IRS Tax Solutions

Any US taxpayer with an interest in offshore financial accounts will have to file a FBAR through FinCEN Form 114 (previously Form TD F 90-22.1) where the aggregate value of those financial accounts exceeds $10,000 during the calendar year. Failure to abide with the FBAR reporting or even record-keeping requirements may bring about hefty penalties. Having said that, you can actually ask for explanations behind the penalty amounts and you've got the right to dispute the amount if you think the FBAR penalties are arbitrarily evaluated. Here's what you need to know about FBAR penalty appeals.

Statute of Limitations
Firstly, you are not expected to shell out any sort of penalty to the IRS while the appeal process is underway! Remember, the statute time limit is distinct between civil and criminal FBAR penalties. In the same manner the Assessment Statute Expiration Date (ASED) and Collection Statute Expiration Date (CSED) are also completely different. Though the penalty assessment will be performed by your local tax examiner, only an Appeals FBAR coordinator will conduct the penalty dispute solution for the Office of Appeals. The main objective of this co-ordination would be to ensure consistence in resolution countrywide.

Two types of penalty appeals

Pre-Assessment Procedure
A great many FBAR penalty appeals are conducted pre-assessment, that is before the imposition of FBAR penalty. If you're provided notice of a proposed FBAR penalty prior to the actual assessment it is important that you understand THIS IS THE TIME FOR YOU TO APPEAL.

Post-Assessment
If the taxpayer doesn't appeal, the collection course of action can begin, but post-assessment Appeals is still available to the taxpayer. A.D.R rights or Fast Track Mediation will not be available to tax payer for post-assessment FBAR penalty scenarios but the Office of Appeals reviews it on a priority basis ( have to be completed within 4 months). For cases above $100,000 (not including interest), no resolution can be achieved by appeals without getting the approval of the Department of Justice (D.O.J).

What happens for those who don’t Appeal an FBAR Penalty?
There is an option to challenge an assessed FBAR penalty by paying the penalty first and then filing a refund lawsuit. Bear in mind, judicial proceeding can occur only in the United States federal court and never the tax court. If you do not accept the report the IRS has made or by proving that you've tried to exhaust all the available administrative remedies, you may litigate by appealing up against the FBAR penalty decision. In order to best represent oneself in the court, you must acquaint yourselves with the FBAR process and the strategies the IRS will employ in administering its enforcement. Speak to a FBAR attorney, when you've got any questions or problems about unreported foreign assets or FBAR penalties.

The Internal Revenue Service is convinced - despite all evidence to the contrary - that the strategy to collect greater tax revenue would be to go after US tax payers who have unreported foreign accounts. The media is littered with casualties of the IRS’ aggressive stance on taxpayers who don’t “come clean,” and are savaged by FBAR penalties. The IRS has decided to target the well-to-do taxpayers by scrutinizing their tax returns, just hoping to find someone with undeclared offshore income.



Severe FBAR penalties
The main threat of FBAR penalties is that it is not computed on one’s income, but instead, on bank account value. FBAR penalties are worse than tax penalties; it will be greater of $100,000 or 50% of the overseas account value for every willful violation. As an example, if you've got $400,000 in foreign account, the Internal Revenue Service can assess a $200,000 penalty, for one year. For two years, the FBAR penalty could erase the entire amount of the account. Not only that, the Internal Revenue Service might assess the FBAR for 6 or more years - placing taxpayers in a a whole lot worse situation.

It is absolutely legal for U . S . citizens and residents to hold international bank accounts. Individuals have overseas bank accounts for a variety of genuine reasons, which include people that have relatives in a foreign country, those bank accounts that are inherited and those who would like to facilitate financial transactions for business purpose. Individuals with overseas accounts are usually dual citizens who bring tremendous value to the country's economy. But the sad fact is, The United States is the sole nation on the globe who asserts universal tax authority over all money made wherever in the universe.

So what can you do to avoid FBAR penalties?
Here are some of the voluntary disclosure programs available to people who are not under audit or criminal investigation.

Streamlined OVDP domestic: Taxpayers who're non-willful and dwell in the United States can make the most of the procedure by simply shelling out an offshore penalty equal to 5% on one of the year's maximum account balance.

Streamlined OVDP offshore: Individuals residing away from the U . S . could be qualified for a 0% offshore penalty as long as they meet the criteria.

Standard OVDP with 27.5% penalty: This program is for people who may have quite a few bad facts on their side. The standard 27.5% overseas penalty, aka, in-lieu-of FBAR penalties, is applied one time to the highest account balance within the OVDP period.

The Standard 50% offshore penalty: This 50% offshore penalty applies to all taxpayers with foreign accounts at banking institutions which are named or are publicly identified as being under investigation by the federal government.

FBAR only: When your offshore accounts did not have any unreported income you may be able to essentially file delinquent FBARs and never get penalized in any way.

Voluntary Disclosure: In case your OVDP is declined as you are under investigation, it may be recommended to try to get into a standard voluntary disclosure, or negotiate with the prosecuting authority, or at the minimum prepare for trial.

OVDP Opt out: This program is for individuals who differs with the OVDP stringent penalty structure and wish to get considered right under the normal FBAR assessment policies. For non-willful violators, opting-out of the program can be good option to reduced penalties.

If you are facing possible prosecution for undisclosed foreign income

If you are under audit of in case you are referred to the IRS CI division, immediately obtain legal help by choosing a tax attorney who is focused on FBAR issues and are aware of the technicalities of the reporting requirements based in the Bank Secrecy Act of 1970. You need to note that civil FBAR penalties can be in additional to criminal FBAR penalties, however that in order to collect civil FBAR penalties, the IRS must take part in FBAR litigation in federal court.

In any case, have an expert honest opinion from a qualified FBAR attorney who are able to help you to find out if you're at high risk for criminal prosecution. They will certainly help with bringing your offshore bank account into IRS compliance and minimizes your criminal exposure to the IRS.

The liberalized 2014 Streamlined Foreign Offshore eligibility rules have been unveiled on June 18, 2014. This new program offers you many benefits which includes reduced offshore penalties (even 0% in some cases). The following paragraphs will help you to determine whether you are eligible, and provides an overview of important streamlined offshore OVDP procedures.

Eligibility Requirements

•    Should be individual U.S. residents or estates of U.S. citizens

•    Tax payers must certify that their failure to report overseas assets, and pay all tax on earnings from these assets had not been a result of willful conduct.

•    Taxpayers under a criminal investigation or civil examination are ineligible for streamlined reporting, whether or not the case relates to undisclosed overseas assets.

•    "Soft Disclosures” made outside of the OVDP still entitled to streamlined procedures but any kind of penalty assessments previously made will not be abated.

•    Must have a valid Taxpayer Identification Number (SSN or ITIN)

•    Unavailable for taxpayers who submitted OVDP Intake Letter/Disclosure Right After July 1, 2014. This offers great advantage to those who have provided their Pre-clearance earlier. To avoid getting unqualified, don't send the OVDP intake letter. In case you do, the OVDP opt-out may become the only option for you to lessen offshore penalties. Those who have presented an OVDP submission just before July 1, 2014, may qualify for the Streamlined Procedures pursuant to transitional rules under OVDP.

Non-Residency Eligibility for Streamlined Foreign Offshore Procedures

•    Non Residency Requirement for US Citizens or Green Card Holders: In any one or more of the 3 recent years of which the tax return due date has gone by, the individual did not have a US abode and he or she was physically present outside the U.S. for at least 330 days. "Abode" does not mean a person's place of business - check out IRS Publication 54 for more information on the definition of it.

•    For Non-US Citizens/Green Card Holders: In any one or more of the recent 3 years for which the US tax return due date (or properly applied extended due date) has passed, the individual did not meet the substantial presence test of IRC section 7701(b)(3).

Streamlined Procedures

1. For each of the past three years for US tax return due date (or properly applied for extended due date) has passed:

•    If return was not filed previously, submit a delinquent return using Form 1040, along with the necessary information returns (i.e, Form 8938, 3520, and 5471).

•    If U.S. income tax returns have been filed previously: submit a correct amended tax return using Form 1040X, together with the required information returns (Forms 3520, 5471, and 8938).

2. Near the top of the delinquent/amended tax return first page and also in the information return, mention "Streamlined Foreign Offshore" clearly and in RED color. This is really important to make sure the returns are processed under these special procedures.

Certification of non-willfulness

Willfulness requires more than just filing an inaccurate Schedule B. Willfulness involves much more than the failure to file FBAR. It is vital you get a legal viewpoint on whether or not you had been willful.

Filing missed FBARs

File overdue FBARs in an electronic format for most recent six years for which the FBAR due date has passed at FinCen web site. Include a statement explaining that it is submitted as a part of Streamlined Filing Compliance Procedures.

The OVDI opt-out appears to be very subjective without having proper guidelines and many un-answered questions remain among the individuals. Below are the answers to several FAQs regarding the OVDI opt out procedure.

1. I Would Like to Opt Out of the OVDP Program- Can the IRS Initiate Any Criminal Prosecutions Against Me?

No. This confusion is there is mainly because when you go for opt -out option, you aren't actually opting out of the OVDI. Yes, that is correct.

An individual will not increase his/ her risk of criminal prosecution by opting out and what they really opt out will be the regular penalty rate which is determined by the highest aggregate balance in unreported offshore reports. For the majority of taxpayers, the penalty is going to be 27.5% of the highest aggregate value in offshore accounts but you may be eligible for 12.5% penalty if the highest balance is below $75,000 or if you fulfill certain conditions. And that means you just opt- out from the penalty fee cap rather than out of the entire OVDP.

2. Do I need to pay additional penalty if I opt-out?

It can be possible but we have yet to see this type of case. The IRS doesn't have any intention of penalizing any person who utilizes the OVDI. The reality is, as per the IRS, they're doing the right thing. We might see the IRS charging somebody more, but this could only occur if they give the OVDP team a hard time.

3. Exactly how many successful OVDPs opt-out have been done?

Unlike other options, the opt -out is a fairly new program. For the opt -outs which was submitted in 2012, only a very few successful cases has happened until now. The IRS is trying to centralize all opt-out decisions for uniformity, so there appears to be a queue that lots of our cases have been in for approval of the5% penalty.

One more reason for the delay is because of the misjudgment by the IRS over who will mainly use the opt out program. They thought that the intentional tax-evaders would primarily use this program however the reality is, the innocent filers (particularly dual citizens, ex pats and Visa holders) ended up being the major users of the OVDP.

4. Appeal rights

You can not appeal inside the OVDP but an opt-out offers multiple appeal rights for you. Keep in mind that outside the OVDI program, you could be charged several 50% penalties which can completely wipe out your savings in few seconds. This has happened before and the Internal Revenue Service threatens to do a lot more.

5. For small cases, OVDI appears to be overkill. Why don’t I just carry out a 'quiet' or 'soft' disclosure?

It is your choice whether to utilize this program or not. There's an FBAR audit and in case fortune tags along, you possibly will not get caught during the audit. But what will happen if you get caught? You might not deal with felony charges ( though it is highly possible), however it can bring other devastating consequences.

These individuals want to submit a ‘quiet’ disclosure. This could greatly minimizes the possibility of criminal prosecution for failure to file an FBAR, however the IRS carries on to threaten prosecution of individuals who go for 'soft' voluntary disclosure. They actually found nearly 10,000 individuals and they can be treated more harshly. If you didn't file FBAR and in addition didn't report your income from offshore accounts, your situation can become really challenging.

6. If I made a 'soft' disclosure can I still use the OVDI?

Absolutely. And you have to. Again, the government has discovered 10,000 people it suspects of making a 'quiet' disclosure. These belong to the people that have accounts balance of over $1,000,000. There are many more below $1,000,000.00

7. How much the OVDP process would cost me?

In order that you to make an optimum decision, we think you should know exactly what the entire cost of experiencing the OVDP is going to be. It primarily include the attorney and accounting fees. Our lawyers follows the flat fee model for our various tax resolution services. You will have a guarantee on our fee but we can not have control over the IRS. So all we will carry out is offering you a general idea. Should you have reasonable cause, the possibility of getting favorable result is much higher.

The Internal Revenue Service has announced that the revised and modified OVDP program should come into effect only on Aug 4, 2014.

(irsmedic.com - July 1, 2014) Wallingford, CT - Anthony E. Parent of Parent & Parent LLP points out that the IRS has decided today that the original deadline of June 30, 2014 will be extended to August 4, 2014, to help taxpayers who has or had an undisclosed financial foreign accounts and want to get protection under the old 2012 streamlined rules.

Even if this seems to be a lenient extension by the government, Parent is quick to indicate that in reality, it isn't going to leave much time for people who have to divulge their foreign assets under the 2012 OVDP rules.

The Offshore Voluntary Disclosure Program’s Frequently Asked Questions and Answers (FAQ) released by the Federal Government (http://www.irs.gov/Individuals/International-Taxpayers/Offshore-Voluntary-Disclosure-Program-Frequently-Asked-Questions-and-Answers-2012-Revised) sheds some light on new amendments: “Because the implementation of the Foreign Account Tax Compliance Act (FATCA) and the IRS and Department of Justice offshore enforcement efforts continue to raise the risk of detection of taxpayers with undisclosed foreign accounts and assets for the foreseeable future, it has been determined that 2012 OVDP should be modified and made available to taxpayers who wish to voluntarily disclose their offshore accounts and assets to avoid prosecution and limit their exposure to civil penalties but have not yet done so.”

On June 30, 2014, FACTA regulations came into effect, so now foreign financial institutions (FFIs) must report on the foreign account balances. It means that those account holders will have to enter the 2012 OVDP by August 4 in order to be qualified for the domestic Streamlined Program. Per Parent, the problem on the new amendment is that the IRS may assume that those American resident tax payers were willfully concealing their assets abroad. He contends the fact that is not really true.

While the main offshore account penalty is 27.5%, the Streamlined program offers a chance of a 5% penalty for all non-willful offshore account holders who failed to report their accounts. This option will work just for certain individuals but Parent finds that the opt-out option can be beneficial for a majority of people with non-willful reporting.

The employees at IRS Medic has years of practical experience with offshore voluntary disclosures, FBAR penalty problems, along with all other IRS tax issues. This foreign assets issue is affecting numerous U.S. citizens, Green Card holders and also expatriates. Contact http://www.irsmedic.com for any tax problems.

Men And Women residing in The US hate Internal Revenue Service and their tax policies like anything. Their agents are the most unarguable individuals and do whatever things they will to acquire back the required taxes. The Offshore Voluntary Disclosure Initiative (OVDI) is a complex program and when the IRS reaches you for this, most people have no idea of the right way to proceed the process. An OVDI legal professional could be extremely helpful in getting you through this scenario properly. There is also something known as the OVDP where the "P " means procedure instead of initiative. The people who generally use this program are dual citizens, expatriates, and foreign nationals.

Internal Revenue Service announced a new program at the time of 2009 known as Offshore Voluntary Disclosure Initiative (OVDI) for citizens who get revenue from foreign accounts but never divulge them. They can now voluntarily disclose the earnings particulars to the federal government. The tax would be based on the amount they currently owe along with a penalty of 20 % will likely be calculated on the highest international account balance. Nearly 5000 people have opted for the program. In this way, you not only protect your family and assets but also avoid criminal prosecutions. If you have had over $10000 on your offshore bank-account, you will need to report it to the Internal Revenue Service.

Internal Revenue Service was criticized for that OVDP penalty format because the charges always been exact same for people who purposely hide their offshore bank accounts and those who made genuine error in reporting with no intention of being unfaithful .In 2011, some modifications was done in the program. The IRS introduced an opt -out procedure in the 2011 OVDP. The FBAR penalty structure was altered where instead of 20 %, one has to pay out 25 percent charges on the highest balance . Also the IRS started to look at an 8 year look- back period as opposed to 6 years in the 2009 OVDP. However, if you have made a legitimate error in reporting or in the event you aren't aware of tax policies related to foreign accounts, one can request for a lesser FBAR penalty rate. When the IRS feels that your particular claims are legitimate, they could lessen the penalty for you to just 5%.

In January of 2012, it changed once again and the new FBAR penalty was 27.5% The Government is very rigid on these new policies and it is wise that you do not chance a "soft" disclosure. A tax settling firm can assist you through the entire Offshore Voluntary Disclosure Initiative process and normally they like the client to come clean since though expensive, this is the safest way to deal with Internal Revenue Service. At the time of May 2012, just about 2500 OVDI's have been registered in the IRS. With the increasing number of filings and tax lawsuits in the court, IRS is completely bombarded now. Therefore there will be more chance of one getting unjust penalty rate that you can do nothing at all about it . That is why it's so vital to have an OVDI lawyer to help you with this entire process.

The penalty which one needs to pay might be less when you opt out of the OVDI, but you must consider other possible outcomes of this program before seeking it. It will always be safe to come clean considering that the IRS is quite strict with FBAR reporting. They not just make you to pay massive penalties but also can enforce significant actions against on you such as jail time. Seek the help of an OVDI Lawyer Or Attorney immediately to get all the assistance with the OVDP Procedure.

The word IRS itself is intimidating for most people since when we are dealing with them, fear instantly creeps into our minds. If you have any problems with IRS Foreign Bank Account reporting, then you get a lot more scary. So are you aware about the methods that need to be taken for FBAR problems? IRS people won't ever leave you that easily when they choose your filings for review . So individuals need to be prepared in dealing with challenging questions from IRS. There are specific methods in FBAR review process which can help to manage the reporting more effectively. They usually are the very best method to fix conquer the IRS safely. The big challenge standing in your path is how you can rightly find and utilize those methods?


An Foreign Bank Account Reporting Attorney is exactly what you need to help you with the Internal Revenue Service FBAR problems. These legal professionals are specifically skilled and competent to deal with these difficulties and they know what steps to take to resolve them. Did you know what you are going to do about the IRS FBAR? Do you consider that doing nothing and anticipating the best or making a voluntary disclosure of one's international bank account details is the right way to manage the Internal Revenue Service? How about the making a " soft " disclosure of one's accounts? These are the areas where an Foreign Bank Account Reporting Lawyer can assist you to make a proper decision.

These are the trying times for a person where he/ she will be entirely confused about the direction to go. Your entire concerns get disappeared when a FBAR Attorney is with you. They'll give all the right assistance and support during the whole process. Rather than taking action, if you remain idle and do nothing at all with regards to the problem, things will turn a lot more serious than ever. Imprisonment and large penalty charges will wait for you when remain undecided. And don't forget regular tax attorneys won’t be the ideal person as they are not likely to make the circumstance any better. You will have to get the help of someone who is experienced and focuses only on FBAR.

IRS gave notice to the tax payers that the Offshore Voluntary Disclosure Initiative can be withdrawn at any time which means that the penalties can go up further more. A Person need to act now and get fix for your offshore accounts problems otherwise a person has to shed more cash from his pocket than ever. IRS extended the voluntary disclosure period another time during early part of the year 2012. But each time they extended, penalty payments also got increased. Since already three times the penalty got increased, it's always best to pay now as it will be definitely lower than any amount that you ever need to pay. So don’t hold off, get the right guidance immediately to avoid bigger penalties.

Foreign Bank Account Reporting Lawyers are the ones an individual should contact, if they have issues with their offshore bank accounts. With all those awful civil and criminal penalties for those who fail to take action, engaging a specialized lawyer can solve all of your problems with their professional guidance. These attorneys know what problems will normally occur in the FBAR review and can readily give solution for your every issues. So don't hold off any more. Make an intelligent choice in each and every action you take by getting expert opinion from a competent FBAR lawyer.