Taxpayers are required to file an FBAR (Report of Foreign Bank and Financial Accounts) if they had a financial interest in or signature authority over at least one financial account located outside of the United States; and the aggregate value of all of these foreign financial accounts exceeds $10,000 at any time during the calendar year for which the taxpayer is reporting.
The FBAR is a calendar year report and must be filed on or before June 30 (with no extensions granted) of the year following the calendar year being reported. But what do you do if you are required to file FBARs and you haven’t been filing them? An experienced tax professional like one of the many at the Thorgood Law Firm can help all taxpayers resolve their problems with delinquent FBARs.
Taxpayers have three options when dealing with delinquent FBAR filings.
- Submit Delinquent FBARs;
- Use the IRS’ Streamlined Filing Compliance Procedures;
- Use the Offshore Voluntary Disclosure Program (OVDP).
The first option deals with simply filing delinquent FBARs according to the instructions given by the IRS. Those taxpayers that have not filed a required FBAR and are not under a civil examination or a criminal investigation by the IRS, and have not already been contacted by the IRS about their delinquent FBARs, may utilize these procedures. For taxpayers expecting little in the way of penalties, this is probably the best option.
Streamlined procedures are also available, which, while more time-consuming than filing delinquent FBARs, enable participating taxpayers to have all penalties waived by the IRS. These procedures are designed to provide to taxpayers with a streamlined mechanism for filing amended or delinquent returns, as well as terms for both resolving their tax and penalty procedure for filing amended or delinquent returns, and their tax and penalty obligations. This is more appropriate depending on the potential penalties at stake. An experienced tax professional like one at the Thorgood Law Firm can help taxpayers decide which of these avenues is the most appropriate.
The Offshore Voluntary Disclosure Program is a voluntary disclosure program specifically designed for taxpayers with exposure to potential criminal liability and/or substantial civil penalties due to a willful failure to report foreign financial assets and pay all tax due in respect of those assets. The IRS designed this program to protect taxpayers from criminal liability, as well as provide terms for resolving their civil tax and penalty obligations. Taxpayers that face criminal punishment will want to avail themselves of the OVDP, but only with the help of an experienced tax professional.
If you have questions about the timely or delinquent filing of a FBAR — Report of Foreign Bank and Financial Accounts, or questions about your foreign accounts, contact THE TAX EXPERTS at the Thorgood Law Firm www.thorgoodlaw.com. For a FREE consultation, call 212-490-0704.
