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What If You Didn’t File Required IRS FBARs?

What should you do if you have foreign investments or accounts and you have not filed the Foreign Bank Account Report or “FBAR” with the IRS? This is can be a complex question based upon your unique circumstances and our best recommendation is that you call us at 866-631-3470 for a free initial consultation. If you have not had any income from the assets or accounts, or have reported the income but simply not filed the required FBAR reports, the resolution can be as simple as filing delinquent FBARs. Not every taxpayer needs to consider the OVDP or streamlined options provided by the IRS for delinquent or under-reported foreign income. The income tax assessment statute of limitations is only 3 years, and depending upon the financial activity surround those accounts and your reporting of it in previous returns you may have little to do to come into full compliance without owing the IRS a penny.

The penalties for under-reporting or omitting information about foreign accounts can be downright draconian. Steep penalties up to 50% as well as criminal tax evasion exposure can result from an IRS determination that your actions represented a “willful” attempt to avoid reporting income and paying appropriate taxes. The penalties are much lower for “non-willful” conduct, but the advent of international cooperation between banks, financial institutions, taxation authorities and the IRS since July has put the IRS into a position of strength in many cases. If you are concerned about your foreign holdings and the IRS you should contact us immediately so that we can take steps together to limit your exposure and protect your interests. This is not an area of tax compliance or federal law where you want to go it alone.