If you have money in foreign bank accounts, you are not immune from disclosing that information to the IRS. The Foreign Account Tax Compliance Act (FATCA) requires foreign financial institutions and other non-financial foreign entities to report foreign assets held by U.S. account holders. Individuals are also required to report their foreign financial accounts and foreign assets. Failing to do so can result in penalties from the IRS.
Fortunately, if you fail to report foreign accounts to the IRS, there are several amnesty programs available to help minimize penalties.
Learn more about these amnesty programs and how a tax attorney can help you reduce your penalties.
Key Insights We Will Discuss
- Consequences for not disclosing foreign accounts.
- How to qualify for Streamlined Filing Compliance Procedures.
- What are the Delinquent FBAR Submission Procedures?
- Who can qualify for the Delinquent International Information Return Submission Procedures.
Penalties for Not Disclosing Foreign Accounts to the IRS
Not reporting foreign accounts and assets to the IRS can result in penalties and fines. In severe cases, the IRS can assess a taxpayer with felony tax evasion charges. In other cases, the agency can impose fines. These can be 100,000 per year or 50 percent of the highest account balance for every year the accounts were not disclosed.
Streamlined Filing Compliance Procedures
If you fail to report foreign accounts to the IRS, one option to avoid penalties is through the Streamlined Filing Compliance Procedures. These are available to taxpayers who did not knowingly fail to report foreign accounts or assets.
These procedures allow taxpayers to:
- File amended or delinquent returns.
- Get direction on how to resolve tax and penalty procedures for filing amended or delinquent returns.
- Receive terms for resolving tax and penalty obligations.
To be eligible for the streamlined procedures – both for non-U.S. residents and U.S. residents — you must meet certain criteria. The main requirement is to show the taxpayer unwillfully failed to report foreign accounts and assets. Other criteria includes:
- The taxpayer’s returns have not previously been investigated by the IRS.
- The taxpayer pays previous penalty assessments on delinquent or amended returns.
- The taxpayer must have a valid Taxpayer Identification Number.
Delinquent FBAR Submission Procedures
Another option to resolve unreported foreign accounts are the Delinquent FBAR Submission Procedures. These procedures are open to you if:
- You are not being investigated by the IRS.
- You have not been contacted by the IRS about delinquent FBARs
If you file a delinquent FBAR, the IRS will not impose a penalty if you properly reported the foreign accounts on your U.S. tax returns and paid taxes on the income.
Contact a tax attorney to help navigate how to apply for and submit the procedures.
Delinquent International Information Return Submission Procedures
Another option to avoid penalties for undisclosed foreign accounts is through Delinquent International Information Return Submission Procedures. The main requirement for these procedures is to have unwilfully failed to disclose foreign accounts.
Other requirements include:
- Have not filed required international information returns.
- Have a reasonable excuse for not filing the returns on time.
- Are not being investigated by the IRS.
- Have not been contacted by the IRS about delinquent FBARs.
Contact Ayar Law
If you have unreported foreign accounts and assets, call Ayar Law at 800-571-7175 to receive free, no-obligation legal advice from one of our qualified and experienced senior tax attorneys.
Executive Summary
- Unreported foreign accounts and assets can result in penalties from the IRS.
- To avoid IRS penalties, taxpayers can apply for various options, including Streamlined Filing Compliance Procedures, Delinquent FBAR Submission Procedures and Delinquent International Information Return Submission Procedures.
- Contact Ayar Law to get free, no-obligation legal advice at 800.571.7175.
