If you are a US taxpayer, including foreign nationals who live and work in the United States you need to take notice. Overseas bank accounts could cost still you $100,000 or more in penalties and interest if the aggregate balance of your offshore accounts exceeds $10,000 at any point in the tax year. Our office has recently helped several foreign nationals living and working here in the San Diego area. They and their families have offshore accounts which in many cases were in existence long before our client came to the US. In some cases the accounts were in their parent’s name(s) but the client still had signatory authority over them.
If you are a US taxpayer it is your responsibility in the eyes of the IRS to understand your responsibilities under US tax law. If you live or work in the US you are required to file federal tax returns. In addition, if you have offshore bank accounts, investment accounts, or other assets and income you are required to disclose them to the IRS on an IRS FBAR if the aggregate value ever exceeds $10,000 in a tax year, even for a day. The failure to comply with IRS FBAR requirements will result in a penalty of 50% of the highest aggregate balance (regardless of the present account values) or $100,000 whichever is higher, as well as the genuine risk of imprisonment for criminal tax evasion.
The recent charges by special counsel investigations included the “failure to file reports of foreign bank and financial accounts.” These charges carry some of the heaviest financial costs as well as prison time.
The majority of banks, financial institutions and sovereign tax authorities around the world are providing direct, electronic information to the IRS about all US taxpayers including detailed information regarding account balances and transactions. It is quite easy for the IRS to tie the data in these files back to your own tax return to find accounts which have not been fully or properly disclosed and reported.
Overseas bank accounts could still cost you $100,000 or more and put you at genuine risk for prison time. If you have offshore bank or investment accounts we invite you to contact the experienced domestic and international tax attorneys and accounting team at Allen Barron or call for a free consultation at 866-631-3470. Ask about the protections of the attorney-client privilege and how you can come into compliance with IRS FBAR reporting requirements.