If you are required to file a Report of Foreign Bank and Financial Accounts, known as an FBAR, and also called FinCEN Form 114, you may think you have plenty of time to meet this year's deadline -- if you think the filing date is June 30.
Earlier this week, the IRS released a statement saying that its voluntary offshore disclosure programs are working. Programs such as the Report of Foreign Bank and Financial Accounts, (often referred to as FBAR) which requires a Form TD F 90-22.1; and the Foreign Account Tax Compliance Act (FATCA) on Form 8938 have helped the IRS recover more than $5 billion in penalties, interest and back taxes in the last couple years.
Closing your foreign bank account does not excuse you from disclosing it. With the end of the offshore bank account amnesty program called the Offshore Voluntary Disclosure Initiative, the consequences for not disclosing your foreign bank accounts is even greater. Transparency is truly the best policy. Those who do not follow these 10 rules may face at least five years in prison, three years of supervised probation and up to $250,000 in fines and fees.
Boston accountants waiting for the passthru payment regulations of the U.S. Foreign Account Tax Compliance Act will have to keep waiting. Some industry experts think the Internal Revenue Service will have to postpone releasing elements of the Fatca passthru payments beyond June of this year or make them easier for institutions to understand and implement.
The Internal Revenue Service is not alone in its effort to crack down on offshore tax evasion by American taxpayers. Last week, the federal government announced that it has enlisted the help of five European nations to enforce the Foreign Account Tax Compliance Act.
All American citizens who have offshore bank accounts totaling more than $10,000 are required to disclose those accounts to the Internal Revenue Service and pay any applicable taxes.