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Our experience has been that the IRS doesn’t look at FBARs as a primary determiner of whether or not to audit someone. Rather, the IRS will look to see if someone already under audit has an FBAR requirement, and then check to see if that FBAR requirement was fulfilled or not.
While the IRS has the option of pressing criminal charges (the willful failure to file an FBAR is a felony punishable by 5 years in prison), it is highly unlikely.The true threat of an FBAR audit is that of significant FBAR penalties.
If an IRS FBAR auditor makes a determination that someone was willful (meaning, you knew about the requirement but did not file) in not filing their FBAR forms, the IRS auditor may impose an FBAR penalty of 50% of the account balance, per year.
If it is determined that you were non-willful, the maximum non-willful penalty is $10,000 per occurrence. If you need assistance, we can help you prove to the IRS that you were sincerly non-willful...we know what to say, and what not to say.
Yes. If you're audited and it is found that you had an FBAR filing requirement you will be subject to a separate examination (conducted by the same examiner that is auditing you). The IRS interview will most likely be over the phone, but it could also be in person.
If you are ever selected for an FBAR audit, the most important thing to do is to convince the FBAR auditor not to assess the willful FBAR penalty of 50%. You could say something that seems fine to you, but it could give them basis for willful penalties. We can help you prepare for the interview.
An example: We had a client who found out he had an FBAR filing requirement, but before he filed his brother unexpectedly passed away. In dealing with the grief and arrangements, he missed the FBAR filing deadline. He was chosen for audit, and during the FBAR interview he explained the situation. The IRS had no compassion for the situation; they basically said, "Well, you admitted to us that you knew about the filing requirement, so that means you willfully did not file" (side note, we helped him out so he wasn't penalized so harshly).
Maybe. If they don't quite believe your story, if they got a letter from a bank about your foreign accounts, or if you're tied to some other investigation they could potentially interview your CPA or other people.
Absolutely. Throughout the entire process of being audited, our goal is to paint a picture of non-willfulness. The IRS doesn't like to lose in court, and if you appeal the next step would be a case in the US district Court. They only like to go to court when they have a rock solid case. We make sure you don't give them one.
If you need assistance with an FBAR audit, contact us to schedule a free, confidential consultation. Call us at 888-727-8796 or email firstname.lastname@example.org.
We invite you to review what our past clients have to say about us.