by Fresh Start Tax | Jun 25, 2013 | FBAR
Trust your FBAR filing to Tax Lawyers, Tax Attorneys, Certified Public Accountants, and former IRS agents, managers and tax instructors who have over 60 years experience working directly for the Internal Revenue Service in the local, district, and regional tax offices of the Internal Revenue Service.
If you need to file on your own you can find the Fbar form on our website.
The filing of Fbar is no longer a laughing matter.
The federal government has devoted many tax dollars and resources to make sure everyone is fully compliant on their Fbar reporting requirements.
The reason for this is this huge success they have had in the last three filing seasons.
Over the last three filing seasons the federal government has collected over $5.5 billion with the estimates being over 300 billion is still left on the table to collect.
The IRS has hired many new revenue agents and criminal prosecutors to attack this huge amount of revenue that is sitting out there and they mean business.
In the latest GAO report they have found that for every dollar the federal government spends on Fbar they collect six so it is no wonder you’re going to find the IRS and the federal government putting huge amounts of resources and the fear of criminal prosecution into this program.
As a matter of fact on the IRS.gov website they keep a list of all criminal prosecutions.
Contact us today for free initial tax consultation and we can help you with your Fbar filing. We are Fbar tax experts comprised of affordable tax lawyers, affordable tax attorneys and CPAs.
I highly recommend that any taxpayer or individual who has yet to file to do so. make sure you contact IRS before they contact you. Should the IRS contact you first you will probably be looking at a criminal prosecution that’s usually the way it works.
You can contact our office for a free initial consultation and we can walk you through the process of how to get current without worries.
FBAR FILING HELP – FBAR EXPERTS – Affordable Lawyers, CPA’s, Former IRS
by Fresh Start Tax | Jun 25, 2013 | FBAR
It’s here again and it’s never going away. The annual FBAR filing date.
This year June 30, 2013.
The federal government loves to receive this birthday gift of the filings of FBAR.
In the last three filing seasons the federal government collected over $5.5 billion on Fbar alone and the federal government feels there are over $300 billion more to collect and they are on a diligent hunt to collect all the money that’s out there that they feel belongs to them.
It is in anyone’s best interest who is required to file to make sure they file this report timely because the IRS and the federal government are not going the way away and the fear of criminal prosecution is looming large over those who have yet to make a decision.
Being a former IRS agent and not trying to put fear in anybody, I would suggest anyone who has yet to file, to contact our office today for free tax consultation about their particular facts and situation and find out the different solutions available to them and about the abatement of penalties and interest.
If you are required to file you MUST file by June 30, 2013.
Who has File?
U.S. persons having 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 may be required by the Bank Secrecy Act to report their interest in the account to the IRS by filing Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR).
A U.S. person may have a reporting obligation even though the foreign financial account does not generate any income.
If a U.S. person had such a financial interest or signature authority at any time during calendar year 2012, the FBAR must be received by the Department of the Treasury on or before June 30, 2013.
The FBAR is not filed with the 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. The June 30th filing date may not be extended.
FBAR filers report their foreign accounts by (1) completing boxes 7a and 7b on Form 1040 Schedule B; box 3 on the Form 1041 “Other Information” section; box 10 on Form 1065 Schedule B; or boxes 6a and 6b on Form 1120 Schedule N and filing the FBAR, satisfies the account holder’s reporting obligation.
Even if all relevant information is not available, the FBAR should be filed with as much information as is available; the FBAR can be later amended (by checking the “Amended” box in the upper right corner of the first page of the FBAR) when the additional or new information becomes available.
Having Financial Interest
A United States person having a financial interest in or signature authority over a foreign financial account must file an FBAR if the aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year.
A United States person includes U.S. citizens; U.S. residents; entities, including but not limited to, corporations, partnerships, or limited liability companies created or organized in the U.S. or under the laws of the U. S.; and trusts or estates formed under the laws of the United States.
The term PERSON
The term “person” means an individual and legal entities including, but not limited to, a limited liability company, corporation, partnership, trust, and estate. A U.S. resident includes an alien residing in the United States.
To determine whether the U.S. person is a resident of the U.S., look for guidance in the residency tests set forth in 26 U.S.C. §7701(b).
A single-member LLC, which is a disregarded entity for U.S. tax purposes, is a U.S. person for FBAR filing purposes since the tax rules concerning disregarded entities do not apply with respect to the FBAR reporting requirement (FBARs are required under Title 31, not under any provisions of the Internal Revenue Code).
Financial Account.
A financial account includes, but is not limited to, a securities, brokerage, savings, demand, checking, deposit, time deposit, or other account maintained with a financial institution (or other person performing the services of a financial institution).
A financial account also includes a commodity futures or options account, an insurance policy with a cash value such as a whole life insurance policy, an annuity policy with a cash value, and shares in a mutual fund or similar pooled fund i.e., a fund that is available to the general public with a regular net asset value determination and regular redemption’s.
Foreign Financial Account.
A foreign financial account is a financial account located outside of the United States. For example, an account maintained with a branch of a United States bank that is physically located outside of the United States is a foreign financial account.
An account maintained with a branch of a foreign bank that is physically located in the United States is not a foreign financial account.
Foreign Country
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).
Financial Interest. A U.S. person has a financial interest in a foreign financial account for which:
(1) the U.S. person is the owner of record or holder of legal title, regardless of whether the account is maintained for the benefit of the U.S. person or for the benefit of another person; or
(2) the owner of record or holder of legal title is one of the following:
(a) An agent, nominee, attorney, or a person acting in some other capacity on behalf of the U.S. person with respect to the account;
(b) A corporation in which the U.S. person owns directly or indirectly: (i) more than 50 percent of the total value of shares of stock or (ii) more than 50 percent of the voting power of all shares of stock;
(c) A partnership in which the U.S. person owns directly or indirectly: (i) an interest in more than 50 percent of the partnership’s profits (e.g., distributive share of partnership income taking into account any special allocation agreement) or (ii) an interest in more than 50 percent of the partnership capital;
(d) A trust of which the U.S. person: (i) is the trust grantor and (ii) has an ownership interest in the trust for U.S. federal tax purposes [See 26 U.S.C. § 671-679 to determine if a grantor has an ownership interest in a trust];
(e) A trust in which the U.S. person has a greater than 50 percent present beneficial interest in the assets or income of the trust for the calendar year, unless the trust, a trustee of the trust, or agent of the trust:
(f) is a U. S. person and (ii) files an FBAR disclosing the trust’s foreign financial accounts.; or
(g) Any other entity in which the U.S. person owns directly or indirectly more than 50 percent of the voting power, total value of equity interest or assets, or interest in profits.
Signature Authority.
Signature authority is the authority of an individual (alone or in conjunction with another individual) to control the disposition of assets held in a foreign financial account by direct communication (whether in writing or otherwise) to the bank or other financial institution that maintains the financial account.
Other authority exists in a person who can exercise power that is comparable to signature authority over an account by direct communication to the bank or other person with whom the account is maintained, either orally or by some other means.
There are specified exceptions to the “signature authority only” filing requirement for officers or employees of certain types of banks and entities.
Where to File.
The FBAR is filed by mailing to: Department of the Treasury, Post Office Box 32621, Detroit, MI 48232-0621.
If an express delivery service is used, file by sending the FBAR 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.
The FBAR instructions indicate that it may be hand delivered to any local office of the IRS for forwarding to the Department of the Treasury, Detroit, MI.
The FBAR may also be delivered to the IRS’s tax attaches located in United States embassies and consulates for forwarding to the Department of the Treasury, Detroit, MI.
The FBAR is not considered filed until it is received by the Department of the Treasury in Detroit, MI.
It is interesting to note that a recent study done by the GAO office of the federal government has found for every one dollar the federal government spends on an employee working Fbar it collects six, so it is no wonder you’re going to find much manpower camping in these programs.
Contact us today for free initial tax consultation and speak to a true tax professional
by Fresh Start Tax | Jun 25, 2013 | FBAR
We are asked on a routine basis is there after FBAR amnesty?
The answer flat out is NO!
There is no such program being offered by the federal government that would give a taxpayer a free ride.
The best deal you are you will get with the Internal Revenue Service is by hiring a highly trained and experienced tax professional who knows the ropes through the system and there are many of these tax professionals that exist. IRS is very tough on FBAR.
In the last three filing years they have collected over $5.5 billion on Fbar alone. It is a hot ticket item with the IRS and it not going to stop.
I have read that there is an estimate of over $300 billion still to collect.
Make sure you do your due diligence before engaging in a tax firm.
With that said, there is much at you can do about the abatement of penalties and interest as a result of the government computations of the various penalties that arise from the filing and reporting of Fbar.
You should contact us today for a free initial tax consultation and find out the truth about your particular situation. Let our years with the federal government and extensive work experience be your best friend.
We have been in private practice since 1982 and have over 206 years of professional tax experience.
We are A+ rated by the Better Business Bureau.
We are comprised of tax attorneys, tax lawyers, former IRS agents, managers and tax instructors.
We have over 60 years of working directly for the Internal Revenue Service in a local, district, and regional tax offices of the Internal Revenue Service.
As a result of our years of experience, we know all the protocols, all the formulas, and all the penalty abatement reasonable classes that can serve you well for the situation that you may be now facing
Reasonable Cause Guidelines
Reasonable Cause.
Once IRS tax examiners determine that the taxpayer is in full compliance for all open years (not on extension) with respective provisions of the law, they must consider any reason a taxpayer provides in conjunction with the guidelines, principles and evaluating factors relating to reasonable cause based on the facts and circumstances.
IRS Tax Examiners are mindful of the fact that generally these penalties apply to individuals who have business or investment activities in foreign countries, and, as such, general care and prudence requires researching the filing and tax obligations of all jurisdictions.
Reasonable cause does not apply to the initial penalty in some IRC sections.
Many of the penalty sections have specific provisions for reasonable cause.
IRS Tax Examiners must issue a determination letter if the taxpayer requested reasonable cause consideration and it was denied.
Reasonable cause determinations can only be made by the unit that asserted the penalty e.g., campus cannot allow reasonable cause for a penalty asserted by LB&I, TE/GE, or SB/SE Field Office Examination.
A taxpayer’s repeated failure to file does not support testimony that the taxpayer demonstrated normal business care or prudence for the older, late-filed years.
Once all open periods (not on extension) are secured, examiners can make a determination as to reasonable cause for any of the periods not timely filed.
IRM 20.1.1.3.2.1 lists the standards and authorities for establishing reasonable cause and IRM 20.1.1.3.2.2 defines ordinary business care and prudence.
A taxpayer’s testimony that records were not available year after year has no merit. Once all late filings are secured, examiners can make a determination as to any reasonable cause for all periods secured.
IRM 20.1.1.3.2.2.3 provides criteria for taxpayers unable to obtain records.
It is critical to understand that there are no two cases alike.
Facts and circumstances different from taxpayer to taxpayer and many times a taxpayers history will determine the IRS tolerance in certain situations.
Remember there is no such thing as Fbar amnesty at this current time.
Avoidance Criminal Prosecution
To avoid criminal prosecution your case must be reviewed by an experienced tax attorney or tax lawyer who has extensive experience in working with the Internal Revenue Service. In all honesty there are no two cases the same.
Every case must be thoroughly reviewed before guidance can be given.
As a general rule, the IRS is going to go after high dollar cases and those who have repeatedly violated the law and have made every effort possible to hide or fail to disclose the funds.
When you call our office and you have such a case, you will speak to a tax attorney or tax lawyer in which all conversations will be held under attorney-client privilege.
FBAR Amnesty – Avoidance Criminal Prosecution – Affordable Attorneys, Lawyers, Former IRS
by Fresh Start Tax | Jun 25, 2013 | FBAR
Instructions for New Streamlined Filing Compliance Procedures for Non-Resident, Non-Filer U.S. Taxpayers
If you need any help for the filing of FBAR contact us today for a free initial tax consultation and speak directly to tax attorneys, tax lawyers, certified public accountants, enrolled agents, or former IRS agents, managers and tax instructors.
We have over 206 years of professional tax experience and over 60 years of working directly for the Internal Revenue Service as agents, former managers, and teaching instructors.
We have worked in the local, district and in the regional teaching offices of the IRS.
We have been in private practice since 1982 and we are A+ rated by the Better Business Bureau.
New Streamline Filing Compliance for FBAR
On June 26, 2012, the IRS announced new streamlined filing compliance procedures for non-resident U.S. taxpayers to go into effect on September 1, 2012.
These procedures are being implemented in recognition that some U.S. taxpayers living abroad have failed to timely file U.S. federal income tax returns or Reports of Foreign Bank and Financial Accounts (FBARs), Form TD F 90-22.1, but have recently become aware of their filing obligations and now seek to come into compliance with the law.
These new procedures are for non-residents including, but not limited to, dual citizens who have not filed U.S. income tax and information returns.
Description of the New Streamlined Procedure
This streamlined procedure is designed for taxpayers that present only a low compliance risk. Let me make this clear if you have a complicated or serious issue the streamlined procedure is not for you.
You should contact one of our tax attorneys or tax lawyers today and help you through the issue that you are having.
All submissions will be reviewed by the IRS, but, as discussed below, the intensity of review will vary according to the level of compliance risk presented by the submission.
For those taxpayers presenting low compliance risk, the review will be expedited and the IRS will not assert penalties or pursue follow-up actions.
Submissions that present higher compliance risk are not eligible for the streamlined processing procedures and will be subject to a more thorough review and possibly a full examination, which in some cases may include more than three years, in a manner similar to opting out of the Offshore Voluntary Disclosure Program.
All Delinquent Tax Returns must be Filed
Taxpayers utilizing this procedure will be required to file delinquent tax returns, with appropriate related information returns (e.g. Form 3520 or 5471), for the past three years and to file delinquent FBARs (Form TD F 90-22.1) for the past six years.
Payment for the tax and interest, if applicable, must be remitted along with delinquent tax returns.
Also a retroactive relief for failure to timely elect income deferral on certain retirement and savings plans where deferral is permitted by relevant treaty is available through this process.
The proper deferral elections with respect to such arrangements must be made with the submission.
Eligibility Requirements
This procedure is available for non-resident U.S. taxpayers who have resided outside of the U.S. since January 1, 2009 and who have not filed a U.S. tax return during the same period.
These taxpayers must present a low level of compliance risk as described below.
Amended returns submitted through this program will be treated as high risk returns and subject to examination, except for those filed for the sole purpose of submitting late-filed Forms 8891 to seek relief for failure to timely elect deferral of income from certain retirement or savings plans where deferral is permitted by relevant treaty.
It should be noted that this relief is also available under the Offshore Voluntary Disclosure Program.
See below for the information required to be submitted with such requests.
If you need to file an amended return to correct previously reported or unreported income, deductions, credits, tax etc, you should not use this streamlined procedure.
Depending on your circumstances, you may want to consider participating in the Offshore Voluntary Disclosure Program.
All tax returns submitted under this procedure must have a valid Taxpayer Identification Number (TIN).
For U.S. citizens, a TIN is a Social Security Number (SSN).
For individuals that are not eligible for an SSN, an Individual Taxpayer Identification Number (ITIN) is a valid TIN.
Tax returns filed without a valid SSN or ITIN will not be processed.
For those who are ineligible for an SSN, but who do not have an ITIN, a submission may be made through this program if accompanied by a complete ITIN application.
Compliance Risk Determination
The IRS will determine the level of compliance risk presented by the submission based on information provided on the returns filed and based on additional information provided in response to a Questionnaire required as part of the submission.
Low risk will be predicated on simple returns with little or no U.S. tax due.
Absent any high risk factors, if the submitted returns and application show less than $1,500 in tax due in each of the years, they will be treated as low risk and processed in a streamlined manner.
The risk level may rise if any of the following are present:
- If any of the returns submitted through this program claim a refund;
- If there is material economic activity in the United States;
- If the taxpayer has not declared all of his/her income in his/her country of residence;
- If the taxpayer is under audit or investigation by the IRS;
- If FBAR penalties have been previously assessed against the taxpayer or if the taxpayer has previously received an FBAR warning letter;
- If the taxpayer has a financial interest or authority over a financial account(s) located outside his/her country of residence;
- If the taxpayer has a financial interest in an entity or entities located outside his/her country of residence;
- If there is U.S. source income; or
- If there are indications of sophisticated tax planning or avoidance.
For additional information about what information will be requested to evaluate risk, please see the Questionnaire.
Instructions for Using This Procedure
Taxpayers wishing to use these streamlined procedures must:
- Submit complete and accurate delinquent tax returns, with appropriate related information returns, for the last three years for which a U.S. tax return is due.
Please note that all delinquent information returns being filed under this procedure should be sent to the address below with the rest of the submission.
Include at the top of the first page of each tax return “Streamlined” to indicate that the returns are being submitted under this procedure.
This is very important to ensure that your returns get processed through these procedures.
Submit payment of all tax due and owing as reflected on the returns and statutory interest due and owing.
For returns determined to be high risk, failure to file and failure to pay penalties may be imposed in accordance with U.S. federal tax laws and FBAR penalties may be imposed in accordance with U.S. law.
Reasonable cause statements may be requested during review or examination of the returns determined to be high risk
.
Submit copies of filed FBARs for the last six years for which an FBAR is due. (You should file delinquent FBARs according to the FBAR instructions and include a statement explaining that the FBARs are being filed as part of the Streamlined Filing Compliance Procedures for Non-Resident, Non-Filer U.S. Taxpayers.
Through June 30, 2013, you may file electronically (http://bsaefiling.fincen.treas.gov) or by sending paper forms to Department of Treasury, Post Office Box 32621, Detroit, MI 48232-0621.
After June 30, 2013, you must file electronically (http://bsaefiling.fincen.treas.gov.)
If you are unable to file electronically, you may contact the FinCEN Regulatory Helpline at 800-949-2732 to request an exemption.
Submit a complete, accurate and signed Questionnaire.
If the taxpayer must apply for an ITIN in order to file delinquent returns under this procedure, the application and other documents required for applying for an ITIN must be attached to the the required forms, information, and documentation required under this streamlined procedure.
Any taxpayer seeking relief for failure to timely elect deferral of income from certain retirement or savings plans where deferral is permitted by relevant treaty will be required to submit:
- a statement requesting an extension of time to make an election to defer income tax and identifying the pertinent treaty provision;
- for relevant Canadian plans, a Form 8891 for each tax year and each plan and a description of the type of plan covered by the submission; and
- a dated statement signed by the taxpayer under penalties of perjury describing:
- the events that led to the failure to make the election,
- the events that led to the discovery of the failure, and
- if the taxpayer relied on a professional advisor, the nature of the advisor’s engagement and responsibilities.
This program has been established for non-resident non-filers. Generally amended returns will not be accepted in this program.
The only amended returns accepted through this program are those being filed for the sole purpose of submitting late-filed Forms 8891 to seek relief for failure to timely elect deferral of income from certain retirement or savings plans where deferral is permitted by relevant treaty.
Non-resident taxpayers who have previously filed returns but wish to request deferral provisions will be required to submit:
an amended return reflecting no adjustments to income deductions, or credits; and
all documents required in item 7 above.
The documents listed above must be sent to:
Internal Revenue Service
3651 South I-H 35
Stop 6063 AUSC
Attn: Streamlined
Austin, TX 78741
Other Considerations
Taxpayers who are concerned about the risk of criminal prosecution should be advised that this new procedure does not provide protection from criminal prosecution if the IRS and Department of Justice determine that the taxpayer’s particular circumstances warrant such prosecution.
Taxpayers concerned about criminal prosecution because of their particular circumstances should be aware of and consult their legal advisers about the Offshore Voluntary Disclosure Program (OVDP), announced on January 9, 2012, which offers another means by which taxpayers with undisclosed offshore accounts may become compliant.
For additional information go to the OVDP page. It should be noted, however, that once a taxpayer makes a submission under the new procedure described in this document, OVDP is no longer available.
It should also be noted that taxpayers who are ineligible to use OVDP are also ineligible to participate in this procedure.
Contact us today for free initial consultation so you can be guided through the new Fbar streamlined procedures.
You will speak directly to tax attorneys, tax lawyers, certified public accountants, and former IRS agents, managers are tax instructors.
We are the affordable tax experts.
by Fresh Start Tax | Jun 25, 2013 | Expatriate Tax, FBAR
If you cannot pay your IRS tax as a result of Offshore, FBAR, International Tax Filings call us today and speak to affordable tax attorneys, tax lawyers, certified public accountant, or former IRS agents.
We have over 206 years of professional tax experience and over 60 years of working directly for the Internal Revenue Service.
We have been in private practice since 1982 and we are A+ rated by the Better Business Bureau.
On staff are former IRS agents who have worked the IRS offer in compromise program better known as the tax settlement or workout program.
IRS you cannot pay IRS
Those taxpayers or persons who cannot pay their IRS tax debt will be required to fall under the Internal Revenue Service collection division protocol.
Under the IRS protocol you will need to send to the IRS a copy of your completed and signed Offshore Voluntary Disclosures letter and attachment.
If you cannot pay the total amount of tax, interest, and penalties as described above, submit your proposed payment arrangement and a completed Collection Information Statement ( Form 433-A, Collection Information Statement for Wage Earners and Self-employed Individuals, or Form 433-B, Collection Information Statement for Businesses, as appropriate).
You can find these forms on our website.
Simply go to the homepage, click on the top toolbar under IRS forms and you will find the various financial statements.
As a former IRS agent I will tell you it is in your best interest to have a tax professional review these before you turn them into the Internal Revenue Service.
The IRS Review of your Financial Statement
As a Former IRS agent I have reviewed thousands of financial statements submitted by taxpayers to the Internal Revenue Service for review.
It is critically important that you understand how the IRS reviews your financial statement.
The Internal Revenue Service will expect you to possibly liquidate some of your assets to pay your IRS debt.
Before you do that, you should you consider calling us for free initial tax consultation so we can explain to you various methods in dealing with the IRS situation.
As a general rule, IRS will need to close your case off the IRS enforcement or collection computer.
They will do so after a complete review and analysis of these current financial statements. IRS at some point will ask you to completely document the financial statement with all income, expenses, along with 3 to 6 months worth of bank statements.
Make sure you fill out an honest and accurate financial statement.
After that review IRS will place you in one of three categories.
IRS will either place you into a current tax hardship which means you cannot pay the tax at this time, IRS will insist on a monthly installment or payment plan or IRS can recommend the filing of an offer in compromise or a tax debt settlement.
Remember your current financial statement will dictate how the IRS is going to deal with you that’s why it is critically important to have a tax professional represent you if you have any delicate issues are matters.
If you have a straightforward simple financial statement there is no reason why you cannot handle the representation yourself.
Contact us today for a free initial tax consultation you can speak directly to a true tax professional.
Cannot Pay IRS Tax – Offshore, FBAR, International Tax Workouts – Affordable Tax Experts
IRS will then be looking at your disposable income IRS will be comparing your disposable income with necessary living expenses. The job of the IRS is to collect as much money as they can. I arrest is not want to become a loan agency. I advise all taxpayers that fall in the spin to killer situation to contact us and have their IRS financial statement ready for us to review.
by Fresh Start Tax | Jun 25, 2013 | FBAR
FBAR Requirements – Offshore Banking Issues
Our firm is comprised of tax attorneys, certified public accountants, and former IRS agents and managers.
We were over 206 years of professional tax experience and over 60 years of working directly for the Internal Revenue Service.
We taught tax law at the Internal Revenue Service.
We have been in private practice since 1982 and we are A+ rated by the Better Business Bureau.
We are the affordable tax experts for a FBAR and Offshore Banking Issues.
FBAR Reporting News
The Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has been publishing final regulations for reporting bank accounts, securities accounts and other financial accounts located in a foreign country on Form TD 90-22.1, Report of Foreign Bank and Financial Accounts and many taxpayers seemed confused regarding the filing requirements, including the fast-approaching and accelerated filing deadline.
If you have a financial interest in, or signature authority over, a foreign financial account (the “foreign accounts”), 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 foreign account to the Internal Revenue Service by filing the FBAR by June 30, 2013, or sooner as discussed below. Unlike income tax filings:
Very Important note – FBARs must be received and not mailed by the due date. No extensions!
The FBAR deadline is never extended to the next business day when the due date falls on a holiday or weekend and an extension of time to file FBAR after the June 30, 2013, due date is not available.
The Internal Revenue Service is very tough on these deadline dates and penalties occur in the very next day
The current year filing deadline for FBARs is Sunday, June 30, 2013.
Make sure you plan ahead to ensure timely receipt at the Treasury Department by Friday, June 28. Remember there are no exception!
Penalties for FBAR
There are two types of penalties applicable to FBARs.
It should be noted that the penalties are assessed per account and not per FBAR.
The penalties for FBAR are assessed for each year there is a violation.
Non-Willful Penalty
- Up to $10,000 for each negligent violation
- No Criminal Penalties Assessed
Willful Penalty
- Up to the greater of $100,000 or 50% of the amount in the account at the time of the violation
Criminal Penalties
- up to $250,000 or 5 years in jail or both
Willful Penalty While Violating Certain Other Laws
- Up to the greater of $100,000 or 50% of the amount in the account at the time of the violation
- Criminal Penalties of up to $500,000 or 10 years in jail or both
Offshore Voluntary Disclosure Program (OVDP),
As a condition to being accepted into the Offshore Voluntary Disclosure Program (OVDP), applicants must provide the IRS the following for the eight year voluntary disclosure period.
1. All applicants.
Copies of previously filed original (and, if applicable, previously filed amended) federal income tax returns for tax years covered by the voluntary disclosure.
2. All applicants.
Complete and accurate amended federal income tax returns (for individuals, Form 1040X, or original Form 1040 if delinquent) for all tax years covered by the voluntary disclosure, with applicable schedules detailing the amount and type of previously unreported income from the account or entity (e.g., Schedule B for interest and dividends, Schedule D for capital gains and losses, Schedule E for income from partnerships, S corporations, estates or trusts, and, for years after 2010, Form 8938, Statement of Specified Foreign Financial Assets).
For taxpayers who began filing timely, original, compliant returns that fully reported previously undisclosed offshore accounts or assets before making the voluntary disclosure for certain years of the offshore disclosure period, copies of the previously filed returns for the corresponding years.
3. All applicants.
Copy of your completed and signed Offshore Voluntary Disclosures letter and attachment.
4. All applicants.
A check made out to the U.S. Treasury.
The check must include the amount of tax, interest, and accuracy-related penalty under IRC § 6662(a), and, if applicable, the failure to file and failure to pay penalties under IRC § 6651(a) (the suspension of interest provisions of IRC § 6404(g) do not apply to interest due in this initiative).
If you cannot pay the total amount of tax, interest, and penalties as described above, submit your proposed payment arrangement and a completed Collection Information Statement ( Form 433-A, Collection Information Statement for Wage Earners and Self-employed Individuals, or Form 433-B, Collection Information Statement for Businesses, as appropriate).
5. All applicants.
Completed Foreign Account or Asset Statement for each previously undisclosed foreign account or asset during the voluntary disclosure period if the information requested in that statement was not already provided in your initial Offshore Voluntary Disclosures Letter.
6. All applicants.
Completed penalty computation worksheet showing the applicant’s determination of the aggregate highest account balance of his/her undisclosed offshore accounts, fair market value of foreign assets, and penalty computation signed by the applicant and the applicant’s representative if the applicant is represented.
7. All applicants.
Properly completed and signed agreements to extend the period of time to assess tax (including tax penalties) and to assess FBAR penalties.
8. All applicants disclosing offshore financial accounts:
Copies of filed Forms TD F 90-22.1 (FBARs) for foreign accounts maintained during calendar years covered by the voluntary disclosure. (You should file delinquent FBARs according to the FBAR instructions and include a statement explaining that the FBARs are being filed as part of the OVDP.
Through June 30, 2013, you may file electronically or by sending paper forms to Department of Treasury, Post Office Box 32621, Detroit, MI 48232-0621. After June 30, 2013, you must file electronically.)
If you are unable to file electronically, you may contact the FinCEN Regulatory Helpline at 800-949-2732 to request an exemption.
9. All applicants disclosing offshore financial accounts.
For those applicants disclosing offshore financial accounts with an aggregate highest account balance in any year of $500,000 or more, copies of offshore financial account statements reflecting all account activity for each of the tax years covered by your voluntary disclosure.
Explain any differences between the amounts reported on the account statements and the tax returns. For those applicants disclosing offshore financial accounts with an aggregate highest account balance of less than $500,000, copies of offshore financial account statements reflecting all account activity for each of the tax years covered by your voluntary disclosure must be available upon request.
10. All applicants disclosing offshore entities.
A statement identifying all offshore entities for the tax years covered by the voluntary disclosure, whether held directly or indirectly, and your ownership or control share of such entities.
11. All applicants disclosing offshore entities:.
When accounts or assets were held in the name of a foreign entity, complete and accurate amended (or original, if delinquent) information returns required to be filed, including, but not limited to, Forms 3520, 3520-A, 5471, 5472, 926 and 8865 for all tax years covered by the voluntary disclosure.
If the applicant is requesting that the Service waive the information reporting requirement, the applicant should submit a completed and signed Statement on Dissolved Entities. (See FAQ 29.)
12. Estates and certain executors or advisors.
If the applicant is a decedent’s estate, or is an individual who participated in the failure to report the foreign account, foreign asset, or foreign entity in a required gift or estate tax return, either as executor or advisor, provide complete and accurate amended estate or gift tax returns (original estate or gift tax returns, if not previously filed) for tax years covered by the voluntary disclosure necessary to correct the underreporting of assets held in or transferred through undisclosed foreign accounts or foreign entities.
13. Returns involving Passive Foreign Investment Company (PFIC) issues.
A statement whether the amended returns involve PFIC issues during the tax years covered by the OVDP period, and if so, whether the applicant chooses to elect the alternative to the statutory PFIC computation that resolves PFIC issues on a basis that is consistent with the mark to market (MTM) methodology authorized in IRC § 1296 but does not require complete reconstruction of historical data.
A description of this alternative method is included in FAQ 10.
14. Applicants with Canadian registered retirement savings plans (RRSP) or registered retirement income funds (RRIF) who wish to make late elections to defer U.S. tax on RRSP or RRIF earnings:
- A statement requesting an extension of time to make an election
- Forms 8891 for all tax years and type of plan covered under the voluntary disclosure
- A dated statement signed by the taxpayer under penalties of perjury describing:
- Events that led to the failure to make the election
- Events that led to the discovery of the failure
- If the taxpayer relied on a professional advisor, the nature of the advisor’s engagement and responsibilities
FBAR Requirements – Offshore Banking Issues – Affordable Lawyers, Attorneys, CPA’s, Former IRS
