It’s official. The FBAR audit warnings and IRS data mining you’ve been reading about in this space for the past several years have been confirmed by the Wall Street Journal (WSJ):
It wasn’t a question of “if” it was a question of “when.” The data mining has begun, and all of the reporting provided by thousands of banks, financial institutions, sovereign tax authorities and other sources world wide is being tied to individual taxpayer identification numbers or social security numbers. The next step is ominous: The IRS will compare the information provided by these institutions against the FBAR reports and tax returns provided by US taxpayers going back 6 years or more. The final step is obvious: The IRS will use this information to open an offshore tax and FBAR audit resulting in draconian penalties and interest, and the genuine probability of criminal tax prosecution and prison time.
File Your OVDP Application As Soon As Possible
This may be the final opportunity for US taxpayers who have not come into compliance with IRS FBAR reporting requirements to file an Offshore Voluntary Disclosure Program OVDP or streamlined disclosure. The IRS recently hinted that the OVDP program was not intended to last forever. That may be yet another signal that the time to come into compliance is rapidly passing, and the IRS is shifting into full out audit and prosecution mode.
Unfortunately, the price to US taxpayers who have not fully disclosed offshore accounts, assets and income will be quite high. Unreported offshore income, assets and accounts discovered in an FBAR audit will result in exorbitant financial penalties. The IRS will assess a 50% penalty for each year based upon the highest accumulated high-water mark at any point in the year, regardless of how much remains in the associated accounts today, or $100,000 per violation whichever is higher. This will be followed by a criminal investigation for tax evasion.
If you have yet to come into compliance with FBAR reporting of offshore accounts, income and assets with the IRS we invite you to call immediately for a free consultation at 866-631-3470.