Today’s post is by Michael Rozbruch, Founder and CEO of Tax Resolution Services, Co. (@TaxResolution)
The second (and likely the last) IRS amnesty program for Foreign Bank Account Report (FBAR) violators is set to expire on August 31, 2011. Compliance with FBAR regulations is a serious matter and not to be taken lightly. The strict requirements of the Foreign Bank Account Report (FBAR) must be adhered to by Americans with offshore accounts since foreign financial institutions may not be subject to the same reporting requirements as domestic financial institutions. If you have undeclared funds in foreign bank accounts, this is an opportunity for you to minimize severe tax penalties and/or chances of criminal prosecution.
The 2009 Offshore Voluntary Disclosure Program resulted in more than 14,700 Americans with secret offshore accounts coming forward and taking the IRS up on their offer of tax amnesty for voluntary disclosure. In doing so, they avoided criminal prosecution if they paid FBAR back taxes, interest and reduced civil penalties. According to the IRS, the 2009 FBAR amnesty program generated “billions of dollars” in new revenue from back taxes. With global banks under more pressure than ever to disclose U.S. accounts, those people with their accounts offshore are strongly encouraged to report and settle taxes due before the 2011 amnesty deadline expires.
All offshore reporting activity is being managed through the IRS’s Criminal Investigation Division (CID). The Foreign Bank Account Reporting (FBAR) penalties for not filing and meeting the amnesty guidelines are severe:
• FBAR penalties can exceed 100% of the value of the asset, plus tax penalties and interest.
• If CID makes a referral to the U.S. Department of Justice for felony indictment, the criminal sanctions can be as much as up to 5 years in prison.
Navigating the complex waters of offshore account reporting can be overwhelming. Mistakes are very costly if taxpayers don’t know how to report correctly. FBAR compliance is a serious matter, and global banks are getting more pressure than ever to disclose U.S. accounts, so this is the time to get these matters settled – but I strongly suggest that you do this with help from experts. You can’t afford to not take advantage of the second amnesty program offered by the IRS. Having expert tax professionals on your side when reporting offshore bank accounts is a small investment that can make a big difference financially, emotionally and legally.
To learn more, follow these resources:
About the author: Michael Rozbruch is a recognized tax expert and the Founder and CEO of Tax Resolution Services, Co. To learn more visit, www.taxresolution.com