International FBAR Lawyer
Los Angeles is an international city with multiple airports, one of the largest shipping ports in the nation, universities that attract some of the world’s best and brightest, and a diverse population from all parts of the world. In light of the significant social, cultural, and financial ties to foreign nations and overseas markets, those who live and work in greater L.A. have a higher than average likelihood of holding overseas accounts or assets and requiring the need for an experienced international FBAR lawyer. Individuals holding funds or assets that exceed certain limits are required to disclose the existence of the account or accounts or face serious tax consequences.
Obligations regarding Report of Foreign Bank and Financial Accounts, or FBAR, has been present in the laws of the United States for many years. However it is only in relatively recent years that Congress, the IRS, and the DOJ have placed an emphasis on the identification and enforcement of offshore tax evasion. To address the perceived problem of wealthy Americans use of foreign accounts and trusts to avoid tax, Congress not only strengthened the penalties one could face for a willful FBAR violation, but also created new violation that can punish even inadvertent failures to comply with the disclosure law.
In general, U.S. taxpayers are required to submit their FBAR filing by June 30th of each calendar year if they hold or control foreign accounts where the aggregate balance exceeds $10,000. The taxpayer must make a comprehensive and accurate disclosure or he or she can face serious tax charges. The penalty for accidental non-compliance with FBAR can be punished by a fine of up to $10,000. That $10,000 fine can be imposed for each violation meaning that a $10,000 fine can be imposed for each year where the account went unreported. IN situations where willfulness is not implicated, the IRS can typically look back for up to three years.
However, if your actions are interpreted as being willful, then penalties become even more severe. A willful act can include someone who knows that they have a duty to file FBAR, but voluntarily decides to neglect this duty. Furthermore, a taxpayer who is willfully blind and intentionally avoids learning about a legal obligation or duty has also acted willfully. In short, willfulness involves a voluntary or intentional disregard of a known legal duty. Individuals convicted of a willful failure to fulfill their FBAR obligation face even more harsh penalties. A fine of $100,000 or 50 percent of the original balance – whichever is greater – can be imposed. Furthermore, like the non-willful version, each violation can be punished but for matters involving willfulness the IRS can look back six years. Willful FBAR penalties regularly exceed the value of the account in question.
Taxpayers May Also Have a FATCA Disclosure Duty
FATCA not only requires U.S. taxpayers to disclose foreign assets and accounts, it also requires foreign banks and financial institutions to provide information about U.S. linked accounts to the United States government. The U.S. government uses this information to identify taxpayers who have failed to comply with their disclosure obligations.
Under FATCA, taxpayers are required to disclose foreign assets and accounts. Some taxpayers may be required to only make FBAR disclosures while others may be required to disclosure under both reporting regimes. While both FBAR and FATCA require the disclosure of foreign accounts, FATCA includes a broader array of assets in its reporting requirements. Furthermore, while the FBAR reporting threshold is constant, the FATCA filing obligation threshold is dependent upon one’s tax filing status and whether one is living within the borders of the United States or abroad. Generally speaking sole filers and individuals living within the United States have a lower reporting threshold. Married taxpayers who file jointly and taxpayers who live outside of the U.S. can hold greater amounts of foreign assets before being required to disclose under FATCA.
OVDP can Mitigate Your Exposure to Tax Consequences
While the penalties that a non-compliant taxpayer can face are severe, the Offshore Voluntary Disclosure Program can mitigate the consequences you face provided that you make a comprehensive disclosure of all past compliance failures. While there is an offshore penalty, paying this penalty is undoubtedly preferable to facing the much more severe potential consequences of a tax enforcement action. To schedule a reduced-rate consultation call an experienced international FBAR lawyer at the Tax Law Offices of David W. Klasing at 800-681-1295 or contact us online today.