Did you file an application under the IRS Streamlined Domestic (Foreign) Offshore Procedures? What happens if the IRS rejects your FBAR streamlined application and claims of non-willful conduct? What actions have been taken by the IRS that concern the attorneys at Allen Barron?
Let’s begin with the last question first. The IRS recently closed a fax line used to submit streamlined applications. IRS senior leadership has recently said that the OVDP and streamlined programs were “not meant to be offered in perpetuity.” However, the most concerning recent developments surrounding the streamlined application are:
- The IRS changed the form itself to require the taxpayer to make a substantial biographical and financial disclosure under penalty of perjury, and
- The IRS has sent letters to many early filers of streamlined applications asking them to provide exhaustive narrative regarding their education, financial background, investment history, travel, specific reasons for opening each offshore account, the source of funds used to open the account, source of funding for investments and bank accounts, and even personal travel history and tax knowledge.
The IRS is not simply accepting US taxpayer’s claims of non-willful conduct and approving streamlined applications. In fact, they have begun challenging taxpayers and requesting the very information they will use to decline their streamlined applications.
If the IRS rejects your FBAR streamlined application you will not be able to shift to or re-apply under the OVDP program. You will simply be exposed to the full fury of the IRS FBAR penalties including:
50% of the highest accumulated balance of all offshore accounts and investments at any point in the year, for each of the past 6 to 8 years or $100,000 per incident – whichever is higher
Criminal prosecution for tax evasion and the genuine risk of time in prison
If you have not come into FBAR compliance with the IRS the time is now. If you are a foreign national living or working in the US or have offshore accounts, investments, assets or income you must come into IRS FBAR compliance through either the OVDP or streamlined program. We invite you to contact the experienced IRS international tax attorneys at Allen Barron for a free consultation at 866-631-3470. Ask about the protections of the attorney-client privilege and the implications of willful versus non-willful conduct in these matters.