Time is running out for FBARs, but we can help.
There has been quite a bit of press recently relating the US Treasury trying to find additional tax revenue related to non-US financial accounts. For those of you that have been using the “head in the sand” approach to deal with this issue, the time to take action is now… and quickly.
The American Jobs Creation Act of 2004 changed the landscape for filing the Report of Foreign Bank and Financial Account (FBAR) forever. This act changed the penalties for not timely filing the annual reporting form (Form 90-22.1) dramatically.
Under the prior law, a taxpayer had to “willfully” violate the reporting requirement. With the new law, non-willful violators can also receive a penalty of up to $10,000 per violation. Plus, it increased the penalty where there was willfulness was increased from $10,000 to the greater of $100,000 or 50% of the account at the time of the account.
While these penalty changes attracted some attention, many taxpayers decided to take no action. In many cases, the thought was that the IRS would never actually learn about their account. So, why voluntarily exposure yourself to the penalties?
Then in 2010, the US congress passed the Foreign Account Tax Compliance Act (FATCA). This act requires foreign institutions to report the account information held by US persons. This reporting will begin in Jan. 2013. Countries will be phased in, and all countries will need to be reporting by 2014.
This created some anxiety with non-filers. However, many countries were lobbying the US to change the laws. So, there was a feeling that many countries would not comply.
In November of 2012, the US treasury confirmed that they are in contact with 50 different jurisdictions to get bilateral agreements in place. They also announced that an agreement is in place with the United Kingdom, and they expect to have 16 more agreements in place by the end of this year (France, Germany, Italy, Spain, Japan, Switzerland, Canada, Denmark, Finland, Guernsey, Ireland, Isle of Man, Jersey, Mexico, the Netherlands, and Norway). The next group of countries is slightly behind, but many of them could also be completed by the end of this year (Argentina, Australia, Belgium, the Cayman Islands, Cyprus, Estonia, Hungary, Israel, Korea, Liechtenstein, Malaysia, Malta, New Zealand, the Slovak Republic, Singapore, and Sweden).
It should be noted that just because an agreement is not close, it doesn’t mean that one will not be put into place. The Treasury is actively trying to work with dozens of other jurisdictions to work out an agreement. So, it will likely only be a matter of time before they are on the list.
Still not enough? The Treasury has demonstrated little to no leniency in cases where they discover the foreign account on their own. In most cases they seek the maximum penalty.
So, the answer is to voluntary disclose your accounts and correct your tax returns as required. But, there are several programs out there. Picking the wrong one could cost you a lot of your hard earned money. Let us review your situation and pick the right program for you. We have helped many other clients in your situation get reduced and/or no penalties assessed.
The bottom line is that you want to disclose your account before the Treasury learns about it….. and you’re running out of time.
Read more here – http://www.gemms.us/foreign-financial-assets