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How to avoid FBAR penalties

 

Wouldn’t it be nice if we lived in a fair world?  Wouldn’t it be nice if the IRS gave the little guy a break?  Unfortunately, that’s just not the way it is.  The news is littered with casualties of the IRS’ aggressive stance on taxpayers who don’t come clean.

The IRS is convinced — despite all evidence to the contrary — that the way to collect more tax revenue is to go after US taxpayers who have undeclared foreign accounts.  The IRS has decided that it should increase its audit of so-called wealthy taxpayers, just hoping they can land someone with undeclared bank accounts.

 

Why?

Because of the FBAR Penalties.   Here’s why the IRS salivates over the prospect of assessing these draconian penalties:

First, the FBAR penalties are particularly nasty.  They are not calculated on your income, but rather on your account value.  The problem for many taxpayers who haven’t filed FBARs is that they could wind up with wildly disproportionate penalties.  For instance, if you have an account that is worth $200,000, the IRS, for one year, can asses a $100,000 FBAR penalty — for just one year.  For two years, the FBAR penalties could be equal to the actual total value of the account — completely wiping out its value.  The IRS is not limited to assessing FBAR penalties for just two years; the IRS could potentially assess FBAR penalties for 6 or more years — putting taxpayers in a negative equity position.

Second, the IRS was given complete freedom to assess FBAR penalties whenever it felt the penalty was appropriate.  It used to be the IRS had the burden of proof to prove that a taxpayer intentionally hid accounts by failing to file a FBAR.  However, in 2004, that rule was spun on its head.  Now the IRS can freely assess FBAR penalties, and now it is the taxpayer’s burden to prove it was an honest mistake.

The truth is that FBAR penalties can be particularly devastating and far too many people make the mistake thinking that the IRS won’t come after them. 

So…do you want to hear some good news?

You can avoid the full brunt of the IRS’ power, by taking the smart action…now

There are two ways:

  • If the accounts had no unreported income, and an FBAR filing requirement, it is a matter of filing missing FBARs and arguing  with the IRS why you should not be assessed the FBAR  penalties for these reasons.
  • If you have unreported income you will likely need to submit a 2012 Offshore Voluntary Disclosure Initiative (2012 OVDI).  If you have good reasons like those above, you would then subsequently opt-out of the standard penalty structure, to argue for lower penalties.

Of course, we understand that this may sound confusing.  That is why we created our own exclusive 2012 OVDI awareness guide. In it we will run through the entire OVDI process, and explain to you why the IRS is doing this.  We will discuss the other options available such as doing nothing or the dangers of a so-called “soft” disclosure.

Sign up now and in minutes you’ll be on your way to finding the best solution for your FBAR concerns

 

NOTE: Your request for this information is completely confidential and is 100% protected by the attorney-client privilege even if you hire us, hire someone else or do nothing.

About IRSmedic: Parent & Parent LLP: IRSMedic.com is the website for Parent & Parent LLP, a tax law firm of IRS offshore resolution attorneys, Certified Public Accountants (CPAs), ex-IRS agents, and EAs who want to be the team that permanently resolves our difficult tax problems.

We employ a value pricing model to offer our clients a fixed, flat fee for any legal services.  We communicate these fees to clients prior to representation, so our clients are never taken by surprise.  Our firm is located in Connecticut, but we service all US taxpayers, including non-resident aliens and expatriates living worldwide.  We offer limited free consultations in-person, via telephone or over skype.

Our firm’s headquarters in historic downtown Wallingford, Conn.

The Charles Morris house ca. 1898