OVDP Tax Attorney Atlanta
How do I know if I committed an FBAR or Report of Foreign Bank and Financial Accounts violation and should consult with a tax attorney immediately?
If you can answer ‘yes’ to the following four questions, you very likely have committed one or more FBAR form violations and require the services of a skilled OVDP tax attorney:
1. You are now or in the last six years were a US citizen, a US permanent resident (‘green card’ holder) or a US tax resident
2. In one or more years since 2008, you owned or controlled a foreign financial account of any kind
(Foreign financial accounts are any of the following types of accounts held with an institution located outside the US: checking and/or savings, brokerage account, investment account, private wealth management account, certificate of deposit/time deposit, cash-value life insurance or annuity, or options or commodity futures account)
3. Your foreign account(s), at any time in the year(s), aggregated (totaled) in excess of $10,000 (US dollars)
4. In the year(s) when conditions 1-3 were met, you did not report the existence of the account to the IRS via the Foreign Bank Account Report form (formerly titled TD F 90-22.1, now filed online as FinCEN 114) and/or since 2011, you did not report these same details (and others) on the IRS’ Form 8938 (‘Statement of Specified Foreign Financial Assets’).
5. You may have also committed a reporting violation if you failed in any year to:
a) to disclose your 10%-or-more interest in a foreign corporation on the Form 5471, b) your interest in a foreign partnership on the Form 8865, c) your interest in a Passive Foreign Investment Corporation on the Form 8621, d) any foreign gifts from or transactions with a foreign trust on the Form 3520, or e) your interest in a Passive Foreign Investment Company on the Form 8621.
Failing to report any of these, especially foreign bank and financial accounts, is a significant civil violation and could also expose you to criminal prosecution.
Civil FBAR penalties
– The penalty for a willful failure to file the FBAR form is equal to the greater of $100,000 or 50% of your undisclosed foreign accounts’ value. The IRS has indicated that it may impose this penalty cumulatively for up to six years, and in the recent Zwerner case, has imposed the 50% penalty for four years running (case is still pending but indicates IRS’ willingness to impose cumulative penalties greater than the value of the undeclared account).
– $10,000 per account, per violation for non-willful (negligent) failure to failure where the taxpayer can show no reasonable cause for the failure to file. This penalty can and often will be imposed cumulatively.
– Finally, in narrow circumstances that an OVDP tax attorney is best equipped to analyze and review, a taxpayer may obtain a no-penalty result if he/she shows there was reasonable cause for the failure to file.
Criminal FBAR penalties
– If the IRS determines that your failure to file the FBAR form was willful, and the failure to report your foreign financial account also resulted in your not reporting a significant amount of taxable earnings to the US, you are at risk for prosecution both under the laws governing FBAR violations and the laws governing standard criminal tax prosecution (found in Title 26 of the United States Code). Only an attorney can competently advise you on these issues. This is why you must consult with an attorney – discussions with a CPA or any other non-attorney is not fully confidential and risks disaster.
Why Choose An Experienced Offshore Voluntary Disclosure Program Attorney?
A skilled tax attorney with experience in foreign account reporting and voluntary disclosures will analyze your specific situation and provide a specific solution. A good OVDP tax attorney will provide you with written advice that reviews your specific facts and circumstances, the various options for addressing your foreign account reporting problem, and recommends the best solution after intensive discussion about your particular priorities.
Everything that you discuss with a tax attorney is protected by the robust attorney-client privilege. This is not true if you make the mistake of consulting with any non-attorney, even a CPA. If you know that you will need to file amended returns under the OVDP and already work with a trusted CPA, you should still hire an attorney, who will then retain that accountant under a Kovel letter that extends attorney-client privilege to the accountant’s work.