The international tax team at LSL CPAs wants to make it perfectly clear to our clients and our potential clients: Now is the time for FBAR reporting of any and all foreign financial accounts. We understand the fears a client might have if they failed to report these accounts.
The most common question clients ask is whether they should file late Reports of Foreign Bank and Financial Accounts, known as FBARs, or just start reporting those accounts going forward? The answer is to definitely file FBARS for the current year, then work with your international accountant to resolve the question of noncompliance in relation to prior years.
Without a doubt, international tax shelters are a thing of the past for taxpayers. FATCA is quickly becoming a universal reality. The consequences for not reporting foreign accounts are costly. If you don’t believe this is the case, the international tax team at LSL CPAs wants to convince you otherwise. As a result, here are three reasons you should start reporting your foreign financial accounts.
3 Reasons To Report Your Foreign Financial Accounts
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With FACTA In Place, The IRS Will Find Out
The Foreign Account Tax Compliance Act (FACTA) is the strongest weapon ever given to the IRS when it comes to uncovering foreign financial accounts. This law allows the IRS to enforce a painful withholding tax on foreign financial institutions and international banks that do not report their U.S. account holders. The results have been powerful and overwhelming. With even the strict bank secrecy laws of Switzerland and the Cayman Islands no match for FACTA, what chance do you have of your foreign financial institution refusing to be compliant?
The vast majority of overseas banks have already started reporting their U.S. depositors to the IRS.
By checking this incoming information against filed FBARS, the IRS will uncover you sooner or later. If you fail to take advantage of one of the Voluntary Disclosure Programs, you could find yourself in much bigger trouble than you have ever expected. Even if the IRS runs into technical complications processing the information, it will inevitably solve the issues because it has a mandate to leave no stone unturned.
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The Fines Are Huge And Waiting Will Cost Even More
If you don’t report, then you are subject to the fine. There are no other extenuating factors. The IRS just needs to prove that you did not report the balance in the foreign financial account. Once the IRS assesses the penalties, any legal battle will be long and expensive if you choose to fight. This is why a taxpayer needs contact the international tax team like LSL CPAs, file delinquent FBARs and amend prior year tax returns, if needed. LSL CPAs works closely with highly experienced tax attorneys, who provide excellent representation for clients in foreign non-compliance cases.
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The OVDP & Other IRS Options Will Soon End
Currently, the IRS has established programs to help you comply in light of FATCA. The two most common compliance approaches are known as the Offshore Voluntary Disclosure Program (OVDP) and Streamlined Filing Compliance. Although these programs and procedures can help individuals who come forward avoid criminal prosecution and the larger penalties, there are still financial consequences.
More information regarding the eligibility for the Streamlined Filing Procedure and specific instructions can be found on the IRS website. LSL CPAs encourages all taxpayers with foreign asset compliance issues to contacts our international tax team to discuss their options with an experienced international tax professional. While the IRS does not have an expiration date for OVDP programs at this time, it does have the authority to discontinue such programs whenever it sees fit. As a result, the time to act is now.
Help With Foreign Financial Accounts
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 how these issues might apply to your particular tax issues, please call LSL CPAs international tax accountant Yana Weaver at 714.672.0022.
