I didn’t know I had to report my foreign bank account. How can I come into compliance?
The IRS offers two options for taxpayers with previously undisclosed foreign bank accounts to come into compliance. Taxpayers whose failure to report the foreign bank accounts was non-willful can use the IRS Streamlined Filing Compliance Procedures. Those procedures require an affidavit setting forth facts that the failure to report the foreign bank account was non-willful. For more information on the IRS Streamlined Filing Compliance Procedures, visit the IRS website:
Taxpayers who are unable to set forth facts establishing that their failure to report their foreign bank accounts was non-willful can enter the IRS Criminal Investigation Voluntary Disclosure Program. For more information on the IRS Criminal Investigation Voluntary Disclosure Program, visit the IRS website:
What is the difference between a Tax Audit and a Criminal Investigation?
A tax audit is a common procedure the IRS uses to review your tax filings and determine if you have correctly calculated your tax liability. A criminal investigation is initiated by the IRS to determine if there is sufficient evidence to prove you committed a tax crime.
If you are subject to a tax audit or a collection action for unpaid tax, an IRS Revenue Agent or Revenue Officer will contact you and provide you with you with information regarding your rights as a taxpayer. In some cases, Revenue Agents or Revenue Officers will make a fraud referral to the IRS Criminal Investigation Division if there is evidence of tax fraud.
In the case of criminal investigation, you may not even know you are the target of an investigation until an agent contacts you directly, you receive a subpoena or agents contact your friends and colleagues.
If an IRS agent asks to speak with me, do I need a lawyer?
You have an absolute right to speak with a lawyer if an IRS agent asks to speak with you. Often, IRS agents will approach a taxpayer under investigation to obtain statements or admissions that can be used as evidence in a criminal tax prosecution. Never assume you know the reason an agent wants to speak with you or that you can explain away your conduct. In this scenario, it is best to politely decline the request for an interview and consult with an attorney who can advise you on how to proceed.
Internal Revenue Service (IRS) Report of Foreign Bank and Financial Accounts (FBAR)
William Lovett is a former auditor for a national bank and attorney with over 20 years of experience prosecuting and defending tax cases. He understands complex accounting and tax issues and is experienced in a wide range of tax and financial criminal and civil matters.