What is the FBAR?
The United States has undertaken an intense and sustained campaign to crack down on international tax evasion in recent years. The IRS’s efforts to date have centered on increased foreign asset reporting and specifically on the FinCEN Report 114, or Reporting Form (“FBAR”).
Who should file an FBAR?
U.S. citizens and residents who have a financial interest in, or signature authority over, foreign financial accounts in excess of $10,000 must file this form with the Treasury each year. Green card holders and persons meeting the Substantial Presence Test (generally, those who are present in the United States for the equivalent of 183 days or more when applying a three-year look-back test) must also file the FBAR.
What are the associated penalties with the FBAR?
The penalties for failing to file an FBAR by the due date are severe: up to the greater of $100,000 or 50% of the account balance for each year the account was not reported on an FBAR. Additional civil and criminal penalties may also apply.
What is the Amnesty Program or OVDP?
Since 2009, the IRS has issued various FBAR “amnesty” programs to encourage U.S. taxpayers to become fully compliant with the law. The most recent amnesty, called the “Offshore Voluntary Disclosure Program” (“OVDP”) currently does not have a deadline for submissions. However, the IRS has stated that it can change the terms of the OVDP at any time.
How can we help?
The Wolf Group has helped hundreds of clients make voluntary disclosures under the Offshore Voluntary Disclosure Programs in place since 2009. We provide the following services related to OVDP:
- Advice regarding the various options available under OVDP
- Preparation of prior-year income, gift, and estate tax returns
- Preparation of informational filings (including those for foreign corporations and foreign trusts)
- Preparation of prior-year FBAR forms
- Referral, when necessary, to a qualified and experienced tax attorney
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