The two primary options are the OVDP and the Streamlined Domestic Offshore Procedures. We have reviewed the issues of “non-willful” conduct in previous blogs and on our website, and this is the central issue relating to FBAR compliance.
The IRS has allowed the subject to remain purposefully unclear, and many US taxpayers have joined this program hoping to get off the hook with a 5% penalty and a slight tap on the wrists. This path is fraught with risk if your reporting issues were anything more than one missed account in a single year, or a few errors in balances over a couple of years.
If the IRS comes to you, and you have not brought your offshore activities into the light of day through OVDP or another option, the penalties are harsh, and criminal tax evasion charges will immediately follow the monetary implications and seizures. The minimum is $100,000 per account per year or 50% of the accounts highest balance at any point in the year for each violation for the past 8 calendar years.
The OVDP allows you to qualify for a 27.5% penalty, or 50% for those institutions on the IRS’ willful tax evasion list. This is still far better than criminal prosecution and the penalties above. If you have not yet come into FBAR compliance we invite you to contact us for a free and substantive consultation at 866-631-3470. Learn about the protections of the attorney-client privilege and the single-source benefits of having your tax attorney, CPA, accounting team and tax preparation staff under a single source, and working in harmony to achieve the best and most profitable outcome in your case.