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Foreign bank accounts: How to stay out of trouble

On Behalf of | Jun 2, 2021 | Tax Controversies

If you have a foreign account, the government will likely find it. Hopefully, your foreign account will have already been reported annually to the Internal Revenue Service when they do.  However, if you have decided not to report these accounts, or did not report them correctly, then it is important to know that you may be facing a lot of issues. 

A secret foreign bank account a secret is a bad idea

In the United States, there is a specific tax compliance act, that requires foreign financial institutions to report information regarding foreign accounts of all citizens living in the United States and abroad. These institutions must report to the Internal Revenue Services (IRS) on a foreign bank account report or an FBAR.

Although the Internal Revenue Service will continue to accept compliance to this program while starting enforcement actions, the truth is the Internal Revenue Service will already know if you have a foreign bank account because your bank will let them know about it every year. So hiding it not only looks bad, but it will not cover up the account as you would hope. 

Foreign bank accounts – Start complying 

If you have a foreign bank account or your loved one has one, you need to take action as soon as possible. In some instances, there may even be simple compliance measures with no penalties or limited penalties that are still available for you to take advantage of. Plus, taking action before receiving an IRS notice can save you a significant amount of money and headaches.

Minimize the consequences of keeping your foreign account a secret

There are numerous amnesty programs available for these types of situations. For instance, overseas United States citizens may qualify for a special program that allows them to file a certain amount of Foreign Bank Account Reports. They can also report 1040 filings and pays taxes that are owed to avoid some severe penalties.

Even though a few other programs can help, the best way to ensure you get the legal assistance you need in these situations is to speak with an experienced tax attorney that can make sure you are taking the appropriate actions. 

 

 

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