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Some American taxpayers and businesses hold assets in financial accounts located in foreign countries. This process is legal but there are strict reporting requirements enforced by the Internal Revenue Service (IRS). When you have a history of not reporting these assets, a dedicated tax lawyer could help you address the issue through a variety of IRS disclosure programs.
If you believe you have not fully reported your assets in financial accounts held outside of the United States, it is typically possible to come into compliance without the risk of criminal charges or frustrating legal proceedings. Let a Fairfax offshore disclosure lawyer help you resolve these issues through dedication and value.
The United States is one of the only countries that imposes a tax burden on all income, whether it is earned domestically or abroad. In trying to collect this tax, the IRS has imposed reporting requirements for anyone with assets held in foreign bank accounts.
Several federal laws are in place to help the IRS collect these tax debts. One of these tools is FBAR, or the Reports of Foreign Bank Accounts. Taxpayers who fail to complete this report when required could face civil penalties.
The other federal law related to this type of reporting is FATCA. Formally known as the Foreign Account Tax Compliance Act, this law is imposed by the U.S. Treasury Department and serves essentially the same purpose as the FBAR. Taxpayers with foreign accounts generally must comply with both statutes – however, the minimum threshold for FBAR is $10,000 cumulatively at any point in the year, while the FATCA requirement is $50,000 (or $75,000 at any point in the year), with a higher threshold if you are married.
The form used to report foreign-held bank accounts is IRS Form 8938. Taxpayers are required to submit this form along with their tax return if they meet the minimum reporting threshold. When these filings are skipped or they lacked the relevant information, you should schedule a call with an offshore asset disclosure lawyer in Fairfax to discuss ways to solve it.
If you have failed to properly report your foreign bank accounts to the government, you have options to resolve this situation. This is true whether you failed to report an account entirely or if the details of your paperwork were inaccurate.
Some people choose to simply amend their tax returns to update or correct any errors without notifying the IRS. Known as quiet disclosure, this approach can be problematic. It does not protect you from being penalized and can sometimes result in a worse outcome compared to actively disclosing the reporting error.
Voluntary disclosure is typically the safer approach. This process involves filing a few forms notifying the federal government of your intention to disclose assets that were not originally reported. The IRS requires these disclosures to be truthful, timely, and complete. That means any attempt to fix these errors must include all the assets and accounts that were not previously submitted. There will be a 5% offshore penalty assessed for disclosing the foreign account and related unreported income using the streamlined domestic offshore procedure.
Your efforts must also be timely for them to have a positive impact. You will not be able to take advantage of this program if you are already under investigation by the IRS or if the government is aware of the assets you failed to report. It is highly important to contact an offshore disclosure lawyer in Fairfax before taking any action. We can walk you through this sensitive “eggshell” situation in a way that minimizes the risk of penalties.
You have options at your disposal to correct the mistake of failing to report your offshore financial accounts when filing your taxes. A Fairfax offshore disclosure lawyer could work with you to correct the record and avoid any unfortunate penalties. This service is generally most helpful for taxpayers with about $100,000 or more at issue in unreported foreign financial accounts. Call today for a private consultation with the Pontius Tax Law team.
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.
