IRVINE, Calif., Feb. 25, 2021 /PRNewswire/ -- When a person accidentally does not report their foreign bank account, they could face several legal problems. It is important to resolve these issues quickly to avoid being subject to hefty civil penalties or possibly even criminal penalties. The Tax Law Offices of David W. Klasing is here to present you with options for how to handle the accidental (and even willful) failure to report a foreign bank account and related offshore taxable income.
Any taxpayer who opens a foreign financial account need to know that the United States taxes citizens and other U.S. persons on worldwide income. This means that income that is earned offshore and deposited in a foreign account will be subject to U.S. income taxes and various foreign information reporting requirements.
A taxpayer may be required to file a Report of Foreign Bank and Financial Accounts (FBAR) (FinCen form 114). It is common for taxpayers to miss an FBAR filing if they are unfamiliar with FBAR regulations. However, note that failing to make an FBAR report may not excuse a taxpayer from penalties because they were mistaken.
There are two categories for FBAR penalties based on the mindset of the offender: willful penalties and non-willful penalties.
The IRS may ask a taxpayer the following to determine their intent when they violated FBAR rules:
- The aggregate value of the unreported accounts.
- The amount of income earned across all the accounts.
- Whether the taxpayer received assistance from a CPA or other professional when filing their taxes.
- Whether the tax professional inquired about your foreign income.
- The length of time the taxpayer was considered a U.S. person.
- The first time the taxpayer had to file a return.
To be held responsible for willfully violating FBAR regulations, the defendant must have had access to information that would have increased the chance that they made an accurate and timely FBAR report willfully remained ignorant to or ignored it.
To arrange a confidential consultation about your FBAR reporting requirements, call our law offices at (800) 681-1295 or schedule a reduced rate initial consultation on the contact us page of our website.
See the full version of this article here.
Dave Klasing Esq. M.S.-Tax CPA
SOURCE Tax Law Offices of David W. Klasing, PC