subject: Report Of Foreign Bank And Financial Accounts (fbar)
[print this page] The Internal Revenue Service launched the OVDP that enables you to come clean and report all of your overseas accounts since 2003 if you have not filed the right FBAR forms yet. The Offshore voluntary disclosure initiative required that you provide copies of your previous tax returns, and amend those returns as needed to file the entire TD F 90-22. It also demands that as soon as this is done you must sign documents that allow IRS to widen 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. The FBAR penalties can be as much as 25% of the aggregate balance of all your overseas accounts. Then, and only then, if you have reconciled all the penalties and taxes you owe, you can file a form 906 to close out the case. However, if you are experiencing criminal or civil inspection you are not eligible to take part in the OVDI program.
The FBAR forms have to be filed every year once you have opened foreign accounts. Incorrect reporting may result in harsh FBAR penalties that might put you in jail. Not filing past forms is the way that the majority of people get into trouble with this type of process. They may also attempt 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 imperative that you file according to the law so as to get around FBAR penalties.
Even if you do not owe taxes from an earlier year you must still file the right FBAR Tax as the penalties will still apply. You should never try to evade filing these forms unless you are willing to risk serious consequences that involve prison. Because the instructions and rules regarding the filing requirements are complex it is suggested that you acquire professional guidance so as to get around brutal penalties. Because of the scrutiny on foreign accounts, it is unlikely that you will be able to stay 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 attempt to avoid future tax issues.
