Individuals with foreign accounts, investments, and assets can hold these assets for a variety of reasons. In some cases, they may have a foreign pension or retirement plan from work performed in another country. In other cases, the individual may seek to diversify his or her holdings so that potential financial setbacks and market reversals are less painful. In still other circumstances a United States taxpayer may keep foreign accounts for the purposes of sending remittances to family members who did not immigrate to the United States.
However, regardless of an individual’s reasons for having foreign accounts and assets, certain legal obligations may be incurred. The failure to satisfy these obligations can lead not only to large fines and penalties but also to potential criminal tax prosecution. Therefore, complying with all disclosure laws, such as Report of Foreign Bank and Financial Accounts (FBAR), and all other obligations is essential.
The tax lawyers of the NewPoint Law Group can assist individuals comply with all tax and foreign disclosure obligations. If you have failed to disclose accounts in past years, our legal team can explain the options you may have to fix your nondisclosure. To schedule a confidential legal consultation call 1-800-358-0305 today.
When Am I Required by FBAR to File FinCEN Report 114?
Many people are understandably concerned about having an obligation to file FBAR because of the significant potential penalties. Furthermore, since the IRS and Department of Justice have invested significant money and resources into detection and enforcement efforts, the risk of being identified has never been higher. Therefore it is important to satisfy this and other disclosure obligations in full.
Typically, FBAR must be filed when a U.S. person holds or has signature authority over foreign accounts in excess of $10,000. This $10,000 filing threshold is triggered any time te aggregate value of all accounts exceeds this threshold. Even a momentary valuation greater than $10,000 triggers a duty to satisfy the FBAR filing duty.
Can I Be Penalized for a Failure to File FBAR?
Taxpayers who fail to file FBAR can potentially face extremely serious penalties. Penalties exist not only for willful failures to file but also for mere accidental failures to file. Even a single accidental failure to file can result in a financial penalty of up to $10,000. This penalty can be assessed for multiple years where the obligation was not satisfied. However, the most serious penalties exist for individuals who are believed to have willfully — intentionally or voluntarily disregarded a known legal duty – failed to file FBAR. A willful failure to file FBAR can be met with a penalty that is the greater of 50% of the account balance or $100,000. If the agent believes that your failure to file was part of a tax fraud or tax evasion scheme, you could face an array of criminal penalties.
How Can I Fix an FBAR Filing Failure in California?
If you have failed to file FBAR for past tax years, you may have options to avoid facing the full extent of penalties through the Offshore Voluntary Disclosure Program (OVDP) or Streamlined Disclosure. However, if you fail to take action and come under investigation for a failure to file FBAR, these options will become unavailable and you may end up facing the full extent of potential penalties. However, it is aslo essential to note that each program has different benefits and drawbacks. For instance, individuals with concerns regarding criminal prosecution should only make use of OVDP because this is the only program that offers some level of insulation from facing charges related to your voluntary disclosure. However, for individuals who are not worried about potential criminality, the streamlined program ay provide for significant cost savings through reduced fines and penalties and less onerous filing requirements. This decision can only be made after a meticulous review of your finances and past tax filings. Furthermore, because technical procedures apply to voluntary disclosures, it is important to work with an attorney who has handled matters of this type previously. While a legally sufficient voluntary disclosure can correct FBAR filing errors, a botched voluntary disclosure can unfortunately exacerbate the situation. A botched disclosure often means that you have provided the government evidence of your guilt without receiving the benefits and potential protections offered by the programs.
Work with FBAR Attorneys in Folsom, California
Maintaining compliance with FBAR is of the utmost importance for individuals with foreign accounts and assets. If you have made mistakes regarding your FBAR compliance, you may still have time to fix your failure to file, but time is of the essence since these options can be foreclosed due to government investigation. To schedule a confidential FBAR consultation with a California tax attorney call 1-800-358-0305 today or contact us online.