Did You Fail to File Your FBAR and Now Feel Stuck?

Did You Fail to File Your FBAR and Now Feel Stuck?

Failed to File Your FBAR?

With the recent increase in enforcement by the Internal Revenue Service on matters involving foreign accounts, assets, and investments, many U.S. taxpayers who find themselves out of international information reporting compliance may feel especially overwhelmed or hopeless about what they can do to get into compliance. It is important to note, that while there is an extensive amount of fear-mongering and scare-mongering online, more often than not non-compliance with FBAR or FATCA can be resolved relatively simply by entering one of the offshore disclosure programs. There are different types of programs depending on whether the taxpayer is willful or non-willful — and whether or not they have undisclosed income or if they only fail to report certain forms. Let’s take a look at the basics of what to do if you have unfiled FBARs for prior years.

First, It Will be Okay

Despite all the nonsense you will undoubtedly find in your research, you will be able to resolve your FBAR issues. Almost always FBAR non-compliance is a civil issue and not a criminal issue so there is typically no concern for incarceration. Likewise, most violations are non-willful and typically only result in a monetary fine or penalty. Therefore, once you take a step back and put your non-compliance into perspective you will realize that most likely the issue will be resolved and you will be able to regain your peace of mind.

Willful or Non-Willful?

The most important aspect of getting into compliance is to determine whether or not the Taxpayer is willful or non-willful– since that will impact which offshore disclosure program or programs you qualify for. There is no bright line test to determine willfulness vs. non- willfulness — and you should be sure to talk with a Board-Certified Tax Law Specialist who specializes exclusively in these types of matters to get a better understanding of your situation.

Non-Willful Offshore Disclosure Options

When the taxpayer is non-willful, there are various IRS programs available that they can submit to get into compliance. Some of the more common programs include the Streamlined Domestic Offshore Procedures, Streamlined Foreign Offshore Procedures, and Delinquency Procedures. Each program has its own set of rules and requirements, but they all require the taxpayer to be non-willful.

Willful Offshore Disclosure Options

When a taxpayer is willful, they are still able to get into compliance voluntarily, but the program is a bit different. Taxpayers who are willful may qualify for the IRS Voluntary Disclosure Program — which has more requirements than some of the non-willful programs but does result in the IRS issuing a ‘closing letter’ so that they can help put this matter behind them and move on with their life.

Selecting the Right FBAR Attorney

Unfortunately, there is a lot of noise online when it comes to trying to find the right attorney to hire. Hiring the wrong attorney can lead to additional issues beyond the disclosure and especially with many inexperienced attorneys puffing that they have experience that they simply do not have, it could lead taxpayers into a much worse situation. We have a separate article to assist you regarding Professional Malpractice in Offshore Disclosure matters and how to hire the Right Attorney for your case.

Late Filing Penalties May be Reduced or Avoided

For Taxpayers who did not timely file their FBAR and other international information-related reporting forms, the IRS has developed many different offshore amnesty programs to assist taxpayers with safely getting into compliance. These programs may reduce or even eliminate international reporting penalties.

Current Year vs Prior Year Non-Compliance

Once a taxpayer missed the tax and reporting (such as FBAR and FATCA) requirements for prior years, they will want to be careful before submitting their information to the IRS in the current year. That is because they may risk making a quiet disclosure if they just begin filing forward in the current year and/or mass filing previous year forms without doing so under one of the approved IRS offshore submission procedures. Before filing prior untimely foreign reporting forms, taxpayers should consider speaking with a Board-Certified Tax Law Specialist that specializes exclusively in these types of offshore disclosure matters.

Avoid False Offshore Disclosure Submissions (Willful vs Non-Willful)

In recent years, the IRS has increased the level of scrutiny for certain streamlined procedure submissions. When a person is non-willful, they have an excellent chance of making a successful submission to Streamlined Procedures. If they are willful, they would submit to the IRS Voluntary Disclosure Program instead. But, if a willful Taxpayer submits an intentionally false narrative under the Streamlined Procedures (and gets caught), they may become subject to significant fines and penalties

Need Help Finding an Experienced Offshore Tax Attorney?

When it comes to hiring an experienced international tax attorney to represent you for unreported foreign and offshore account reporting, it can become overwhelming for taxpayers trying to trek through all the false information and nonsense they will find in their online research. There are only a handful of attorneys worldwide who are Board-Certified Tax Specialists and who specialize exclusively in offshore disclosure and international tax amnesty reporting. 

Golding & Golding: About Our International Tax Law Firm

Golding & Golding specializes exclusively in international tax, specifically IRS offshore disclosure

Contact our firm today for assistance.

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