Over the past 15 years, the IRS has dramatically increased the obligations of US persons to report their assets overseas. Businesses and individuals that maintain foreign bank accounts must annually disclose these accounts to the Treasury Department every June. This report is called the Foreign Bank Account Report or “FBAR”. Additionally, anyone who acts as a signer on a foreign bank account (for an employer or family member, for instance) must also file an FBAR.
FBAR reporting is no joke. Failure to comply with FBAR requirements can lead to civil penalties of up to 50% of the balances in your account for the unreported years or possibly even criminal charges.
You may also be required to file Form 8938 to declare foreign assets and income on your annual tax return. The threshold for filing Form 8938 is higher than the FBAR, but the list of included assets is more expansive. The penalty for failing to file Form 8938 is up to $10,000 per year!
If you have unreported foreign assets or income, there are avenues available to you to voluntarily disclose these assets and settle with the IRS for the less than the maximum amount of penalties (in some cases, no penalties). However, you must make these disclosures before the IRS contacts you about it or initiates an audit of your tax return, therefore time is not on your side!
If you have any of the following foreign assets that have not been reported on tax returns or FBARs, you should contact us immediately:
- Foreign Bank Accounts
- Foreign Investment Accounts
- Foreign Retirement or Pension Accounts
- Ownership of Stock in a Foreign Corporation
- Ownership of Interest in a Foreign Partnership
- Ownership in Any Business Organized Outside the US
- Owner or Beneficiary of a Foreign Trust
Our firm specializes in international tax and foreign asset reporting issues. Contact our firm today to discuss your issues and how we can assist you.