The US is one of the few countries that imposes tax on the worldwide income of its residents. US residents and US citizens living abroad are required to file a Report of Foreign Bank and Financial Account (FBARs) if the aggregate account balance of the accounts exceed $10,000. The Foreign Tax Compliance Act (FATCA) added the international information return filing requirement of Form 8938, Statement of Specified Foreign Financial Assets. Generally, the IRS can only audit a tax return for three years. However, the failure to file international information returns stops the statute of limitations until the international information returns are filed. Civil penalties start at $10,000 for each unfiled international form for each year. The typical international information returns are Forms 8938, 5471, 5472, 3520, 3520-A and 926. Willful failure to file international information returns can lead to criminal penalties. During audit examinations the IRS will ask the taxpayer if her or she has foreign accounts in search of unreported foreign income. If the IRS is auditing you, seek help from a Washington DC FBAR examination and offshore disclosure lawyer.
For non-filers, the IRS offers several offshore voluntary disclosure options for taxpayers to properly report their worldwide income and file their international information returns. The following options have different levels of protection, filing requirements and penalties.
Contact a Washington DC offshore disclosure lawyer for assistance.