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If on any one day in a calendar year you have foreign financial accounts which have a balance in excess of $10,000 or more in aggregate, you are required by law to report those accounts annually to the IRS and the Financial Crimes Enforcement Network (FinCen) through the filing of the Report of Foreign Bank and Financial Accounts (FBAR). Neglecting to do so can result in severe and expensive civil penalties, and criminal charges as well.
An account qualifies as a foreign financial account if it is located in any geographic area outside the United States; the nationality of the bank or where the bank is headquartered does not matter. So, for example, you could have a Citibank account in Canada, and it would qualify as a foreign financial account.
Fortunately, the IRS is currently offering an amnesty program called the Offshore Voluntary Disclosure Program (OVDP). This program is a form of relief for US taxpayers who have neglected their reporting duties when it comes to foreign financial accounts.
The IRS previously offered the first OVDP in 2009, followed by the Offshore Voluntary Disclosure Initiative (OVDI) in 2011, both of which are no longer in effect. The most recent OVDP program went into effect in 2012 and was modified to its current form in 2014. The IRS can revoke the program at any time.
The purpose of the OVDP program is to offer a uniform penalty structure to those who have broken the law with regard to reporting offshore accounts if they voluntarily disclose those assets. So why would you voluntarily participate in the program if you are going to be penalized? Because you alternatively risk much more severe penalties if your transgressions are discovered by the IRS or FinCen without your voluntary disclosure.
The most significant protection that the OVDP provides is protection from criminal liability. By participating in this program, you will still have to pay significant civil penalties, but you can avoid jail time and other criminal penalties. The OVDP also lays out uniform terms for resolving your tax and civil penalty obligations, which, for many, will be significantly reduced from what their penalties would be if they were caught violating required reporting laws.
If you want to take advantage of the Offshore Voluntary Disclosure Program, please contact the law firm of Weisberg, Kainen, Mark, P.L., as soon as possible in order to minimize your risk of criminal and civil penalties for a failure to file your FBAR. As previously mentioned, the program can be ended by the IRS at any time, so swift action is essential. Our law firm has been helping people from all over the world with their voluntary disclosures since the program was initiated in 2009, and we are dedicated to helping you comply with the law while maintaining as much of your wealth as possible. Give us a call to learn more.
Weisberg Kainen Mark, PL
