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IRS FBAR Requirements and Your Risks as a Taxpayer

If you have offshore bank accounts, investment accounts or assets you need to understand IRS FBAR requirements and your risks as a taxpayer here in the United States.  While many US taxpayers understand the concept of an IRS FBAR there are still a surprising number who do not understand the risk they are taking with the IRS.  You may have a spouse with foreign bank accounts which or assets such as real estate which have been in their family for years, or you may be a foreign national who is living and working in the United States.  Or you may simply think you’re too small of a fish for the IRS to find in the “sea.”

What are the IRS FBAR requirements and your risks as a taxpayer in the United States?  If you have more than $10,000 accumulated balance in any offshore bank or investment accounts at any point in a tax year (even for a day) you are required to file an IRS FBAR disclosing all foreign bank accounts, investment accounts and assets.  FATCA gave the US Justice Department the power to put Swiss banks up against a wall a decade ago and they were forced to make a decision: if you wish to have any access to US banking, markets or business you must provide the list of every US taxpayer with an account in your institution.  The failure to do so represented a criminal act of “aiding and abetting tax evasion in the US.”  The Swiss banks capitulated, agreed to huge fines and ultimately provided the data.  Access to business in the US as well as US banking and the markets was too important to the global economy.  Since then, hundreds of thousands of institutions around the world have agreed to provide direct electronic data to the IRS on every US citizen and the accounts they hold in the foreign institution.

The IRS is now receiving direct electronic data from hundreds of thousands of banks and financial institutions in more than 100 nations around the world providing detailed historical information about individual US taxpayers, the accounts they hold, balances and in many cases transactional information.  The IRS simply has to compare that data to the information you provided on your tax returns for the past 3 to 4 years.  Failure to report any offshore account is an FBAR violation which exposes the taxpayer to penalties and fines of half or more of the accumulated balance in their accounts for each tax year they failed to report and an extensive and expensive IRS audit.  So much for the “too small of a fish” theory.  It is important to understand IRS FBAR requirements and your risks as a taxpayer and ensure FBAR compliance.

We invite you to contact the domestic and international tax experts at Allen Barron or call 866-631-3470 for a free consultation.  Learn about IRS FBAR requirements and your risks as a taxpayer as well as the distinction between the Offshore Voluntary Disclosure Program or OVDP and the Streamlined Domestic (Foreign) Offshore Procedures.  Ask about “willful blindness” and the real meaning of “willful vs non-willful” conduct.  Download our free white paper “Allen Barron Offshore Reporting Requirements and the Impact of FATCA.”