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IRS Offshore Voluntary Disclosure Program FAQs - Part 2

Why Should I Worry About Unreported Foreign Assets Or Accounts?

United States citizens, residents — including green card holders — and certain other qualifying persons must report their worldwide income and disclose any financial interest whether direct, indirect or merely signature authority, in a foreign bank account, brokerage account, mutual fund, trust or other type of foreign financial account, where the aggregate value of those accounts exceeds $10,000, at any time during the year. Even if you only have signature authority over a foreign account or other comparable authority, you must comply with the Bank Secrecy Act by electronically filing Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (the current FBAR form) formerly Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR). Failure to file the FBAR may result in criminal prosecution, along with the imposition of severe penalties, some as high as 75 percent or even more than 100 percent of your foreign account balance. There is also a requirement to disclose the existence of such accounts, and any foreign income, on their U.S. individual tax returns.

What Can I Do If I Have Undisclosed Foreign Accounts Or Assets?

Timely and accurately complete a voluntary disclosure by participating in the current IRS Offshore Voluntary Disclosure Program while there is still a chance, and thereby mitigate the risk of an international tax audit. To find out how to protect yourself from criminal prosecution for undisclosed offshore accounts or how to reduce the associated penalties, please call our experienced tax attorneys now.

What Is The IRS Offshore Voluntary Disclosure Program (OVDP)?

The IRS is in its fourth iteration of the Offshore Voluntary Disclosure Program (OVDP). The OVDP is designed to bring money held in foreign accounts back into the U.S. tax system and to help taxpayers with income from offshore accounts to comply with federal tax law. While there are legitimate business reasons for keeping an account outside of the United States, there are no legal reasons for not reporting those accounts and paying taxes on the money the foreign accounts earn.