UBS Settlement Update: What Foreign Bank Account Holders Need to Know to Avoid Civil and Criminal IRS Penalties
UBS has just struck a deal with the US Government to give up 52,000 names of Americans who have Swiss bank accounts. In the upcoming weeks, we can expect to see many guilty tax evaders being charged with heavy IRS penalties as well as innocent account holders who will need to defend themselves. (Read more about the latest UBS settlement.)
It is not uncommon for American businesspeople to hold foreign bank accounts, especially if their business is international. Due to the recent heavier IRS enforcement, it is extremely crucial for you to understand everything you are required (by law) to do if you have a foreign bank account or if you have signatory authority over an offshore account. Failure to comply with IRS regulations regarding FBAR will result in severe tax penalties that could debilitate your financial well-being for life.
Currently, taxpayers are required to report all income from domestic and foreign sources. In addition, taxpayers who have a financial interest in or signature authority over foreign accounts are required to file a Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), if the aggregate value of all such financial accounts exceeds $10,000 at any time during the calendar year. The FBAR cannot be filed with your federal tax return. Instead, it is filed with the Department of the Treasury in Detroit, Michigan no later than June 30 of the year following the calendar year reported. There is no extension of time available for filing this report.
Failure to report income in foreign bank accounts, or to file Form TD F 90-22.1, has serious consequences; there are civil and criminal penalties, and both can be imposed in appropriate cases. However, until September 23, 2009, taxpayers with unreported income in foreign bank accounts have an opportunity to take advantage of an IRS settlement offer. In exchange for full disclosure, the IRS agrees not to criminally prosecute those taxpayers not already under investigation who pay all back taxes plus interest and penalties. In addition, the IRS waives the 75 percent fraud penalty for taxpayers who voluntarily disclose their foreign accounts.
If your offshore account has come under scrutiny by the IRS and you’re not sure if you qualify for a voluntary disclosure settlement, consult a professional tax specialist.
Oftentimes, people find themselves in trouble with the IRS because they do not realize their inaction (in certain situations) was illegal. Do not be one of the innocent people who has to pay heavy tax penalties for ignorance. Educate yourself and stay informed.
99% of the time, Tax Resolution Services will keep an IRS tax case in the civil arena and out of the criminal arena, if you find yourself in IRS tax trouble, you can contact our team of experts for a free consultation. Call us at 866-IRS-PROBLEMS (1-866-477-7762) or visit our website at www.TaxResolution.com
Source: Stuart A. Goodman for CCH, July 31, 2009
More Tax Help, IRS News and Tax Relief Tips:
- Swiss Pressured to Reveal All Offshore Accounts
- IRS Asserts Position on Tax Protesters: Sanctions Imposed for Advancing and Maintaining a Frivolous Argument
- IRS Audits of Thousands of Innocent Offshore Account Holders Expected as UBS Releases 52,000 Names of Potential American Tax Evaders
- Tax Help News: IRS Enforcement to Get Priority, Big Bucks in 2010
- Offshore Tax Evaders Get Preferred IRS Help
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