How Many US taxpayers still need to file offshore disclosures and FBARs with the IRS? Should those who have not yet filed a disclosure application utilize the OVDP (Offshore Voluntary Disclosure Program) or a streamlined application? Many US taxpayers have taken a hopeful position as they attempt to understand the core issues of “willful” failure to report versus “non-willful” conduct. The risks of filing a streamlined application are substantial, and these decisions should not be taken lightly.
In October, the IRS announced that roughly 85,000 US taxpayers had filed voluntary disclosure applications to date. The IRS issued a strong warning to those with offshore bank accounts, investments, assets and foreign corporations or trusts:
Come into compliance with IRS FBAR and FATCA requirements or face criminal tax evasion charges and the steepest taxation, penalties and interest under US tax law
The Wall Street Journal in 2014 estimated 7.6 million US citizens live abroad, and millions more have offshore assets, investment accounts and bank accounts. Expatriates should be well aware of the “Foreign Earned Income Exclusion” (currently $100,800 for 2015), which may relieve them from paying taxes to the IRS for earnings below that mark, however they are still required to file a tax return. This includes the requirement to complete accurate FBAR and offshore disclosures.
The key question is this:
If there are literally millions of US taxpayers with offshore accounts and investments and less than 100,000 have filed the required and necessary updated FBARs and voluntary disclosures, what happens to the millions who fail to comply?
If you are a US taxpayer, and you have offshore bank accounts, investments, assets, or own any interest in a foreign corporation or foreign trust the time is now to come into compliance with the IRS. The IRS has announced that they will pursue criminal tax evasion charges (and prison sentences) for those who refuse to comply. Failure to comply with offshore disclosures required by the IRS also exposes US taxpayers to up to 100% of the highest balance of each account, each year for a look-back period of 8 years or $100,000 per violation, whichever is higher. It doesn’t matter how much is in the account today. The foreign banks and investment houses are providing details on all accounts associated with US taxpayers directly to the IRS. There’s nowhere left to hide.
Contact the experienced international tax attorneys at Allen Barron to discuss offshore disclosures, IRS FBAR requirements, FATCA and the impact of willful or non-willful behavior upon your decisions and available options. We invite you to call 866-631-3470 for a free and substantive consultation. Come into compliance, and avoid the wrath and fury of the IRS and the tremendous financial impact this could have upon your life.