, no-obligation tax advice from a tax attorney.
- You can reduce the penalties charged for failing to report your foreign accounts by making a voluntary disclosure
- The IRS has methods of obtaining information about your foreign accounts, which could lead to tax audits or criminal investigations
- The current offshore disclosure options may not be around forever, so take action quickly to revoke your undisclosed foreign bank account problems.