Foreign Account Holders: Significant IRS Tax Deadlines Are Approaching
April 15 is the widely-known IRS tax deadline, by which most Americans must submit their income tax returns. But it is far from the only important “deadline day” for taxpayers. One such deadline is rapidly approaching: June 30. It is a particularly important deadline for taxpayers who have assets abroad. If you have bank accounts or other assets overseas, this is information you need to know.
A recent Forbes.com article dives into the specifics:
1. FBARS, also known as FinCEN Form 114 are due. These are annual bank account reporting forms required if you have over $10,000 in foreign accounts any time during the year. They have been in the law since 1970, but were largely ignored for years. In 2009, they emerged as key documents in the IRS battle for offshore accounts. Failing to file FBARs draws higher civil penalties and more severe criminal penalties than failing to file taxes or tax evasion. A key illustration was the case of Mr. Carl R. Zwerner, who had to pay 150% of the value of his Swiss account.
2. June 30 is also the last day to file under the 2012 OVDP, the Offshore Voluntary Disclosure Program. If you miss it, there’s also the 2014 OVDP coming into effect right on its heels July 1st. Yet the new program is somewhat more rigorous. For example, although the main offshore account penalty remains at 27.5% of the highest aggregate account balance, you have to pay it sooner. Under the 2012 OVDP, the penalty is due at the end of the case, when you sign your closing agreement. Under the 2014 OVDP, you must pay the penalty months earlier when you send in your returns. Interest wasn’t payable on that amount under the 2012 OVDP, so the delay—which could be a year or more—was nice.
3. June 30 is the big FATCA rollout. It’s the day when overseas institutions and governments start turning in American account holders. The handover comes in two ways, either to the IRS directly or to their own governments, which in turn relay the information to the US Treasury, which in turn relays it to the IRS. It’s an attenuated process, and the stakes are high. Get ready.
As many of you know, the IRS has made a concerted effort over the last several years to crack down on taxpayers who are attempting to avoid taxes by moving their assets offshore. The IRS has attempted to convince taxpayers to come clean, by promising strict penalties down the road for taxpayers who don’t comply, but by first offering a window in which the penalties are less severe.
At the same time, the IRS has reached agreements with overseas financial institutions to report on the activities of American account holders. As a result, it will be difficult if not impossible to hide money in foreign banks – even the mystical “anonymous Swiss bank account.”
If you’re facing IRS controversy relating to your foreign assets, or any other tax dispute, we want to help. We understand how stressful and expensive IRS tax disputes can be – we have seen it firsthand. Please contact us today to learn how we can represent your interests to the IRS and help you put your tax dispute in the rear view mirror. We will deal directly with the IRS, and we will put a stop to harassing phone calls and threatening letters. You’ve got better things to do than worry about your IRS dispute – and you can get back to enjoying your life!