Report Of Foreign Bank And Financial Accounts (fbar)
The Internal Revenue Service released the Offshore Voluntary Disclosure Initiative
that allows you to come clean and report all of your overseas accounts since 2003 if you have not filed the right FBAR forms so far. The Offshore voluntary disclosure initiative required that you offer copies of your earlier tax returns, and reconcile those returns as needed to file the inclusive TD F 90-22. The next step requires that you ignore 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 be as much as 25% of the collective balance of all your offshore accounts. Once you have paid all the penalties, taxes and fines you can then file a form to end the case on IRS form 906. However, if you are under criminal or civil investigation you are not eligible to take part in the OVDI program.
The FBAR forms need to be filed every year as soon as you have started offshore accounts. The penalties are brutal and can even result in prison time if you do not report accurately. Not filing past forms is the way that many people get into trouble with this type of process. They could also try to file more than one form at the same time by sending them individually, which is just as bad as not filing them at all. It is crucial that you file with respect to the law so as to evade FBAR penalties.
Even if you do not owe taxes from a previous year you should still file the right FBAR as the penalties will still apply. Unless you enjoy serving prison time you should not try to get out of filing FBAR forms. Because the guidelines and rules regarding the filing requirements are complicated it is suggested that you get professional guidance so that you can get around brutal penalties. Because of the attention on offshore accounts, it is improbable that you will be able to remain unnoticed if you have never filed a FBAR in the past. With the Offshore Voluntary Disclosure Program, it is best that you report all that you have at this time in an effort to avoid future tax issues.