Thursday, January 21, 2016

Disclosing Foreign Accounts -- Delinquent FBAR Submission Procedures | Bethesda Tax Lawyer

In my previous posts about disclosing foreign accounts, I discussed the OVDP and the Streamlined Filing procedures.  The focus of these programs are taxpayers who have foreign financial accounts and/or business entities and have not reported the income from these foreign assets. If a taxpayer has reported the income from her foreign financial accounts and paid taxes on it, the Delinquent FBAR Submission Procedures permit a taxpayer to file the missing FBARs (FinCen Form 114) without a late filing penalty. 

A taxpayer qualifies for this Delinquent FBAR Submission Procedures if she: 

  1. She has not filed an FBAR;
  2. She is or was not under a civil examination/audit or a criminal investigation by the IRS; and
  3. She has not been contacted by the IRS about the delinquent FBARs.
To enter the program, the taxpayer must file the missing FBARs through the FinCen website. When filing the late forms, select "other" as the reason for why you are filing late and include a statement explaining the circumstances for the late filing. The most likely explanation will be "I did not know I had to file an FBAR." The instructions for the program do not provide the number of years to file. However, the statute of limitations for FBARs is six years from the date the form is due (the due date was June 30th in 2015).  Thus, if a taxpayer entered the program today, the maximum number of FBARs required would be six for the 2009 through 2014 tax years. 

Dealing with offshore accounts can be a complicated matter, and not selecting the correct disclosure method could have significant long-term repercussions on penalties.  For a free consultation on these and other tax-related matters, please contact 
The Law Offices of Aaron P. Richter, a Bethesda-based firm with expertise in Tax Controversy, Business Formation, Estate Planning, and Tax Preparation.

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