The Offshore Voluntary Disclosure Program, the FBAR, and You (Video) US Expat Taxes Explained

Lessen Penalties for Filing Your FBAR Late Via the Offshore Voluntary Disclosure Program

The US Department of the Treasury requires all expats with financial accounts in foreign banks that total more than $10,000 to file TD Form 90-22.1, commonly referred to as the FBAR form, by June 30 each year. Many expats did not realize they needed to file this form and are therefore are considered delinquent; thankfully, the IRS and Treasury Department have an Offshore Voluntary Disclosure Program to allow expats to step forward, file their information, and receive greatly reduced penalties.

This short video explains a few fundamentals about the FBAR and exactly what the Offshore Voluntary Disclosure Program entails.

Attention Late Expats!

The IRS has opened another Offshore Voluntary Disclosure Program for those who need to file late FBARs. As always with the IRS, there are some changes… so get ready to take some notes!

What: The Offshore Voluntary Disclosure Program

Who: Expats who need to file late FBAR forms or delinquent tax returns

When: The program is open now and there is currently no deadline

Why: The previous programs have allowed countless expats to come forward and have raised the IRS over $4.4 billion

Who needs to file the FBAR?

US citizens and green card holders need to file FBAR Form TD 90-22.1 with the US Department of the Treasury if their accounts overseas totaled more than $10,000 at any given time in a given tax year.

It could be in one account or in multiple accounts: $4,000 + $4,000 + $4,000 = $12,000, which is greater than the $10,000 threshold, so someone with these three accounts would need to file the FBAR.

Why should I come forward?

If the Treasury Department finds you, they can seize up to 50% of your highest balance, fine you $50,000 for each violation, and look into criminal prosecution (including jail time).

This program gives expats reduced penalties when it comes to delinquent FBAR forms:

  • The maximum penalty: 27.5% of your highest balances
  • The reduced penalty for some expats: 12.5%
  • The lowest penalty for few expats: 5%

The Treasury Department will not seek criminal prosecution for expats filing under the program. Translation: You don’t go to jail!

How many years do I have to file?

The IRS and Treasury Department ask for eight years of back taxes for expats who have failed to file. Taxpayers should file eight years of back taxes if they have not filed and should file the FBAR for any year they had accounts overseas that were above the $10,000 threshold.

Note that in September 2012 the IRS launched a new Streamlined Procedure for late filing.  If you are a “Low Risk” filer you may qualify for this program which would require you to file 3 years of Federal tax returns and up to 6 FBARs, for more information click here.

Why should I come forward?

If the IRS or US Department of the Treasury finds you, the penalties will be higher and will most likely include jail time.

The US has tax information exchange agreements with a number of countries if they suspect you are hiding accounts. Many foreign banks and investors are required to tell the US about any US persons who have accounts at their institutions. In other words, they can and will find you.

Don’t worry! Greenback can help you:

  • Learn more by reading Everything You Need to Know About the FBAR on our website.
  • Determine which of your accounts need to be reported.
  • File your initial FBAR form(s) accurately and in a timely manner.
  • Get your ducks in a row so that this becomes just another form you file, like your taxes.

Need Help With the FBAR?

Have a look at our post on the Offshore Voluntary Disclosure Program if you are late filing your FBAR. If you have any questions or would like to know about our expat tax services, please contact us.

Copyright Greenback Expat Tax Services June 17, 2013