Correct & Resolve Offshore Account Disclosure Violations

Correcting and Resolving Offshore Account Disclosure Violations 

U.S. Taxpayers who have not properly reported their offshore accounts to the Internal Revenue Service may become subject to fines and penalties. Whether the US taxpayer resides in the United States or lives overseas as an expat, they are still required to disclose their offshore accounts to the Internal Revenue Service and FinCEN each year on various international information reporting forms. The number of forms and extent of the reporting they will have to make depends on the categories of foreign assets they own along with the value of these assets. Some international reporting forms have a higher reporting threshold than others and some international tax forms are more complicated than other forms. Once a taxpayer is out of compliance, how can they get back into compliance for their offshore account disclosure violations in 2024? Let’s take a brief look at some of the common issues to consider.

Was it an Inaccurate Filing or No Filing?

The first thing to consider is whether or not the taxpayer filed any of the international information reporting forms that they were required to file. If they did not file any of the forms, then the next question is to determine whether they knew they were supposed to file the form or not. If the taxpayer did file the form(s) but they were not accurate, it is important to determine whether that lack of accuracy was due to negligence or whether it was reckless disregard or willful blindness. For example, that the taxpayer know they had a large dollar value account that they just didn’t want to report, or did they report most of their accounts but simply missed some of the negligible or dormant and/or zero balance accounts?

How Many Years of Offshore Account Non-Compliance?

The next question is to determine whether or not this non-compliance was a one-off or whether there have been several years of offshore account disclosure violations. If it turns out that this was only the 1st year the taxpayer was supposed to file or possibly one prior year then the non-compliance may not be as big of an issue. Rather, if the taxpayer had several years of offshore account disclosure violations come and then it becomes a more serious situation.

Willful or Non-Willful

It is next important to determine whether or not the taxpayer was willful or non-willful. If the taxpayer was willful then they are limited to using the voluntary disclosure program to get back into compliance if the taxpayer was non-willful, then there are various disclosure options that the taxpayer may use to get into compliance for their offshore account disclosure violations. For example, the taxpayer may qualify for either the Streamline Procedures or Delinquency Procedures.

Late Filing Penalties May be Reduced or Avoided

For Taxpayers who did not timely file their FBAR and other international information-related reporting forms, the IRS has developed many different offshore amnesty programs to assist taxpayers with safely getting into compliance. These programs may reduce or even eliminate international reporting penalties.

Current Year vs Prior Year Non-Compliance

Once a taxpayer missed the tax and reporting (such as FBAR and FATCA) requirements for prior years, they will want to be careful before submitting their information to the IRS in the current year. That is because they may risk making a quiet disclosure if they just begin filing forward in the current year and/or mass filing previous year forms without doing so under one of the approved IRS offshore submission procedures. Before filing prior untimely foreign reporting forms, taxpayers should consider speaking with a Board-Certified Tax Law Specialist who specializes exclusively in these types of offshore disclosure matters.

Avoid False Offshore Disclosure Submissions (Willful vs Non-Willful)

In recent years, the IRS has increased the level of scrutiny for certain streamlined procedure submissions. When a person is non-willful, they have an excellent chance of making a successful submission to Streamlined Procedures. If they are willful, they would submit to the IRS Voluntary Disclosure Program instead. But, if a willful Taxpayer submits an intentionally false narrative under the Streamlined Procedures (and gets caught), they may become subject to significant fines and penalties. 

Need Help Finding an Experienced Offshore Tax Attorney?

When it comes to hiring an experienced international tax attorney to represent you for unreported foreign and offshore account reporting, it can become overwhelming for taxpayers trying to trek through all the false information and nonsense they will find in their online research. There are only a handful of attorneys worldwide who are Board-Certified Tax Specialists and who specialize exclusively in offshore disclosure and international tax amnesty reporting. 

Golding & Golding: About Our International Tax Law Firm

Golding & Golding specializes exclusively in international tax, specifically IRS offshore disclosure. 

Contact our firm today for assistance.