In an effort to provide a way for unfiled reports to be filed the Internal Revenue
Service released the OVDP that allows US persons to report all of their foreign accounts since 2003 by filing the right FBAR Forms. The OVDI required that you provide copies of your previous tax returns, and amend those returns as needed to file the inclusive TD F 90-22. The next step requires that you waive the tax assessing time period for the IRS while they examine your circumstance, meaning that you will not be protected by the statute of limitations for these years. The FBAR penalties can amount to as much as 25% of the collective balance of all your overseas accounts. Once 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 presently under a civil or criminal case at this time you are not eligible for this program.
FBAR forms are mandatory to be filed every year that you hold a financial interest in an offshore account. The penalties are severe and can even end in prison time if you do not report correctly. Not filing past forms is the way that the majority of people get into trouble with this kind of process. They may also try to file more than one form at the same time by mailing them separately, which is just as bad as not filing them at all. It is crucial that you file according to the law so as to avoid FBAR penalties.
Regardless of your tax liability, you are still required to file the correct FBAR within the filing deadline in order to avoid penalties. Unless you enjoy serving prison time you should not try to evade filing FBAR forms. Because the guidelines and rules concerning the filing requirements are complicated it is suggested that you acquire professional guidance in order to avoid severe penalties. If you have never filed before it is doubtful that you can stay below the radar eternally, and once you are caught, the penalties are severe. Therefore, it is best to hire help and get the FBAR Forms filed and out of your way.