Randall Andreozzi Co-Authors Article on FBARS
Individuals with a financial interest in bank accounts or certain foreign financial accounts must report these accounts, if their cumulative value exceeds a threshold amount. Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts, commonly known as FBAR, is the form which is used to satisfy this reporting requirement. The FBAR form is required to be filed annually by June 30th. Unlike rules pertaining to tax returns, the FBAR form must be received by the June 30th deadline, not just post-marked.
On January 9, 2012, the IRS announced they are reopening the Offshore Voluntary Disclosure Program for 2012. The IRS suggests that the 2012 program will be substantially similar to the 2011 program, which closed in September 2011. However, the penalty has increased to 27.5%, up from 25% for the 2011 program. Depending on individual circumstances, some taxpayers will be eligible for 12.5% or 5% reduced penalty rates.
An individual who willfully fails to file an FBAR faces a penalty equal to the greater of $100,000 or 50% of the foreign financial account balance as of the June 30th FBAR due date. Willful violation of the FBAR requirements is also a felony, and punishable by up to five years in prison, a fine not to exceed $250,000, or both. Non-willful noncompliance can be punished with a maximum penalty of $10,000 per account per year of noncompliance. For an individual who is noncompliant for a number of years, these penalties can quickly exceed the total account balance.
Consequently, U.S. persons having an interest in or signatory authority over foreign accounts, who believe they may not be in compliance with U.S. tax or banking laws, should contact a professional immediately to assess their compliance and evaluate their options. Andreozzi Bluestein LLP can provide legal counsel regarding these foreign accounts and the 2012 OVDP.
Please see FBAR: Handle With Care co-authored by Partner Randall Andreozzi for a more detailed explanation of FBAR compliance issues.
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