FBAR Audit: U.S. persons are required to file an FBAR Form (aka FinCEN Form 114) to report foreign bank accounts. Whether or not the person files the FBAR, they may become subject to an IRS Audit of their foreign accounts..
There are several FBAR Audit Triggers that can unnecessarily increase the change of the Taxpayer being audited or examined. This could lead to an FBAR Violation.
We will summarize common FBAR audit triggers that may lead to an IRS offshore account examination.
What Triggers an Audit for FBAR Filing
One major cause for increased FBAR audits is bad Streamlined Disclosure lawyering. This has become a bit of an epidemic, with copycat firms popping up online and perpetuating to have experience they do not have.
We have resources to help you if you were misled into the Streamlined Program.
But, even if you never submitted to the streamlined program or other offshore voluntary disclosure program, you may become subject to an FBAR Audit.
Here are a few common situations we come across:
International Business Consultants
Jeff is an international business consultant.
Jeff misapplied his travel expenses and is under audit, when the examiner sends an IDR (Information Document Request) requesting if Jeff has any bank accounts overseas.
It turns out, Jeffrey has a bank account in each country. And, since the interest rates are high, and the income grows tax-free – Jeff has unreported income as well.
This could lead to an FBAR audit.
Maria has a business in the U.S. The business expanded to multiple foreign countries.
Maria needs to have local accounts in each country, in order to pay her suppliers. Therefore, she has multiple accounts, in different countries.
Maria’s business is under audit, when she also receives an IDR from the examiner asking about Foreign Accounts.
This is a very common FBAR Audit trigger.
Peter is originally from Australia.
He has multiple accounts in Australia, the UK and India – all places he either lived or worked. One of the accounts in India has significant value, since the interest rate is at nearly 8%. The Bank reports Peter to the IRS – along with thousands of other customers – in accordance with FATCA reporting requirements.
Peter receives an FBAR Audit notice.
Avoid an IRS FBAR Audit for Undisclosed Accounts?
While you cannot absolutely avoid an audit, you can reduce the chance of penalties by submitting to one of the IRS offshore disclosure programs.
We Specialize in Streamlined & Offshore Voluntary Disclosure
Our firm specializes exclusively in international tax, and specifically IRS offshore disclosure.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe. Our attorneys have worked with thousands of clients on offshore disclosure matters, including FATCA & FBAR.
Each case is led by a Board-Certified Tax Law Specialist with 20-years experience, and the entire matter (tax and legal) is handled by our team, in-house.
*Please beware of copycat tax and law firms misleading the public about their credentials and experience.
Less than 1% of Tax Attorneys Nationwide Are Certified Specialists
Our lead attorney is one of less than 350 Attorneys (out of more than 200,000 practicing California Attorneys) to earn the Certified Tax Law Specialist credential. The credential is awarded to less than 1% of Attorneys.
Recent Case Highlights
- We represented a client in an 8-figure disclosure that spanned 7 countries.
- We represented a high-net-worth client to facilitate a complex expatriation with offshore disclosure.
- We represented an overseas family with bringing multiple businesses & personal investments into U.S. tax and offshore compliance.
- We took over a case from a small firm that unsuccessfully submitted multiple clients to IRS Offshore Disclosure.
- We successfully completed several recent disclosures for clients with assets ranging from $50,000 – $7,000,000+.
How to Hire Experienced Offshore Counsel?
Generally, experienced attorneys in this field will have the following credentials/experience:
- Master’s of Tax Law (LL.M.)
- Dually Licensed as an EA (Enrolled Agent) or CPA
- 20-years experience as a practicing attorney
- Extensive litigation, high-stakes audit and trial experience
- Board Certified Tax Law Specialist credential
Interested in Learning More about our Firm?
No matter where in the world you reside, our international tax team can get you IRS offshore compliant.
We specialize in FBAR and FATCA. Contact our firm today for assistance with getting compliant.