As a vocal advocate for taxpayer rights, the National Taxpayer Advocate Nina Olson has strongly criticized both the IRS Offshore Disclosure Programs and the resulting FBAR penalties. In her annual report to Congress, Olson castigates the IRS for its unfair application of offshore account penalties. She highlights the difficulties of innocent Americans caught in reporting problems in her Complete Report: 2014 Annual Report to Congress.
National Taxpayer Advocate Criticizes FBAR Penalties
The report asks Congress to act right away by writing legislation that would cut back on possible FBAR penalties. Entirely out of proportion, the FBAR penalties are particularly unfair. As opposed to offering amnesty through voluntary disclosure, the IRS are sticking innocent taxpayers with FBAR penalties equal to over eight times the unreported tax, and over ten times the 75% penalty for civil tax fraud.
What’s worse is that taxpayers who were unrepresented generally paid even more. Given the take on the FBAR penalties by the National Taxpayer Advocate, the international tax team at LSL CPAs is dedicated to helping taxpayers clean up their international tax problems and challenges. Given the timeline on the more advantageous streamlined deal, taxpayers disclosing international accounts were penalized harshly despite doing what was requested of them by the IRS. Such FBAR penalties are nothing less than hypocritical.
FBAR Penalties & The Taxpayer Bill Of Rights
In the Taxpayer Bill of Rights, the IRS says a taxpayer has the right to pay no more than the correct amount of tax, to challenge the IRS’s position and be heard, to appeal an IRS decision in an independent forum, to be informed, and to a fair and just tax system. In the case of FBAR penalties, the National Taxpayer Advocate does not see such rights as being an actual reality. The Taxpayer Advocate wants legislation to lower and even cap the amounts of the civil FBAR penalties. In addition, there should also be no penalty at all if the taxpayer resides where the account is located.
Given the position of the National Taxpayer Advocate, the international tax consultants at LSL CPAs want the opportunity to help. If you are caught in a tax bind because of foreign accounts, please contact us. There is no reason why more innocent American taxpayers should be financially decimated by the FBAR penalties enforced by the IRS.
International Tax Consultant & FBAR Penalties
It is important to further note that this article presents only a partial view of the subject matter. It does not claim or attempt to be comprehensive or perfectly accurate. To learn more about FBAR penalties and foreign financial accounts, please call LSL CPAs international tax accountant Yana Weaver at 714.672.0022.
