You have three main options for filing delinquent FBARs in 2019. You should talk to a tax attorney to determine which choice best fits your circumstances and will protect you from civil or even criminal tax penalties.
Offshore Disclosure Procedures
The old Offshore Voluntary Disclosure Program (OVDP) ended in 2018 and can no longer be used. Instead, taxpayers must make offshore disclosures under the new framework created by the IRS at the end of 2018.
The new rules feature several changes from the OVDP:
- The disclosure period is now six years instead of eight.
- The miscellaneous offshore penalty is no longer assessed.
- Civil fraud penalties and FBAR penalties will generally be assessed, including willful FBAR penalties.
The new offshore disclosure program still offers protection from criminal prosecution for taxpayers who reach a settlement with the IRS, as the former OVDP did.
Streamlined Filing Compliance Procedures
The Streamlined Procedures offer a middle-of-the-road alternative for taxpayers with unfiled FBARs. The costs are lower than the new Offshore Disclosure Program, while eligibility is less restrictive than the requirements for a quiet disclosure.
You’ll need to file up to six years of delinquent FBARs and amend up to three years of tax returns if you use the Streamlined Procedures. Taxpayers living in the U.S. will also need to pay a miscellaneous penalty of 5% of the highest aggregate offshore account balance during the disclosure period.
Perhaps the most important condition of using the Streamlined Procedures is that you must certify that your FBAR noncompliance was not willful.
Delinquent FBAR Submissions
Quiet disclosure is still a viable option for some taxpayers. Just send in your unfiled FBARs along with a statement explaining why you are filing late.
However, you can only use this method if you didn’t have any unreported foreign income related to these accounts. If you have to amend your tax returns to report foreign income, you can’t use this disclosure method.
Choosing the wrong disclosure method can result in additional costs or further problems with the IRS, including the IRS Criminal Investigations division. Talk to an offshore disclosure attorney to get help selecting the best offshore disclosure method based on all of your facts and circumstances.
The Gartzman Law Firm can evaluate your case to determine your best offshore disclosure strategy. Use our contact form to request a consultation with an Atlanta tax resolution attorney.