In this episode we talk to tax attorney Anson Asbury on the How & Why to Disclose Offshore Bank Accounts
Anson Asbury, J.D., LL.M., is the founder of Asbury Law Firm, an Atlanta-based tax boutique with offices in New York and Washington, D.C. Asbury Law Firm represents clients in all aspects of federal, state and international tax controversy and tax planning. Anson focuses his practice on tax controversy and litigation. He is a frequent speaker and author on federal tax matters. Today we’re going to talk about the IRS requirements to disclosure foreign bank accounts and some of the steps people can and maybe should take to make sure they are in compliance.
In this episode you will hear:
- How long have there been requirements to disclosure foreign bank accounts?
- Who does this apply to?
- What are the basic requirements for disclosing offshore bank accounts?
- What is the risk of non disclosure?
- Three methods to return to compliance.
- Streamlined Filing Compliance allows taxpayers to disclose delinquent unreported foreign financial holdings with minimal penalties of 5%. The program limits the lookback period for unfiled reports, avoids additional penalties that would be applied under audit, and preempts any potential criminal prosecution. The key to the Streamlined Compliance Program is that the taxpayer’s non-disclosure was non-willful. This includes negligence, inadvertence, mistake or a misunderstanding of the applicable rules.
- Offshore Voluntary Disclosure is still available for taxpayer’s who non-filing may have been willful or intentional. Keeping in mind that the IRS would ultimately have to prove willfulness, taxpayers with large overseas investments may still want to consider this option.
- Filing delinquent FBARs. This guidance issued by the IRS limits this option to taxpayers who do not owe tax on any income generated from the offshore accounts. So, if the offshore assets did not produce any income or if that offshore income was fully reported on the U.S. returns applicable for the delinquent FBAR reports, then the taxpayer could just file the delinquent FBARs. This option carries more risk and should not be taken lightly.