FBAR Reporting: How to Avoid IRS Tax Penalties | Gordon Law Group

FBAR Reporting: Disclosing Foreign Assets To The IRS [Infographic]

Are you meeting FBAR reporting requirements? Individuals and businesses must disclose foreign financial interests  (offshore bank accounts, securities, brokerage accounts, mutual funds, etc.)  to the IRS annually.

Learn what you need to disclose to the IRS, potential penalties for non-compliance, and how to avoid further penalties through the Offshore Voluntary Disclosure Program.

FBAR Reporting Infographic - Disclosing Foreign Assets, FBAR Filing, Civil Penalties, and the Offshore Voluntary Disclosure Program (OVDP)


Do I Need to Report Foreign Bank Accounts?

According to United States tax law, you need to disclose foreign assets if:

  • You are a U.S. citizen or permanent resident
  • Your combined offshore holdings exceed $10,000 at any time during the tax year

Assets are typically reported along with annual tax returns via FBAR filing (Foreign Bank Account Report).

FBAR Filing Penalties

  • If you do not disclose foreign assets as required by law, FBAR filing penalties start at $10,000 per tax return.
  • Once the IRS notifies you of filing delinquencies, you have 90 days to file and pay up.
  • If you don’t respond within 90 days, the IRS will penalize you with an additional $10,000 per month on each outstanding return.
  • Civil penalties can reach a maximum of $50,000 per return.
  • Inaccurate returns may incur penalties of 20% to 40%.
  • Willful failure to submit FBARs can result in civil penalties of up to 75% of the unpaid tax.
  • Taxpayers who don’t file annual tax returns are subject to audits, as well as increased penalties.

Read this cautionary tale about failure to comply with FBAR law.

The Offshore Voluntary Disclosure Program

Have you been a little lax with your FBAR reporting requirements? It’s not too late to get square with the IRS.

The IRS developed the Offshore Voluntary Disclosure Program (OVDP) to help taxpayers who owe penalties on foreign accounts. The program focuses on taxpayers who may face substantial fines, or even criminal charges, because they failed to report foreign financial assets and remit proper taxes.

Reporting foreign financial holdings can be complex, especially if you have multiple foreign accounts. To address common concerns, the IRS published a list of ODVP questions and answers that provides valuable information on the program. The IRS encourages taxpayers to use the OVDP to get compliant.

FBAR Reporting and OVDP Made Simple

Our experienced lawyers have been representing Offshore Voluntary Disclosure Program participants for years. We know all the ins and outs of FBAR and OVDP filing, how to deal with the IRS, and how to minimize your tax burden.

Remove the stress; get in touch with our team today to start exploring your options. The consultation is on us.

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