Is it too late to correct past FBARs and file amended returns with the IRS? The net is closing in on U.S. taxpayers with unreported or under-reported domestic and offshore income and assets. The IRS has increased audits in this area based upon a significantly improved ability to process data streams coming into the agency from Foreign Financial Institutions (FFIs), crypto exchanges, investment houses, digital asset wallets, and sovereign tax agencies. The agency’s substantial recent investment in state-of-the-art data processing and Artificial Intelligence (AI) has genuinely paid off.
If you have already been informed of an investigation or an audit by the IRS, it may be too late to simply amend past returns and update FBAR filings. You will need the advice and counsel of experienced tax attorney Janathan Allen to navigate the challenges ahead. Ask about the protections of the attorney-client privilege. While this constitutional protection will not aid in criminal conduct, it can provide significant legal protections for U.S. taxpayers to have transparent communications with their tax attorneys about their standing with the IRS. The Voluntary Disclosure may be an option for those presently facing investigation and audit.
This isn’t always the best strategy, but it should be considered – especially when there are concerns with “willful” conduct on the part of the U.S. taxpayer to conceal unreported or under-reported money or assets offshore.
It is not too late to correct past FBARS and file amended tax returns. There are other options for coming into compliance with income tax reporting and FBAR submissions for those who are not yet under IRS investigation or audit. The streamlined filing compliance procedures are an option for those “certifying that their failure to report foreign financial assets and pay all tax due in respect of those assets did not result from willful conduct on their part.” The streamlined procedures are only for individual taxpayers (including married couples) or the estates of individual taxpayers. The program applies to U.S. taxpayers who reside outside of the United States as well as U.S. residents.
While not a formal option recognized by the IRS, a “quiet disclosure” has been attempted by many U.S. taxpayers. A quiet disclosure is the process of amending past tax returns and FBARs and simply submitting them without any other notice to the agency or FinCEN. This strategy is fraught with genuine risk for U.S. taxpayers. The “quiet disclosure” does not relieve the taxpayer from any of the civil or criminal penalties, fines, unpaid taxes, or fees. It does not provide any immunities or remove the possibility of criminal prosecution for tax evasion.
Coming into compliance with cryptocurrency and digital asset transactions, as well as offshore investment, income, and assets, is no longer an option. The IRS has already received detailed information that provides insight into your offshore activities, accounts, balances, and transactions. This information is directly associated with your social security number or taxpayer ID.
It is not too late to correct past FBARs and file amended returns with the IRS to minimize risk and tax exposures and perhaps avoid an IRS investigation, audit, and substantial civil and potentially criminal consequences. However, the noose is tightening around the returns of U.S. taxpayers with unreported or under-reported domestic and foreign income, assets, and accounts. What is the best strategy to minimize risk and financial exposure with the IRS? An experienced tax attorney can provide accurate, timely advice about available programs and the best strategy to come into compliance based on your unique circumstances. The FBAR, FinCEN Form 114, is filed electronically through the BSA E-Filing System of the Financial Crimes Enforcement Network (FinCEN).
If you are concerned with unreported income or under-reported income on IRS or California tax returns and/or prior year FBARs, we can help you to reduce exposures and come into compliance. We invite you to learn more about the integrated tax, legal, accounting and business consulting services of Allen Barron and contact us or call today to schedule a free consultation at 866-631-3470.
We will discuss the protections of attorney-client privilege and all of the options that are available based upon your unique situation.
