Account Of Foreign Bank And Financial Accounts (fbar)
The Internal Revenue Service introduced the Offshore Voluntary Disclosure Initiative
that allows you to come clean and report all of your offshore accounts since 2003 if you have not filed the acceptable FBAR forms so far. The initial step in the process is filing a finished TD F 90-22 and including copies of your earlier tax returns for those years. It also demands that once this is completed you must sign papers that allow the IRS to expand the tax assessing time period, pay 20% tax penalty on all underpayments for all years, pay failure to file as well as failure to pay penalties. You have to then pay any other penalties that pertain up to and including 25% of the gross balance of all offshore accounts. As soon as you have paid all the penalties, taxes and fines you can then file a form to close out the case on IRS form 906. If you are currently under a civil or criminal case at this time you are not eligible for this program.
FBAR forms are required to be filed every year that you possess a financial interest in an offshore account. Faulty reporting might result in severe FBAR penalties that might put you in jail. The most common way to get in trouble with the FBAR forms is to start filing forms going forward without considering older accounts, filing overdue FBAR Forms in separate envelopes in an attempt to avoid attention, or filing more than 8 different forms with letters explaining that you did not know you were required to file the FBAR Forms.
Even when you do not owe taxes from a preceding year, you must still file the correct FBAR forms as the anchor still apply for not submitting the correct forms. Unless you take pleasure in serving prison time you should not try to get out of filing FBAR forms. While the guidelines and the rules concerning the filing requirements are complex you can navigate these waters by yourself, but it is suggested that you obtain professional guidance so as to evade even more severe FBAR penalties. Due to the crackdown on offshore accounts it is improbable that you will be able to remain undetected if you have never filed a FBAR in the past. With the OVDI, it is easiest that you report all that you have at this time in an attempt to avoid future tax issues.