It is not uncommon for American individuals and businesses to keep some of their financial assets overseas. While there are benefits that can come with using offshore accounts, you still have a responsibility to report your assets and pay the taxes on any income generated.

If you believe you are out of compliance with offshore account reporting, now is the time to seek guidance from a seasoned tax lawyer. A Bethesda offshore disclosure lawyer could review your records and your history of tax filings before assisting you in coming into compliance with the IRS.

The Obligation to Report Foreign Financial Assets and Income

The IRS has strict reporting requirements when it comes to assets and income, and those requirements include a taxpayer’s worldwide income and specific assets in foreign countries. Collecting these taxes is accomplished through mandatory reporting by taxpayers.

There are several laws that address reporting requirements for offshore financial assets. One of the most prevalent is Reports of Foreign Bank Accounts, or FBAR. This report is made along with annual tax returns but only for foreign financial accounts that in aggregate are worth at least $10,000 at any point in the year.

There is also a federal law known as the Foreign Account Tax Compliance Act. Commonly referred to as FATCA, this law has been in place since 2010. The reporting requirement is similar to FBAR but taxpayers must comply with both. FBAR is regulated by the U.S. Treasury, while FATCA involves reporting to the IRS.

How Do I Report My Offshore Accounts?

There are numerous reporting requirements that come with offshore assets and each of these requirements involves its own documentation. Taxpayers that hold financial accounts overseas could be responsible for filing numerous forms with the IRS or U.S. Treasury. The failure to file any of these forms opens a taxpayer up to civil penalties, with the possibility of criminal action if it is determined that the failure to file was willful. A Bethesda offshore disclosure attorney could assist with ensuring compliance with each of these forms in order to prevent significant penalties.

It is important to file these forms on time but sometimes mistakes are made. Some taxpayers are unaware that they have the requirement of reporting offshore accounts until the deadline has passed. If the value of the financial accounts at issue exceeds $100,000, an individual or business should ask an attorney for help with resolving this problem.

IRS Form 8938

One of the most commonly-used forms for reporting offshore financial accounts is IRS Form 8938. This form must be submitted along with a tax return each year. Whether or not this form is required will depend on the amount a taxpayer holds in foreign accounts, as well as the residency and marital status of the filer. An unmarried individual who lives within the United States must report overseas financial assets if it is over $50,000, while a married couple filing jointly and living outside of the country must report if they have at least $400,000 in their accounts.

Disclosing Delinquent Accounts to the IRS

The IRS allows taxpayers to voluntarily report their undisclosed offshore accounts with minimal penalties, provided that they qualify and follow the directions of these procedures closely. The primary methods of disclosure are the streamlined offshore procedure (one for those living within the United States and one for those living outside of it), which requires submitting three years of tax returns and six years of FBARs, as well as a written narrative explaining why they failed to report this information previously. Taxpayers using the domestic streamlined procedure will incur a 5% penalty. There is also a delinquent FBAR submission process and, in some rare cases, a quiet disclosure option.

The value in speaking with an offshore disclosure lawyer in Bethesda is that they can determine which disclosure program, if any, is ideal for the taxpayer’s current situation, and guide them every step of the way so that they do not incur further penalties.

Call a Bethesda Offshore Disclosure Attorney Right Away

If you own financial assets or accounts overseas, you have an obligation to report if they are valued above a certain amount. Keeping up with these requirements is important, as there are consequences that come with non-compliance. A Bethesda offshore disclosure lawyer could help you get into good standing with the IRS if you have not been meeting your obligations. Reach out for a private consultation as soon as possible.

Attorney John Pontius

Pontius Tax Law, PLLC is a tax law firm that strives to resolve sensitive tax problems through trust, dedication and value. The law firm was founded by John Pontius with offices in Washington, DC,  Rockville, MD, Bethesda, MD, Fairfax, VA, and Alexandria, VA. Mr. Pontius represents individual and business clients with sensitive and serious tax matters before the Internal Revenue Service and state taxing authorities. His client base is local, national, and international.

Over the course of his career, Mr. Pontius has represented businesses and individuals with complex tax issues in the following areas: FBAR examinations, offshore and domestic disclosures, FATCA, FIRPTA, tax planning, unfiled tax returns, release of tax liens and levies, trust fund recovery penalty, IRS and state audit examinations, as well as appeals, penalty abatement, U.S. Tax Court litigation, along with defense of tax fraud and evasion. If you require assistance from a tax lawyer, contact Mr. Pontius to discuss your situation.

Client Reviews
John helped us with a DC tax audit and succeeded in getting us a "no change" final decision. The issues were related to two flow-through entities and the use of carry-forward operating losses -- something that the DC auditors struggled to understand and with which they did not have any...
Paul A
Mr. Pontius is extremely professional and was able to take care of my tax returns which includes international bank accounts quickly and at a very reasonable price. Would definitely recommend.
I received a fee this past November from the IRS for over $800 because of an error I made on my 2016 taxes. I called my cousin, John Pontius, and he immediately knew what steps needed to be taken. Thanks to him, the fee was cleared. A 10 minute conversation...
As an American citizen living in the Middle East my local banker informed me that I needed to file FBARs and report my worldwide income to the IRS. Through the recommendation of another attorney at an international law firm, I was introduced to John Pontius. Mr. Pontius efficiently and effectively...
Kareem S
John handled a difficult IRS lien for my client. He was excellent in getting the lien released so we could close on the property. I would highly recommend John .
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We were seeking tax advice with managing two properties, LLC, as well as some future financial planning. John responded to my call in a timely manner and was happy to answer our questions while referring us to specialists who can manage our accounts on a more regular basis.
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