Beverley Hills and its surrounding areas are home to famous actors, celebrities and everyday people. Aside from the area’s obvious star-power, it is also a place where some of the more complex work arrangements and some of the most sophisticated investors in the nation are found. As part of the greater Los Angeles area, Beverley Hills is distinctly connected to both the national and worldwide economy. This means that the residents and businesses of Beverley Hills often have overseas connections. This leads to a greater likelihood that the taxpayer may hold foreign bank or financial accounts that must be disclosed if certain criteria are met.
The Hoffman Law Office can address your FBAR concerns. We are dedicated to providing sound, strategic legal advice to correct past tax mistakes, re-enter the tax system, and maintain compliance with tax and disclosure laws going forward.
When must a US taxpayer file FBAR?
The obligation to file a Report of Foreign Bank Accounts (FBAR) exists for all taxpayers with a sufficient link to the United States. This includes citizens, legal permanent residents, and expatriates living abroad. The duty to report a foreign bank or financial account arises when, at any point during the tax year, the balance of the foreign account exceeds $10,000. Additionally the taxpayer must have an interest in the account or signature authority over the account. It is important to know that the IRS construes an interest in an account broadly, so if you are unsure whether an account must be disclosed it is prudent to seek an offshore tax professional.
The obligation to file FBAR can only be satisfied by filing online through the FinCEN web portal. There is no option to file through paper documents. On the FinCEN web portal a taxpayer must access Form 114 and complete it accurately and completely. This form is submitted under the penalty of perjury. That is, failure to make a full disclosure can result in serious civil or, depending on if the IRS agent believes that this is part of a larger scheme or that conduct is willful, criminal tax charges.
What penalties can I face if I forget to file FBAR?
A failure to file FBAR can result in serious consequences even when the noncompliance is simply the product of a mistake or a lack of awareness regarding the law and obligation. Even a simple mistake regarding filing FBAR by the June 30th deadline can result, upon conviction, of a fine of up to $10,000 per a violation. However if the IRS agent perceives intent to conceal income or otherwise defraud the IRS, consequences become significantly more harsh.
A willful violation of the law is one where a person intentionally or freely disregards a known legal duty. Evidence of willful conduct, sometimes termed badges of fraud, can include structuring transaction to avoid cash reporting laws, use of overseas trusts, inaccurate statements to agents, and obstructing the investigation. If convicted of a willful FBAR compliance failure, the taxpayer can face punishment that includes either a $100,000 fine or 50% of the original account balance, whichever is the greater amount. Considering that FBAR violations often occur for a period of at least several years, penalties can quickly escalate to being beyond manageable.
OVDP may correct your past FBAR noncompliance
Offshore Voluntary Disclosure is a program created by the IRS to encourage non-compliant taxpayers to come forward voluntarily. However, because the disclosure must be voluntarily and freely offered by the taxpayer, those who are already being investigated by the IRS are not eligible for this program. However not all forms of disclosure are equal and depending on the types and nature of noncompliance and undisclosed accounts, one form of disclosure may be more likely to result in a favorable outcome for the taxpayer. If OVDP is appropriate for your tax situation, the IRS will typically refrain from pursuing criminal charges, however there will be a monetary offshore penalty for coming back into compliance. However compared to the penalties that can be imposed in a potential enforcement actions, OVDP provides a relatively favorable way to achieve compliance with the U.S. Tax Code.
Contact An Experienced Tax Lawyer
The Hoffman law Office can help you with these concerns and other tax issues. To schedule a free initial consultation to discuss your FBAR and tax concerns call (800) 897-3915 or contact us online today.