For those of you who follow international matters, it is an understatement to say that there has been tension between the United States and Russia over the past several decades. But surprisingly, it seems like there is something that the two nations can agree on: taxes.
Just ahead of the July 1st FBAR filing deadline, Russian President Vladimir Putin agreed to allow banks within Russia to send account information directly to the United States. Federal Law No. 173-FZ is not an intergovernmental agreement that the U.S. is used to entering into with other countries, but at this point, the IRS will celebrate this action by Russia as a victory.
Amid its crisis involving Ukraine, the United States halted talks with Russia earlier this year. The two nations were attempting to come to terms on a Model 1 IGA that would involve the mutual sharing of account information between Russia and the U.S. According the U.S. officials, those talks have still not restarted.
Some of the larger Russian banks are listed below. Though keep in mind, this listing is not exclusive. Russia has thousands of banks and under this new law; every one of them is authorized to avoid the adverse affects of FATCA themselves by handing over specific account information of American taxpayers.
Once again, this listing is non-exhaustive. If you have undeclared accounts in any bank in Russia that have exceeded $10,000, you must file an FBAR or risk having your information sent to the IRS. Once that happens, you will be facing an IRS Criminal Investigation and could potentially find yourself in federal prison.
In addition to the possible prison-time, the penalties for the willful failure to file are enormous and have been called draconian. At 50% of the unreported account balance for each year that has gone unreported, you could be looking at owing more than two-times the amount of money that even gave rise to the penalty in the first place.
Luckily for the American taxpayer, the IRS recently modified their Offshore Voluntary Disclosure Program. Under the new terms, a 5% of the undisclosed foreign account or offshore income generating asset penalty is paid by those whose failure to file wasn’t willful. By participating in the streamlined program, not only can you avoid some of the insanely high penalties but you can also stay out of jail. The decision to enter the streamlined program versus the Offshore Voluntary Disclosure Program should only be made with qualified criminal defense counsel as the legal definition of willfulness is not what the public might think it is.
Though the terms of the Offshore Voluntary Disclosure Program are relatively taxpayer-friendly, the steps to participate aren’t as easy to navigate as one would hope. It is in your best interest to consult an experienced tax attorney who has helped clients time and time-again participate in the program and avoid federal prison. Contact the Tax Law Offices of David W. Klasing today and let us help you get right with the government, keep as much of your money in your pocket as possible and keep you out of prison.