Los Angeles, or officially, the City of Los Angeles is the largest city in California, the second largest city in the nation, and is the focal point of the greater Los Angeles metropolitan area. In fact, the Los Angeles metropolitan area is home to more than 13 million people making it one of the most populous developed areas on the planet.
Los Angeles is a city that has embraced global trade wholeheartedly. Movies produced in Hollywood and throughout the region are seen on screens worldwide while licensed products are marketed in cities from Akron, Ohio to Beijing, China. The city is home to the contiguous ports of Long Beach and Los Angeles representing the fifth busiest port in the world and a vital link to Asia. The University of Southern California and other respected institutions facilitates the exchange of ideas. In short, those living and working in L.A. are more likely than average to have international links and connections. These international connections may form the basis of an obligation to file Report of Foreign Bank and Financial Accounts (FBAR).
Hoffman Law Office can address your FBAR concerns and provide legal guidance and advice as to viable means to correct compliance issues.
When must a US taxpayer file FBAR?
An FBAR obligation can exist regardless of whether the taxpayer is currently residing within the borders of the United States or in a foreign nation. This is because for taxpayers in the United States, the obligation to report and pay taxes is a worldwide one that is based on citizenship rather than physical location. As for FBAR, it is also irrelevant where the money was earned – the relevant inquiry is whether the funds are held or controlled in foreign financial accounts and if the amount exceeds the disclosure threshold. That is, an FBAR reporting obligation exists when a US taxpayer has signature authority over or an interest in foreign financial accounts when the aggregate balance of those accounts exceeds $10,000.
If you have an obligation to disclose foreign accounts via FBAR, you can only do so online via the FinCen web portal. Filers must complete and submit FinCen Form 114. However, do not confuse convenience of the web form with informality – when your submit FinCen Form 114 you are certifying under penalty of perjury that the information contained within is both complete and accurate.
What penalties can I face if I forget to file FBAR?
It is important to note that the IRS’ perceptions of your conduct and intent will determine the severity of the consequences you could face. This is because penalties are significantly harsher if the IRS believes that your conduct was willful. Conduct that is considered willful involves an intentional or voluntary disregard of a known legal duty. Willful blindness, intentionally preventing oneself from learning of a fact or obligation, is considered to be willful.
Upon conviction, a willful FBAR violation can be punished by a penalty of 50% of the account balance or $100,000 – whichever amount is greater. If a penalty for willfulness is imposed, it is not uncommon for the the fines and penalties to exceed the balance that was originally held in the foreign bank account. If your FBAR disclosure failure is considered to be non-willful, significant penalties still apply, but these penalties are significantly less. A non-willful FBAR violation can be punished by a fine of $10,000 per a violation.
OVDP can correct FBAR problems
If you have not already come under investigation for your potential FBAR errors, the Offshore Voluntary Disclosure Program may offer a way to resolve your tax compliance issues. In exchange for your voluntary disclosure of tax problems and agreeing to pay a penalty, the IRS will typically refrain from pursuing a criminal tax investigation. However the form of your voluntary disclosure is important so it is advised that you consult with an experienced tax professional before taking any action.
The Hoffman law Office can help you with these concerns and other tax issues. To schedule a free initial consultation call (800) 897-3915 or contact us online today.