subject: Understanding The Irs Offshore Fbar Voluntary Disclosure Program Trap
[print this page] There once was a time when US taxpayers could shield foreign financial records with impunity. Since 9/11, though all that has changed is the IRS has grown much more clever in discovering information. In fact, the Internal revenue service already has the information on where these accounts are and who owns them, they are just too busy sorting through the records to get the time to prosecute everyone. Because of this, the Internal revenue service has created the IRS offshore FBAR voluntary disclosure program. The penalties increase with each new version of the IRS offshore FBAR voluntary disclosure program, and the most recent version is the third. The current IRS offshore FBAR voluntary disclosure program has no end date. But the terms may be altered at any time..
This is the way the IRS offshore FBAR voluntary disclosure program works:
First, you can find a tax attorney to look into your case and ensure that a disclosure into the IRS offshore FBAR voluntary disclosure program is the best move. The tax lawyer then mails a letter in and works to amend 8 years of returns to incorporate unreported income and absent FBARs. The taxpayer, if they are competent, pays the taxes and interest due. The taxpayer now has two options. The taxpayer can accept the standard penalty structure which includes a 27.5% penalty on the highest account value throughout the last 8 years. This is the optimum decision when the taxpayer intentionally evaded taxes.
The supplementary choice for the taxpayer is to choose to argue for lower tax penalties rather than agreeing to the standard penalty structure. Typically, this equals a 5% penalty on the highest account value. Or the account could be small enough (under $75,000) so that only a 12.5% penalty will be applied.
In either case, opt-out or not, the taxpayer's lawyer will also go through a mini audit to confirm that the taxpayer's claimed income matches the bank account information. If a taxpayer opt-outs and disagrees with the penalty total, the taxpayer could take an administrative appeal. If the taxpayer is not happy with the outcome of that, the taxpayer can take the case to US tax court. Hypothetically, the US Supreme Court could wind up as the final arbiter of the penalty total, however that scenario is highly unlikely.
