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Delinquent FBAR Procedures

If you have a foreign bank account that you failed to disclose you could be subject to penalties or worse from the IRS. Allow the California attorneys at Kugelman Law to help you disclose your foreign bank accounts properly to avoid penalties and serious consequences.

The IRS requires U.S. taxpayers to report foreign bank accounts regardless of whether the account generates income. The reporting requirement is triggered when the combined value of foreign bank account(s) exceed $10,000 during the tax year. The accounts must be reported on a Fincen Form 114, Report of Foreign Bank and Financial Accounts (FBAR). All U.S. taxpayers, regardless of U.S. residency, are required to timely file FBAR forms reporting each account.

For U.S. taxpayers who did not file FBARs, the IRS established the Delinquent FBAR Procedures. It may be helpful to retain a California lawyer who can help guide you through the often complex world of tax law.

In order to be eligible for Delinquent FBAR Procedures, there are several criteria that you must meet. First, you must have acted in good faith. Second, you must not have had any unreported foreign-sourced income. Third, you must not be under civil audit or criminal investigation by the IRS or otherwise contacted by the IRS regarding delinquent FBARs.

Disclosing Foreign Accounts With No Unreported Income vs. With Unreported Income

Generally speaking, Delinquent FBAR Procedures are available only where there was no unreported income associated with foreign accounts. A taxpayer must demonstrate reasonable cause in late filing the FBARs.

However, in circumstances where a taxpayer did timely report foreign income, the IRS will be skeptical that the taxpayer acted with reasonable cause. Those taxpayers should consider the Streamlined Offshore Procedures.

Penalties and Criminal Prosecution

The IRS prioritizes enforcement in this area because many U.S. taxpayers have concealed income with foreign accounts and assets. Consequently, civil and criminal penalties are steep. Taxpayers that do not successfully disclose assets through the various disclosure programs may be liable for penalties outlined below.

Keep in mind that the statute of limitations does not begin until a taxpayer files the necessary forms disclosing the asset. Thus, these penalties may be assessed years after the fact.

Non-willful failures to file FBARs are penalized by fines of up to $10,000 for each non-willful violation.

Willful failures to file FBARs are penalized $100,000 or 50 percent of the amount in the account, whichever is greater.

Closing a foreign bank account does not absolve you of previous reporting requirements and could be considered a sign of willful violation of FBAR rules.

The IRS takes these matters seriously. Whether intentional or not, failure to disclose foreign accounts and assets could result in significant financial penalties.

The California attorneys at Kugelman Law can guide you through Delinquent FBAR Procedures to help you achieve compliance and avoid penalties. Our lawyers’ combined decades of experience include serving as an IRS Chief Counsel attorney as well as years spent at the U.S. Tax Court and a U.S. District Court. You have a trusted tax law partner in Kugelman Law.

Client Reviews
★★★★★
Alexander helped me break down my tax situation and used his expertise to figure out the next actionable steps, make sure that all the bases were covered (that I wasn't aware even existed), and confirm that things were done correctly. If you are confused and stuck in a difficult tax situation, Alexander will guide you forward and help you confidently resolve the issue. Henry Wang
★★★★★
If you are having tax trouble, Alexander is the one to help you. He was very professional, personable, and easy to reach. His explanation of the entire process is helpful for easing the stress that is associated with tax trouble. We never felt intimidated or out of the loop while working with him. The process was handled to our liking and we are satisfied with the results. Even the after care has been phenomenal! Tony W.
★★★★★
If anyone out there is in need of stellar legal tax assistance, look no further and contact Alexander Kugelman. He helped me tremendously with my tax situation and is always there to help when needed. If I can give Alexander more stars, I would because 5 stars is not enough! Thank you for everything, Alex!!! Flo Lauzon
★★★★★
Alexander has been a life saver! I got dragged into some serious IRS issues with a complicated foreign assignment component, which included divorce. Alexander has been working with me to resolve directly with the IRS. Alexander is detail oriented, responsive and I trust him to guide me. I will be using Alexander for all tax related matters from now on! He is stuck with me forever. Eve T.
★★★★★
Alexander helped me understand the IRS audit process and prepared my response. There were certain records that I had lost, but he suggested alternatives that the IRS accepted. Even better, he showed up at the audit for me and I never actually had to talk with the IRS. I didn't have to pay any penalties. I'd definitely recommend hiring Alexander to deal with an IRS issue. L.R.