It may be 2 to 3 years before we witness the full impact of the IRS response to all of the foreign account information and asset documentation they received as a result of the US Justice Department’s enforcement of FATCA. There is still time to soften the blow to US taxpayers who are required to come into compliance with FBAR and foreign account and asset reporting requirements.
The central issue is and will remain the IRS’ interpretation of “willful” conduct. If you missed an item here or there, it is straightforward to correct the back returns and claim non-willful conduct under the IRS OVDP or Streamlined Domestic Offshore Procedures programs. However, there is a huge difference between a simple misunderstanding and a pattern of behavior over years. The IRS has signalled that it will not simply accept the taxpayer’s declaration of “willful” versus “non-willful” activity, and they will closely scrutinize all returns and make their own decision as to the US taxpayer’s status.
If you were shielding assets or income offshore, you need to give careful consideration to the threshold of risk you are willing to approach. Many FBAR filers who enter the streamlined program will be in for a rude awakening when the IRS simply rejects their application, declares the behavior willful, and pursues heavy penalties and interest as well as criminal tax evasion charges. Protect yourself. Contact the experienced FBAR and FATCA tax attorneys at Allen Barron today for a free consultation. We provide candid, thorough assessments of your status and the ramifications of your offshore activities that is protected by the attorney-client privilege. Call 866-631-3470 today.
