FOREIGN BANK ACCOUNTS AND OFFSHORE TAX COMPLIANCE
U.S. citizens and resident aliens have a duty to report their world-wide income on the tax returns that they file with the IRS. A U.S. citizen or resident alien who has an interest in or signatory authority over offshore bank accounts with a total balance of over $10,000 during the calendar must file a Foreign Bank and Financial Account (FBAR) Form with the IRS. Failure to comply with the FBAR reporting requirements can result in penalties of up to 50% of the amount in unreported offshore accounts for each year of non-compliance. The law imposes additional reporting requirements for ownership interests in foreign corporations, partnerships and trusts and for foreign gifts and inheritances. Failure to comply with these reporting requirements can result in additional penalties.
In the past few years, the IRS and the Department of Justice have become increasingly aggressive in enforcing these requirements, assessing civil penalties and criminally prosecuting taxpayers who willfully failed to comply with the law. The IRS has instituted an Offshore Voluntary Disclosure Program (OVDP) and a streamlined program to allow eligible taxpayers to come into compliance.
Robert Horwitz has helped clients come into compliance through the OVDP and streamlined programs. He has also represented clients with unreported income from foreign accounts, in criminal cases, and in audits and appeals of FBAR penalties and has written about litigation of the FBAR penalty in federal court.