Several years ago, the IRS passed legislation aimed to catch at tax cheats harboring income producing assets in foreign bank accounts. The legislation required taxpayers to disclose details relating to off shore banking accounts to the U.S. Treasury (and more recently on Form 8938 for the IRS). The form, referred as the Report of Foreign Bank and Financial Accounts, commonly called an “FBAR” (now revised and reported on FinCEN Form 114) carried strict penalties, currently the greater of $100,000 or 50% the account balance for each year the taxpayer willfully fails to comply. And, yes, I’ve seen clients hit hard, with $10’s of millions in civil penalties.
While this law was aimed at tax cheats, it catches other taxpayers who may not be willfully trying to deceive the government, but could still fall prey to the harsh penalties. If you are a taxpayer who has signature authority over an foreign account with a balance greater than $10,000, have not filed an FBAR in the past, have not been contacted by the IRS, and are not under civil or criminal investigation by the IRS, you may qualify for relief under the new delinquent FBAR submission procedures (note that these are different from the OVDP program).
FBAR’s for the 2014 tax year are due next week, June 30.
For more information on whether or not you are required to file and FBAR, or you have questions on how to qualify under this new procedure, please contact Paul at paul@launchconsultinginc.com