IRS Penalty for Not Reporting Foreign Bank Accounts (Golding & Golding, Board-Certified Tax Law Specialist)
IRS Penalty for Not Reporting Foreign Bank Accounts
When it comes to international tax and foreign bank accounts, the IRS has made it a habit of issuing excessive fines and penalties against individuals who have not properly reported their foreign bank accounts.
While not everybody who has unreported foreign accounts will be penalized by the IRS, the growing trend is to issue penalties as opposed to issuing penalty waivers.
Contents
Why Does the IRS Issue Penalties?
The reason the IRS issues penalties for not reporting foreign accounts is because the IRS knows it can get away with it.
In other words, at the time when the IRS is understaffed and underfunded, they have to direct their resources toward the options that will bring them the most money.
And, when you realize just how stiff penalties are for not reporting foreign accounts, you will realize why the IRS is laser-focused on offshore and foreign matters. In fact, the IRS has created several new international tax enforcement groups which are designed to enforce international tax laws.
Were You Willful?
If you were willful, the IRS has the right to issue upwards of $100,000 or 50% penalty against the unreported foreign accounts or assets – whichever is higher. Moreover, if you find yourself stuck in a multiyear audit, the IRS could go for a 100% penalty (multiple 50% penalties over a 3 to 6 year period).
Time for OVDP is Running Out
OVDP is the offshore voluntary disclosure program. It has been around 2009, and it was designed to facilitate taxpayers who were either willful, or looking to make certain tax positions while getting into compliance at a reduced penalty. In addition, a person will almost always avoid the criminal prosecution, investigation or even an audit on these issues.
Recently, the IRS has issued a notice stating that this program will be terminated as of September 28, 2018. That does not leave much time to get into compliance, if you are seeking OVDP.
Were You Non-Willful?
If you are non-willful, you can rest a bit easier. Why? Because as of yet (although who really trusts the IRS), the IRS has indicated it has no immediate attention to terminate the Streamlined Filing Compliance Orocedures (SFCP). SFCP is the program designed to assist taxpayers who were non-willful.
Golding & Golding: About Our International Tax Law Firm
Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe. Our attorneys have worked with thousands of clients on offshore disclosure matters, including FATCA & FBAR.
Each case is led by a Board-Certified Tax Law Specialist with 20 years of experience, and the entire matter (tax and legal) is handled by our team, in-house.
*Please beware of copycat tax and law firms misleading the public about their credentials and experience.