subject: Fbar Penalty: Report It Correctly
[print this page] The Internal Revenue Service introduced 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 yet. The first step in the procedure is submitting a completed TD F 90-22 and including copies of your earlier tax returns for those years. It also demands that as soon as this is done you must sign documents that allow IRS to extend the tax assessing time period, pay 20% tax penalty on all underpayments for all years, and pay failure to file and failure to pay penalties. You have to then pay any other penalties that you owe, up to and including 25% of the entire balance of all overseas accounts. Once you have paid all the penalties, taxes and fines you may 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 each year that you hold a financial interest in an offshore account. Improper reporting may end in cruel FBAR penalties that may possibly put you in jail. The most common way to get in trouble with the FBAR forms is to start filing forms without addressing older accounts, filing past due FBAR Forms in different envelopes in an effort to avoid notice or filing more than eight separate forms with letters explaining that you did not know you were required to file the FBAR Forms.
Despite your tax responsibility, you are still required to file the right FBAR Penalty within the filing deadline so as to evade penalties. Unless you like serving prison time you should not attempt to get around filing FBAR forms. The rules for FBAR forms and FBAR penalties can be confusing and hard to navigate so it is important to have good representation when you begin this procedure so as to make sure that you have complied with the present laws. Because of the scrutiny on overseas accounts, it is unlikely that you will be able to stay hidden if you have never filed a FBAR in the past. With the Offshore Voluntary Disclosure Initiative, it is best that you report all that you have at this time in an effort to avoid future tax issues.
