Philadelphia Tax Attorney
Since 1970, the IRS has required the filing of a Report of Foreign Bank and Financial Accounts ("FBAR") for each "U.S. person" with an interest in or some authority over bank, securities, or other financial accounts in any foreign country. This rule applies to any U.S. person who has an interest in or authority over an account or accounts, the value of which exceeds $10,000 in any calendar year. The rules apply to individuals, business entities, trusts and estates in the United States, regardless of their citizenship.
The IRS has made improving FBAR compliance an official Treasury Department priority, beginning with the enactment of the Patriot Act of 2001. Specifically in the past year, the IRS has focused on identifying individual account holders who have not complied with FBAR requirements over the past six years. The IRS recently made headlines by winning a legal dispute with UBS in which the courts forced UBS to disclose the identities of U.S. citizens with accounts held with UBS in foreign countries.
In this global economy, more people find themselves with assets held in foreign accounts. The FBAR requirements, and potential penalties for failure to comply, apply to both the account holders and any other person or entity that has signature authority over the account.
If you believe that you have, or may have, failed to comply with FBAR requirements in the past, you should contact an attorney as soon as possible. The attorney will be able to confidentially determine whether in fact you have violated the FBAR requirements and determine the best way for you to fix the situation.
It would be unwise to wait and see if the IRS becomes aware of your past non-compliance with the FBAR requirements. Penalties that can be imposed for violations include fines of up to $500,000 and prison time of up to five years. Until October 15, 2009, the IRS is running a limited amnesty program to reduce civil penalties and promise no criminal penalties for the voluntary disclosure of previously unreported offshore income. Even after that time, however, an attorney can advise you on how to utilize the ongoing voluntary disclosure program with the IRS to minimize the chance of excessive IRS penalties or the imposition of jail time.
The FBAR for 2009 will be due June 30, 2010. Be sure to advise your professional tax preparer of all accounts in which you hold an interest or over which you have signatory authority. You do not want to become a target of the IRS enforcement authority.
