Recent FBAR Developments

IRS Fact Sheet (FS-2011-13) on Information for US Citizens, Dual Citizens Residing Outside the U.S

The IRS, on December 8, 2011 provided a summary of information about federal income tax return and FBAR filing requirements related to certain Dual Citizens residing outside the U.S.  Specifically, the Fact Sheet offered that penalties will not be imposed in all cases and that taxpayers who owe no U.S. tax (eg. Due to the application of the foreign earned income exclusion or foreign tax credits) will owe no failure to file or failure to pay penalties.  In addition, it adds that no FBAR penalty applies in the case of a violation that the IRS determines was due to reasonable cause. 

Information for U.S. Citizens or Dual Citizens Residing Outside the U.S.

Per the Fact Sheet, it should be noted that whether a failure to file or failure to pay is due to reasonable cause is based on a consideration of the facts and circumstances.  Reasonable cause relief is generally granted by the IRS when a taxpayer can demonstrate that they excercised ordinary business care and prudence in meeting their tax obligations but nevertheless failed to meet them.

The Fact Sheet essentially provides that there may be situations where none of the OVDI related penalties would apply under certain circumstances.  The Fact sheet recommends that such taxpayers go back six years (2005 through 2010) and provide the IRS with a reasonable cause argument, therefore asking for waiver of penalties for failure to file U.S. Income tax returns and FBARs. 

What Should You Do Next?
Please contact a member of our International Tax team.  We at Freed Maxick are poised to assist you in assessing your FBAR filing requirements, assimilating the necessary information and preparing your current and past due FBARs.  We also have considerable experience in helping taxpayer’s that have not been historically compliant to deal within the IRS guidelines and minimize their potential penalties through the various IRS Voluntary Disclosure Programs that have been available.

As IRS Commissioner Doug Shulman has stated “for taxpayers who continue to hide their head in the sand, the situation will only become more dire.  They should come forward now under our Voluntary Disclosure Practice and get right with the government”.

Do You Need Our Help?
Unsure if you are affected? Take our FBAR survey to find out if you may need assistance from our team. We will be happy to get in touch with you as soon as possible to address your FBAR tax needs.

Related Links
International Tax Services
Expatriation Consulting Services
Foreign Bank Account Report (FBAR)
Failure to File FBAR | Penalties
FBAR Penalty Relief Under Certain Circumstances
Foreign Account Tax Compliance Act (FATCA)
FBAR Survey

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