Source: http://dorot.devrelease.net/news/fbar-voluntary-disclosure
Timestamp: 2020-08-13 14:49:44
Document Index: 441024511

Matched Legal Cases: ['§ 1010', '§ 1010', '§ 1010', '§ 7201', '§ 7206', '§ 7203', '§ 5322']

January 09, 2012 By: If you have reached this page, it is probably the middle of the night and you cannot sleep. You heard somewhere, from someone, that the Internal Revenue Service has recently hired 15,000 new Agents and has made international tax enforcement a priority. Furthermore, you have probably been confronted with acronyms like “FBAR,” “FINCEN,” “FATCA” and a myriad of obscure terms that all led you to the question – how much trouble am I in, and how can I start sleeping again? The good news is that the IRS has extended (indefinitely) the Offshore Voluntary Disclosure Program and continues to accept taxpayers at a significantly reduced civil penalty and withholding of criminal penalties. General Information:
An FBAR, a “Foreign Bank and Financial Account Report,” is IRS Form 90-22.1, which is an informational return each U.S. person must complete on an annual basis if such U.S. person has an interest or signature authority over foreign bank or financial account which held, at any time during the year, an aggregate balance of $10,000 or more. Being an “informational return,” there is tax liability associated with this disclosure; it merely requires that U.S. persons report the existence of their foreign accounts that fall within the parameters. ... Read More [+]
On February 24, 2011, the Treasury Department published final regulations amending the FBAR regulations. These regulations became effective March 28, 2011, and apply to FBARs required to be filed with respect to foreign financial accounts maintained in calendar year 2010 and for FBARs required to be filed with respect to all subsequent calendar years. The FBAR form and instructions (PDF) have been revised to reflect the amendments made by the final regulations. On May 31, 2011, the Financial Crimes Enforcement Network (FinCEN) issued FinCEN Notice 2011-1(PDF), revised June 6, 2011, to provide administrative relief for certain individuals with signature authority over but no financial interest in foreign financial accounts. The deadline to report signature authority has been extended to June 30, 2012, for the following individuals: an employee or officer of an entity under 31 CFR § 1010.350(f)(2)(i)-(v) who has signature or other authority over and no financial interest in a foreign financial account of a controlled person of the entity; or an employee or officer of a controlled person of an entity under 31 CFR § 1010.350(f)(2)(i)-(v) who has signature or other authority over and no financial interest in a foreign financial account of the entity, the controlled person, or another controlled person of the entity. For purposes of FinCEN Notice 2011-1, a controlled person is a United States or foreign entity more than 50 percent owned (directly or indirectly) by an entity under 31 CFR § 1010.350(f)(2)(i)-(v). On June 16, 2011, the IRS issued Notice 2011-54 to provide additional administrative relief for individuals with signature authority but no financial interest whose filing requirements were properly deferred under Notice 2009-62 or Notice 2010-23. The deadline to file the FBAR for these individuals was extended until November 1, 2011. This extension only applies to reports for the 2009 or earlier calendar years. This Notice did NOT extend the reporting deadline for calendar year 2010. On June 17, 2011, FinCEN issued Notice 2011-2(PDF) to facilitate more accurate compliance with FBAR filing requirements. Notice 2011-2 was issued to provide administrative relief for certain officers or employees of investment advisors registered with the Securities and Exchange Commission who have signature or other authority but no financial interest in certain foreign financial accounts. The deadline to file an FBAR has been extended to June 30, 2012, for those specified individuals working for advisors registered with the Securities and Exchange Commission. Who Must File an FBAR United States persons are required to file an FBAR if:
Look to the FBAR instructions to determine eligibility for an exception and to review exception requirements. What are the potential criminal penalties/charges? Possible criminal charges related to tax returns include tax evasion (26 U.S.C.§ 7201), filing a false return (26 U.S.C. § 7206(1)) and failure to file an income tax return (26 U.S.C. § 7203). The failure to file an FBAR and the filing of a false FBAR are both violations that are subject to criminal penalties under 31 U.S.C. § 5322. A person convicted of tax evasion is subject to a prison term of up to five years and a fine of up to $250,000. Filing a false return subjects a person to a prison term of up to three years and a fine of up to $250,000. A person who fails to file a tax return is subject to a prison term of up to one year and a fine of up to $100,000. Failing to file an FBAR subjects a person to a prison term of up to ten years and criminal penalties of up to $500,000. What are the civil penalties for failure to file an FBAR? The following is a summary of potential reporting requirements and civil penalties that could apply to a taxpayer, depending on his or her particular facts and circumstances.
What is a Voluntary Disclosure? Taxpayers with undisclosed foreign accounts or entities should make a voluntary disclosure because it enables them to become compliant, avoid substantial civil penalties and generally eliminate the risk of criminal prosecution. Making a voluntary disclosure also provides the opportunity to calculate, with a reasonable degree of certainty, the total cost of resolving all offshore tax issues. Taxpayers who do not submit a voluntary disclosure run the risk of detection by the IRS and the imposition of substantial penalties, including the fraud penalty and foreign information return penalties, and an increased risk of criminal prosecution. Where can I get more information? Much of the information regarding the Voluntary Disclosure procedure is provided by the IRS on its website (see links below). Since that information is very general and each client’s situation depends on the client’s specific facts and circumstances, we strongly encourage you to contact our office and schedule a conference with one of our attorneys to go over your specific situation so that we may advise you on the proper steps you should be taking to resolve this matter, put it behind you and get back to sleeping through the night.