While living in the United States presents individuals many opportunities to live and work in a number of unique and exciting locations, some individuals are driven to see the world and immerse themselves in cultures significantly different from our own. Others, may decide to pursue business and employment opportunities unavailable in the United States. Still other expats may decide to live abroad to pursue a particular hobby or goal.
However, simply because you have decided to no longer live in the United States does not mean your tax and disclosure obligations have ceased. On the contrary, individuals who maintain their U.S. citizenship are subject to the same tax and offshore disclosure duties as Americans living at home. While certain standards, filing thresholds, and tax treatment may vary for American expats the core obligations are largely undisturbed. Expats who have failed to satisfy certain obligations, especially in FATCA nations like Switzerland, should immediately contact an experienced tax and offshore account attorney before receiving a FATCA letter from their foreign bank. The Hoffman Law Offices can help American expatriates maintain or fix compliance with offshore account disclosure duties. To schedule a free and confidential consultation with an experienced tax lawyer call 800-897-3915 or contact us online today.
What Offshore Account Disclosure Obligations do Expats in Switzerland Face?
Expats in Switzerland are subject to similar account disclosure obligations under Foreign Account Tax Compliance Act (FATCA) and Report of Foreign Bank Accounts (FBAR) as Americans living within the United States. Both account disclosure obligations are annual in nature and must be filed by the deadline. the severe penalties that can apply for non-compliance or incomplete disclosures apply equally to expats and Americans living at home .
FBAR &FATCA Disclosure Obligations for Expats in Switzerland
The obligation to file FBAR was long been on the books, but until the past five to ten years, compliance with the law was only loosely enforced. However, starting in 2003 when the IRS was authorized to pursue FBAR noncompliance, enforcement efforts were increased significantly. Since that time, penalties for willful, voluntary or intentional1 disregard of the FBAR filing obligation, violations of FBAR were increased significantly. Furthermore, new penalties for even inadvertent violations of the law were enacted. In short, individuals who are noncompliant with this law either due to willfulness or because of an innocent mistake can face serious penalties.
The FBAR obligation requires any individual with $10,000 or more in covered foreign assets or accounts to file a disclosure statement through the Financial Crimes Enforcement Network’s (FinCEN) bank Secrecy Act (BSA) E-Filing Portal. There is no option for individuals to file via paper forms. Expats with a FBAR obligation must complete and submit under penalty of perjury FinCEN Form 144(a).
Failure to file FBAR due to a mistake or error can be met with a penalty of $10,000 for each year where noncompliance occurred. This penalty is harsh punishment for an honest error. However, penalties for willful violations are even more draconian for willful violations. Violations of this type can be punished by a fine that is the larger of $100,000 or 50% of the account balance.
FATCA filing obligations are also concerned with certain covered accounts and assets held in foreign nations and at foreign banks. FACTA filing obligations are handled by completing and submitting IRS Form 8938 by the deadline. The amount of assets and money in accounts that an expat can hold depends on his or her tax filing status. Couples filing jointly can hold more assets than a sole tax filer before the disclosure obligation is triggered. Penalties for failure to make a FATYCA disclosure starts at $10,000. Additional penalties up to $50,000 can be imposed if the expat taxpayer continues his or her noncompliance.
OVDP Can Fix Past Noncompliance – Reach Out to A Tax Lawyer Today
The potential financial penalties for FATCA and FBAR noncompliance are, quite frankly, eye-popping. However, compliance with these and other tax obligations can be a nightmare of complexity for expats and unintentional noncompliance is reasonably common. Unfortunately detection methods used by the IRS including information gained through the Swiss Bank Program and international tax treaties means that most accounts will be discovered.
However, Offshore Voluntary Disclosure can provide a means to reduce the penalties you owe. Furthermore, if you are at risk of facing prosecution, the program can also provide some protection from facing criminal charges for tax evasion. However, if you come under investigation, you become ineligible for these benefits. Furthermore, if your bank is added to the Offshore Facilitators list through a non- or deferred prosecution agreement secured through the Swiss Bank Program or other means, you will face an increased offshore penalty. To discuss how you can achieve and maintain compliance with FBAR and FATCA call the Hoffman Law Offices at 800-897-39156 or contact us online today.