To read part 1 of this post, click here.

Offshore Voluntary Disclosure Program

The IRS reopened the Offshore Voluntary Disclosure Program (OVDP) in 2012 after taxpayers continued to express interest after the closure of the program in 2009 and 2011. The Offshore Voluntary Disclosure Program, also known as the Offshore Voluntary Disclosure Initiative, gives taxpayers with unreported foreign accounts and assets to come into tax compliance in the U.S. To read more about the Offshore Voluntary Disclosure Program, visit the IRS OVDP website.

New Streamlined Filing Compliance Procedures

In September 2012, the IRS announced a streamlined filing procedure for non-resident U.S. taxpayers who can prove their failure to report foreign financial assets was due to non-willful conduct. In this case, the taxpayer must file delinquent income tax and information returns for the past three years, and file delinquent FBARs for the past six years. For those who reside outside the U.S. and qualify, the IRS will expedite the review of your submission and not assess penalties or pursue follow-up actions.

In 2014, the IRS expanded these filing compliance procedures to include certain U.S. taxpayers residing in the U.S. For these taxpayers, the only penalty will be an offshore penalty of 5% of the foreign financial assets which give rise to the tax compliance issue. To learn more about the Streamlined Filing Compliance Procedures, visit the IRS website.

What if I Have a Delinquent FBAR Submission?

Taxpayers who have not filed an FBAR and are not under civil or criminal investigation by the IRS and have not been contacted by the IRS regarding their delinquent FBARs should file all delinquent FBARs according to the FBAR filing instructions, found on the IRS website. When you file your delinquent FBAR, provide a statement detailing why you are filing late. You can either select an option on the cover page of the electronic form or provide a customized explanation using the “Other” field. If for some reason you are unable to file electronically, contact FinCEN’s Regulatory Helpline at 1-800-949-2732 if you are inside the U.S. and 1-703-905-3975 if calling from outside the U.S.

Need additional assistance?

If you have more questions about filing your FBAR, visit the FBAR Reference Guide provided by the IRS. The IRS has also provided a Webinar on the topic, titled Reporting of Foreign Financial Accounts on the Electronic FBAR, and can be accessed through the IRS website.

You can always contact the IRS directly for assistance in filing your FBAR by calling 1-866-270-0733 (toll-free inside the U.S.) or 1-313-234-6146 (not toll-free, for callers outside of the U.S.), Monday through Friday 8 a.m. to 4:30 p.m. Eastern time.

Because of the large penalties and confusing regulations, hiring a tax attorney to assist in the process of preparing and filing FBARs or opting in to the Offshore Voluntary Disclosure Initiative (OVDI) might be prudent. Our team of expert tax attorneys who are all very well versed in the regulations and process would be glad to assist should you find yourself in need. We have prepared FBARs numerous times and can help answer any questions you may have. Please feel free to contact us or call us at (619) 595-1655 and set up a free consultation with an attorney. We are happy to help in any way we can!

[1] Reports of Foreign Bank and Financial Accounts (FBAR) https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Report-of-Foreign-Bank-and-Financial-Accounts-FBAR

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Please keep in mind the information and advice presented in this blog is not intended to be used as formal legal advice. Contact a tax professional for personalized tax advice pertaining to your specific situation. While we try and answer all parts of the question when we write our blogs, sometimes there may be some left unanswered. If you have any questions about your problems with the IRS, SBOE, FTB, or BOE, or tax law in general, call RJS Law at (619) 595-1655.