Bank accounts held offshore have been in the spotlight over the past couple of years. The IRS has taken steps under the provisions of congress to setup a Foreign Bank Account Regulations committee. During this process, the IRS has been successful in collecting millions of dollars in offshore accounts that should have been taxed. These regulations have recently been updated and therefore there are new definitions and regulations for those people with foreign bank accounts to be in compliance with the IRS.
The FBAR was codified under the Bank Secrecy Act of 1970 (Title 31 of U.S. Code). Under this act, the enforcement agency that is delegated responsibility for filings is the Financial Crimes Enforcement Network (FinCEN), which in turn delegated powers to the IRS to have examination and enforcement authority of the FBAR. In February 2011, the FinCEN published new regulations for the FBAR that came affective as of March 28, 2011. These regulations modified definitions under the original act stating that all persons with foreign bank account finances or signature authority to report for calendar year 2010 and future calendar years on the FBAR form by June 30, 2011.
Amnesty was granted for those who have not been in compliance in previous years to file FBAR’s by September 9, 2011. While this was not complete amnesty, it did allow many individuals who filed to escape criminal prosecution and mitigate penalties assessed on their tax returns. That is why so many persons took advantage of this program. This program was again initiated in January of 2012, but has since passed.
While this deadline has recently passed, the IRS is still amenable to people reporting their accounts and amending tax returns and the FBAR form. By being proactive, the taxpayer has a good chance of mitigating penalties and lessening chances for criminal prosecution. There is now more of a risk of individuals being caught not reporting these accounts as more foreign banks are sharing information with the IRS. Further, as the information technology revolution continues to expound, the ability for the IRS to investigate abroad has never been easier.
The FBAR filing is a wary requirement for individuals with bank accounts abroad. They must come forward, admit that they have been shielding income from the IRS, and cross their fingers for protection from criminal investigations. This type of gamble is worth it, but only if you are protected. Therefore, contact a professional who can best assist you with this type of situation. Our team at Platinum Tax Defenders is here to help.