Over 50,000 Delinquent FBAR Filers Come Forward – Report of Foreign Bank and Financial Accounts
The latest numbers are in and they are impressive. Since 2009, over 50,000 taxpayers with delinquent FBAR forms have come forward. Although many taxpayers are now seeking to take advantage of the IRS’ offshore account amnesty program, the IRS continues to ramp up enforcement efforts against the stragglers that ignore the law or refuse to comply.
Taxpayers with an aggregate of $10,000 or more in offshore financial holdings must annually report those assets on a Report of Foreign Bank and Financial Accounts or “FBAR” form. These reporting requirements extend to those with mere signature authority over a foreign bank account and can include non bank assets such as foreign brokerage accounts, precious metal accounts and even some annuity and life insurance products.
The penalties for willfully failing to file an FBAR are huge; up to the greater of $100,000 or 50% of the highest account balance per account. Some FBAR violations can be prosecuted criminally. With penalties that high, it is not surprising that 50,000+ taxpayers have taken advantage of the various compliance options available including the current Offshore Voluntary Disclosure Program (OVDP).
When announcing their 2015 enforcement priorities, the IRS mentioned the 50,000 taxpayer milestone. Lest anyone think that the means the IRS is getting ready to ease up, the opposite is true. In January the IRS said, “avoiding taxes by hiding money or assets in unreported offshore accounts remains on its annual list of tax scams known as the ‘Dirty Dozen’ for the 2015 filing season.”
Most people don’t want to be the first to comply but the most recent statistics from the IRS and the record number off offshore audits mean that taxpayers definitely don’t want to be the last either.
Why? Although the IRS hasn’t announced an end date for the current OVDP amnesty, it has adopted a “first contact” policy. If the IRS gets your name first from a cooperating bank or other source, it won’t let you participate in the amnesty program and may also mean criminal prosecution. (To date, criminal prosecutions while well publicized, have been relatively few.)
As early as next month, the new FATCA legislation will require foreign financial institutions to begin disclosing names of accounts holders with ties to the United States. The disclosures will begin as a trickle but will soon grow in volume.
If you have not yet filed FBAR forms for all qualifying offshore accounts, speak with a good offshore tax lawyer or CPA immediately. If you have more than one year of missing FBARs, speak with a tax lawyer. Unfortunately CPAs don’t enjoy the same attorney – client privilege that lawyers do.
If you have unfiled FBARs, its probably not too late but time is quickly running out.
