To the rest of the country, Long Beach California may be known solely for its desirable Mediterranean climate, ample coast line and culture. And this is for good reason as the city is home to RMS Queen Mary, Aquarium of the Pacific Ocean, the Long Beach Museum of Art and the Long Beach Opera. But these aspects only scratch the surface of what Long Beach, California has to offer.
The city is the 36th largest in the nation and the 7tth largest in California. It bridges the City of Los Angeles with nearby Orange County. It is the second-largest city in the Los Angeles metro area and is home to the Port of Long Beach. The port is the second busiest container port in the United States and a major sipping port. With the city motto of, “The International City”, the frequent and diverse exchange of goods, ideas, and culture in Long Beach residents of the city are more likely than average to have foreign income or foreign accounts that can create unexpected or additional tax burdens.
The discovery of a potential tax problem can entail a great deal of anxiety and sleepless nights since you may worry about if you have mistakenly subjected yourself to harsh civil or criminal tax penalties. To take your first steps toward resolving the tax issue, discuss your tax concerns due to foreign accounts or foreign income with Robert Hoffman by calling the Hoffman Law Offices at 800-897-3915.
What is FBAR?
For decades, if not longer, a tax strategy minimization strategy employed by wealthy Americans involved the use or foreign offshore accounts, corporations or trusts to conceal income or assets from being assessed for tax purposes. While in those days there was still an argument, however debatable, that could be made regarding the legality and legitimacy of these practices, the same cannot be said today.
Congress and the IRS recognized that there was a significant shortfall in actual vs predicted income tax receipts. This problem was transformed into a crisis by the 2007 financial crash and its impact on tax revenues. As part of a comprehensive plan to close foreign tax loopholes for American taxpayers, the Bank Secrecy Act was amended to require US taxpayers to disclose certain offshore financial accounts. Today, the failure to disclose and pay tax on these foreign accounts is undoubtedly, at best, a civil violation of the tax code and, at worst, a tax crime such as the felony of tax evasion.
When must a taxpayer file FBAR?
Typically, the obligation to file FBAR is limited to US taxpayers which usually includes citizens, legal permanent residents, and others with sufficient connection to the United States. Typically a duty to disclose a foreign account exists when the balance in the covered accounts held by a US taxpayer exceeds $10,000 for any period during a tax year. If the taxpayer has a financial interest in the account or holds signature authority over the account then he or she would be required to file FBAR. A financial interest can include being the holder of legal title to the account, when the account’s owner is your representative or agent, or if you have sufficient interest in the entity that holds the account’s legal title. Signature authority simply means that you have authority to control the account directly without another having to speak on your behalf.
What are the penalties for neglecting my FBAR filing obligation?
Depending on whether the IRS agent believes your actions to be inadvertent, voluntary or intentional, a range of FBAR consequences can attach. The least severe punishments are reserved for those instances where it appears that the non-compliance was unintentional or an oversight. This is known as the non-willful FBAR penalty. Even a non-willful FBAR violation – a mistake — can be punished by a fine of $10,000 for each year where the account went undisclosed. If the IRS agent believes that the unfiled FBAR was willful, the product of an intentional or voluntary disregard of a known legal duty, ten, upon conviction, the greater of a $100,000 fine or 50-percent of the original foreign account balance can be imposed. It is common for FBAR penalties where willfulness was present to exceed the original foreign account balance.
Contact An Experienced FBAR Lawyer
If you have not already come under IRS investigation, Offshore Voluntary Disclosure may provide a way to reduce or minimize the tax consequences you face. To discuss your tax concerns and how you could potentially resolve them and come back into compliance, call the Hoffman Law Offices at 800-897-3915 or contact us online.