by Fresh Start Tax | Jun 25, 2012 | Expatriate Tax, FBAR, Representation, Tax Lawyer
FBAR – Offshore Voluntary Disclosure – Tax Attorneys, IRS Tax Experts – Former IRS – Tax Representation
Have IRS Tax Experts in FBAR in the Offshore Voluntary Disclosure Program (OVDP) represent you before the Internal Revenue. Why call any other tax firm when we worked for the IRS and know there tax policies and procedures.
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As you may know the Internal Revenue Service ( IRS ) reopened the Offshore Voluntary Disclosure Program to help people hiding offshore accounts get current with their taxes and announced the collection of more than $4.4 billion so far from the two previous international programs.
The third offshore program.
The Third and new Offshore Program comes as the IRS continues working on a wide range of international tax issues and follows ongoing efforts with the Justice Department to pursue criminal prosecution of international tax evasion.
This 3rd program will be open for an indefinite period until otherwise announced. The IRS has collected far more money than expected and this program will continue to generate large dollars of revenue into the federal government.
The new OVD program is similar to the 2011 program in many ways, but with a few key differences.
There is no set deadline for people to apply.
However, the terms of the program could change at any time going forward. For example, the IRS may increase penalties in the program for all or some taxpayers or defined classes of taxpayers – or decide to end the program entirely at any point.
The third offshore effort comes as Shulman also announced today the IRS has collected $3.4 billion so far from people who participated in the 2009 offshore program, reflecting closures of about 95 percent of the cases from the 2009 program. On top of that, the IRS has collected an additional $1 billion from up front payments required under the 2011 program. That number will grow as the IRS processes the 2011 cases.
In all, the IRS has seen 33,000 voluntary disclosures from the 2009 and 2011 offshore initiatives. We are expecting those numbers to soar.
Since the 2011 program closed last September, hundreds of taxpayers have come forward to make voluntary disclosures.
Those who have come in since the 2011 program closed last year will be able to be treated under the provisions of the new OVDP program.
The overall penalty structure for the new program is the same for 2011, except for taxpayers in the highest penalty category. It is best to look into the abate of certain penalties as it relates to FBAR.
Penalty Structure
For the new program, the penalty framework requires individuals to pay a penalty of 27.5 percent of the highest aggregate balance in foreign bank accounts/entities or value of foreign assets during the eight full tax years prior to the disclosure.
That is up from 25 percent in the 2011 program. Some taxpayers will be eligible for 5 or 12.5 percent penalties; these remain the same in the new program as in 2011.
Participants must file all original and amended tax returns and include payment for back-taxes and interest for up to eight years as well as paying accuracy-related and/or delinquency penalties.
Participants face a 27.5 percent penalty, but taxpayers in limited situations can qualify for a 5 percent penalty. Smaller offshore accounts will face a 12.5 percent penalty. People whose offshore accounts or assets did not surpass $75,000 in any calendar year covered by the new OVDP will qualify for this lower rate.
As under the prior programs, taxpayers who feel that the penalty is disproportionate may opt instead to be examined.
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by Fresh Start Tax | Jun 25, 2012 | FBAR, IRS Tax Problem, Tax Help, Tax Lawyer
FBAR Tax Attorney – IRS Tax Experts – Former IRS – IRS Tax Representation
We are a Professional Tax Firm specializing in FBAR IRS tax representation.
We are comprised of Board Certified Tax Attorneys, CPA’s and Former IRS Agents and Managers.
We are familiar with all areas of the FBAR and can help you through any situation or problem you may have. We handle all areas of tax representation and you will never have to talk to the IRS.
We have over 205 years of professional tax experience and over 60 years of working directly for the Internal Revenue Service in all facets of the IRS.
We are True IRS Tax Experts. We also taught Tax Law at the Internal Revenue Service.
Call us today for a no cost professional consult and speak direct to Tax Attorneys, CPA’s or Former IRS Agents.
We handle all aspects of FBAR and all tax representation can be if necessary conducted under attorney-client privilege.
INFORMATION FOR – FBAR – Foreign Bank Financial Accounts
If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, the Bank Secrecy Act may require you to report the account yearly to the Internal Revenue Service by filing Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR).
The FBAR is required because foreign financial institutions may not be subject to the same reporting requirements as domestic financial institutions.
The FBAR is a tool to help the United States government and the Internal Revenue Service identify person(s )who may be using foreign financial accounts to circumvent United States tax law.
Investigators use FBARs to help identify or trace funds used for illicit purposes or to identify unreported income maintained or generated abroad.
3 of the most FAQ’s
What is an FBAR?
A. An FBAR is a Report of Foreign Bank and Financial Accounts. The form number is TD F 90-22.1 (PDF).
Who must file an FBAR?
A. Any United States person who has a financial interest in or signature authority or other authority over any financial account in a foreign country, if the aggregate value of these accounts exceeds $10,000 at any time during the calendar year.
Q. What is a foreign country?
A. A “foreign country” includes all geographical areas outside the United States, the commonwealth of Puerto Rico, the commonwealth of the Northern Mariana Islands, and the territories and possessions of the United States (including Guam, American Samoa, and the United States Virgin Islands).
What is a United States person?
A. “United States person” includes a citizen or resident of the United States, a domestic partnership, a domestic corporation, and a domestic estate or trust.
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by Fresh Start Tax | Jan 4, 2012 | FBAR
Foreign Tax Accounts – Requirement, Representation, Answers to Questions 1-866-700-1040
You can contact our firm if you are looking for professional expert tax representation on all Foreign Tax Account information and reporting.
We will go with you all the filing requirements and confidentially answer all questions you may have. Attorney privilege is available if requested
You can reach us for a no cost consult at 1-866-700-1040
The Offshore Voluntary Disclosure Program
The IRS began an open ended offshore voluntary disclosure program (OVDP) in January 2012 on the heels of strong interest in the 2011 and 2009 programs. The IRS may end the 2012 program at any time in the future.
IRS collected over $5.5 Billion Dollars as a result of the first two programs when over 33,000 filers came forward to avoid criminal penalties and the possibility of jail time.
The IRS Offering
The IRS is offering people with undisclosed income from offshore accounts another opportunity to get current with their back tax returns filings.
The 2012 has a much higher penalty rate than the previous program but offers clear benefits to encourage taxpayers to disclose foreign accounts now rather than risk detection by the IRS and possible criminal prosecution.
Receiving Foreign Income
Many United States citizens and resident aliens receive income from foreign sources. There have been recent reports about the interest of the Internal Revenue Service in taxpayers with accounts in Liechtenstein. It should be noted that the government has gave way to US demands and are currently turning over the records of bank accounts and financial dealing of US citizens to authorities making the request. Yes, Liechtenstein gave way to US pressures.
The interest of the IRS however extends beyond accounts in Liechtenstein to accounts anywhere in the world. The IRS and the DOJ reminds you to report your worldwide income on your US tax return.
US Citizens and Resident Aliens
If you are a U.S. citizen or resident alien, you must report income from all sources within and outside of the U.S.
This is true whether or not you receive:
1. Form W-2 Wage and Tax Statement, a Form 1099 (Information Return)
2. or the foreign equivalents.
If you are a US citizen or resident alien, the rules for filing income, estate and gift tax returns and for paying estimated tax are generally the same whether you are living in the U.S. or overseas abroad.
Hiding Income Offshore
Not reporting income from foreign sources may be a crime punishable with prison time. Both the IRS and the Department of Justice keeps actively posting those convicted of these crimes.
The IRS and its international partners are pursuing those who hide income or assets offshore to evade taxes.
Specially trained IRS examiners call Revenue Agents or CID Specialist are focused on aggressive international tax planning, including the abusive use of entities and structures established in foreign jurisdictions. The current Obama Administration is current funding the IRS with over $500 M this next year to go after tax cheats.
The goal is to ensure US citizens and residents are accurately reporting their income and paying the correct tax.
Foreign Financial Accounts
In to reporting your worldwide income, you must also report on your U.S. tax return whether you have any foreign bank or investment accounts.
The Bank Secrecy Act requires:
a. that you to file a Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), if:
1. You have financial interest in, signature authority, or other authority over one or more accounts in a foreign country and,
2. The aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year.
Consequences for Evading Taxes on Foreign Source Income
A taxpayer will face serious consequences if the IRS finds you have unreported income or undisclosed foreign financial accounts. These consequences can include not only the additional taxes, but also substantial penalties, interest, fines and even imprisonment.
If you are a U.S. citizen or resident alien, the rules for filing income, estate, and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad. Your worldwide income is subject to U.S. income tax, regardless of where you reside.
When to File
If you are a U.S. citizen or resident alien residing overseas, or are in the military on duty outside the U.S., on the regular due date of your return, you are allowed an automatic two month extension to file your return and pay any amount due without requesting an extension.
For a calendar year return, the automatic 2-month extension is to June 15.
If you are unable to file your return by the automatic 2-month extension date, you can request an additional extension to October 15 by filing form 4828 before the automatic 2-month extension date.
However, any tax due payments made after June 15 will be subject to both interest charges and failure to pay penalties.
FBAR Penalties
The IRS has been delegated authority to assess FBAR as civil penalties.
There are civil penalties for negligence, pattern of negligence, non-willful, and willful violations.
Whenever there is an FBAR violation, the examiner will either issue the FBAR warning letter, Letter 3800, or determine a penalty. See IRM 4.26.17 for the Letter 3800procedures
The penalties should be asserted only to promote compliance with the FBAR reporting and record keeping requirements.
In exercising IRS discretion, tax examiners or agents should consider whether the issuance of a warning letter and the securing of delinquent FBARs, rather than the assertion of a penalty, will achieve the desired result of improving compliance in the future.
FBAR civil penalties have varying upper limits.
This is a noteworthy and extremely important,
The IRS tax examiner has discretion in determining the amount of the penalty, if any. The tax examiner or agents has discretion to make necessary changed because the total amount of penalties that can be applied under the statute can greatly exceed an amount that would be appropriate in view of the violation.
Tax Examiners and Agents are expected to exercise discretion, taking into account the facts and circumstances of each case, in determining whether penalties should be asserted and the total amount of penalties to be asserted. Call us for more details on this subject matter because here is where you save the bucks.
FBAR penalties do not have a set amount IRS has developed penalty mitigation guidelines to assist examiners in the exercise of their discretion in applying these penalties.
The mitigation guidelines are only intended as an aid for the examiner in determining an appropriate penalty amount.
The tax examiner or Agent must still consider whether a warning letter or a penalty amount that is less than what would be called for under the mitigation guidelines would be more appropriate given the facts and circumstances of a particular case.
Case study.
If an individual failed to report the existence of five small foreign accounts with a combined balance of $30,000 for all five accounts but the income from each account was properly reported and the taxpayer made no effort to conceal the existence of the account, it may be more appropriate to issue a warning letter rather than assert penalties under the mitigation guidelines.
FBAR penalties are determined per account, not per unfiled FBAR, for each person required to file.
Penalties apply for each year of each violation. As noted above however tax examiners or agents are expected to exercise discretion, taking into account the facts and circumstances of each case, in determining whether penalties should be asserted and the total amount of penalties to be asserted.
There may be multiple FBAR civil penalty assessments arising from one account.
FBAR civil penalties can apply to each person with a financial interest in, or signature or other authority over, the foreign financial account.
Thus there may be multiple penalty assessments if there is more than one account owner or if a person other than the account owner has signature or other authority over the foreign account. Each person can be liable for the full amount of the penalty.
Foreign Tax Accounts – Requirement, Representation, Answers to Questions
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by steve | Jul 5, 2011 | FBAR, IRS Tax Advice, Tax News
FBAR Reporting Requirements – FBAR FORM – FBAR Tax Experts
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Let Tax Attorneys, IRS Tax Lawyers and Former IRS Agents, Managers and Instructors who know their way through the system resolve your FBAR Reporting Requirement situation. FBAR Forms can be found on our website under the tax forms section.
Report of Foreign Bank and Financial Accounts (FBAR)
Financial Interests.
If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, the Bank Secrecy Act may require you to report the account yearly to the Internal Revenue Service by filing Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR).
The FBAR is required because foreign financial institutions may not be subject to the same reporting requirements as domestic financial institutions.
The FBAR is a tool to help the United States government identify persons who may be using foreign financial accounts to circumvent United States law.
Investigators use FBARs to help identify or trace funds used for illicit purposes or to identify unreported income maintained or generated abroad.
Recent FBAR Guidance
On February 24, 2011, the Treasury Department published final regulations amending the FBAR regulations. These regulations became effective on March 28, 2011, and apply to FBARs required to be filed with respect to foreign financial accounts maintained in calendar year 2010 and for FBARs required to be filed with respect to all subsequent calendar years. The FBAR form and instructions have been revised to reflect the amendments made by the final regulations.
On May 31, 2011, the Financial Crimes Enforcement Network (FinCEN) issued FinCEN Notice 2011-1, revised June 6, 2011, to provide administrative relief for certain individuals with signature authority over but no financial interest in foreign financial accounts. The deadline to report signature authority has been extended to June 30, 2012, for the following individuals:
a. an employee or officer of an entity under 31 CFR § 1010.350(f)(2)(i)-(v) who has signature or other authority over and no financial interest in a foreign financial account of a controlled person of the entity;
b. or an employee or officer of a controlled person of an entity under 31 CFR § 1010.350(f)(2)(i)-(v) who has signature or other authority over and no financial interest in a foreign financial account of the entity, the controlled person, or another controlled person of the entity.
For purposes of FinCEN Notice 2011-1, a controlled person is a United States or foreign entity more than 50 percent owned (directly or indirectly) by an entity under 31 CFR § 1010.350(f)(2)(i)-(v). Who Must File an FBAR
FBAR Reporting Requirements
United States persons are required to file an FBAR if:
The United States person 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 foreign financial accounts exceeded $10,000 at any time during the calendar year to be reported.
United States person means United States citizens; United States residents; entities, including but not limited to, corporations, partnerships, or limited liability companies created or organized in the United States or under the laws of the United States; and trusts or estates formed under the laws of the United States. Exceptions to the Reporting Requirement
Exceptions to the FBAR reporting requirements can be found in the FBAR Instructions. There are filing exceptions for the following United States persons or foreign financial accounts:
Certain foreign financial accounts jointly owned by spouses; United States persons included in a consolidated FBAR; Correspondent/nostro accounts; Foreign financial accounts owned by a governmental entity; Foreign financial accounts owned by an international financial institution; IRA owners and beneficiaries; Participants in and beneficiaries of tax-qualified retirement plans; Certain individuals with signature authority over, but no financial interest in, a foreign financial account; Trust beneficiaries; and Foreign financial accounts maintained on a United States military banking facility.
Look to the FBAR instructions to determine eligibility for an exception and to review exception requirements.
A person who holds a foreign financial account may have a reporting obligation even though the account produces no taxable income. Checking the appropriate block on FBAR-related federal tax return or information return questions (e.g., on Schedule B of Form 1040, the “Other Information” section of Form 1041, Schedule B of Form 1065, and Schedule N of Form 1120) and filing the FBAR, satisfies the account holder’s reporting obligation.
The FBAR is not filed with the filer’s federal income tax return. The granting, by the IRS, of an extension to file federal income tax returns does not extend the due date for filing an FBAR. You may not request an extension for filing the FBAR. The FBAR must be received by the IRS on or before June 30 of the year following the calendar year being reported.
Place to File by mailing the FBAR to:
United States Department of the Treasury P.O. Box 32621 Detroit, MI 48232-0621.
If an express delivery service is used, file by mailing to:
IRS Enterprise Computing Center ATTN: CTR Operations Mail Room, 4th Floor 985 Michigan Avenue Detroit, MI 48226
Delivery messenger service contact telephone number: 313-234-1062
Account holders who do not comply with the FBAR reporting requirements may be subject to civil penalties, criminal penalties, or both. FBAR Assistance
FBAR Reporting Requirements – FBAR FORM – FBAR Tax Experts
