The Internal Revenue Service (IRS) has been actively targeting U.S. taxpayers with undisclosed foreign bank accounts and cracking down on foreign financial institutions and banks that help U.S. taxpayers hide assets in offshore accounts. Failure to comply with reporting requirements may result in large monetary penalties, criminal prosecution and even jail time.
If you are a U.S. citizen or green card holder who has a financial interest in or signatory authority over any foreign financial accounts with an aggregate value of over $10,000, you are required to report the accounts to the IRS annually. If you believe you have unreported foreign bank accounts or assets, the law firm of Lovett O’Brien can help you identify potential legal issues and bring you into compliance with U.S. tax laws.
Foreign Bank Account Reporting (FBAR), Foreign Account Tax Compliance Act (FATCA) and IRS Voluntary Disclosure Program
The Bank Secrecy Act requires that U.S. citizens, residents, corporations, partnerships, limited liability companies, and trusts and estates report foreign financial accounts such as bank accounts, brokerage accounts and mutual funds to the Treasury Department. Accounts are reported by filing a Report of Foreign Bank and Financial Accounts (FBAR) on FinCEN Form 114. See the IRS website for more information on reporting foreign bank and financial accounts:
The Foreign Account Tax Compliance Act (FATCA) was enacted by Congress in 2010 to target non-compliant U.S. taxpayers with foreign accounts. If you have foreign financial account with a value of at least $50,000, you may need file a Form 8938. FATCA reporting requirements are in addition to the FBAR reporting requirements. See more details on reporting requirements on the IRS website:
FATCA also requires that certain foreign financial institutions report to the IRS information about financial accounts held by U.S. taxpayers or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. The IRS then uses this information to investigate and prosecute individuals who are not complying with tax laws.
The Offshore Voluntary Disclosure Program (OVDP) encouraged U.S. taxpayers with previously undisclosed foreign bank accounts to avoid criminal prosecution and come into compliance by filing amended tax returns reporting previously unreported foreign income, paying back taxes, interest and penalties and paying a one-time penalty based on the high dollar value of the undisclosed foreign bank accounts.
The OVDP closed in 2018 and was replaced by the IRS Streamlined Filing Compliance Procedures for taxpayers who had a "non-willful" failure to report foreign bank accounts and assets, and with the traditional IRS Criminal Voluntary Disclosure Practice. See details on these programs on the IRS Website:
Lovett O’Brien LLP works with U.S. taxpayers domestically and abroad to resolve reporting and compliance problems related to individual accounts, trusts and estates.
Contact William Lovett at 617-371-1007 for an initial consultation.