subject: Fbar: Reporting It Or Leave It Alone [print this page] In an attempt to supply a way for unfiled reports to be on record the IRS announced the Offshore Voluntary Disclosure Initiative that enables US persons to report all of their foreign accounts since 2003 by filing the exact FBAR Forms. The OVDI asked that you provide copies of your previous tax returns and amend those returns as needed to file the complete TD F 90-22. It also requires that as soon as this is completed you must sign documents that allow the IRS to extend the tax assessing time period, pay 20% tax penalty on all underpayments for all years, pay failure to file in addition to failure to pay penalties. You need to then pay any other penalties that pertain up to and including 25% of the total balance of all offshore accounts. Then, and only then, if you have paid all the penalties and taxes you can file a form 906 to finalize the case. However, if you are experiencing criminal or civil investigation you are not eligible to participate in the OVDI program.
FBAR forms are required to be filed every year that you possess a financial interest in an offshore account. Faulty reporting can result in severe FBAR penalties that could put you in jail. The most ordinary way to get in trouble with the FBAR forms is to start filing forms going forward without addressing older accounts, filing past due FBAR Forms in separate envelopes in an effort to evade attention, or filing more than 8 different forms with letters explaining that you did not know you were obligated to file the FBAR Forms.
Despite the consequences of your tax liability, you are still required to file the correct FBAR forms before the filing deadline in order to evade filing anchor. You must never try to get out of filing these forms unless you are prepared to risk serious penalties that might include prison. While the guidelines and the rules concerning the filing requirements are complicated you can get through this by yourself, but it is suggested that you find expert guidance in order to avoid even more severe FBAR penalties. Due to the attack on offshore accounts it is doubtful 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 stay away from future tax issues.
