; IRS Pursues FBAR- Foreign Bank Account Reporting of U.S. Taxpayers
Documents
Resources
Learning Center
Upload
Plans & pricing Sign in
Sign Out
Your Federal Quarterly Tax Payments are due April 15th Get Help Now >>

IRS Pursues FBAR- Foreign Bank Account Reporting of U.S. Taxpayers

VIEWS: 12 PAGES: 2

  • pg 1
									?Undisclosed Offshore Accounts are being hunted down with FBAR (Foreign Bank
Account Reporting) information requests of U.S. Taxpayers suspected of hiding assets
in the wake of the UBS AG fallout and IRS Offshore Settlement Initiative.

What is in store for undisclosed account holders?

In 2009, the IRS and U.S. Department of Justice commenced a highly publicized
investigation into Swiss bank UBS AG and U.S. account holders who essentially hid
their assets from the U.S. Government. However, the investigation did not conclude
with UBS. To entice taxpayers to come clean and disclose their foreign assets in
exchange for lesser penalties, the IRS instituted the Offshore Settlement Initiative
Voluntary Disclosure Program (the Initiative). Although the deadline to participate in
the Offshore Settlement Initiative is long gone, it is clear that offshore tax evasion will
continue to be a top IRS enforcement priority. Now, what can U.S. taxpayers with
undisclosed offshore accounts who did not make the October 15, 2009 Offshore
Settlement Initiative deadline expect coming up?

The IRS will be ramping up their Information Document Requests or IDRs targeting
offshore bank accounts.Taxpayers may receive a Form 6564, Information Document
Request, to obtain necessary books, papers, and other information relevant to the IRS
examiner inquiry into the truthfulness of a tax return. The Information Document
Request is a proper and structured process for the IRS to request and get information
from taxpayers, including information regarding offshore bank accounts. Although
not as formal as a subpoena, an IDR carries with it consequences for failure to comply
and can lead to further inquiry and possible sanction.

The IRS will focus Information Document Requests on U.S. taxpayers with offshore
assets and accounts that failed to disclose these interests to the U.S. government on
their Form 1040, U.S. Individual Tax Returns, and file a corresponding Form TD F
90-22.1, Foreign Bank Account Reporting FBAR. If IRS agents discover that a
taxpayer has not reported an interest in an offshore account or income accruing on
such accounts during the course of an audit, the IRS may impose steep penalties
including the greater of $100,000 or 50% of the offshore account balance for willful
failure to file an FBAR for each account. These penalties, compounded with interest
and fraud penalties, can essentially wipe out the taxpayers foreign assets. Additionally,
taxpayers could be subject to criminal prosecution and jail time for tax evasion.

The issues surrounding these IDRs are extremely delicate and should be approached
with considerable caution. Taxpayers who have been sent an Information Document
Request by the IRS are best served by getting in touch with a tax attorney who is
experienced at resolving disputes with the IRS quickly. An attorney can direct the
taxpayer how best to answer an Information Document Request and will be able to
talk with his attorney the most appropriate course of action. Otherwise the Internal
Revenue Service can seek formidable fines and possible criminal prosecution against
those U.S. Taxpayers believed to be hiding assets in undisclosed offshore accounts.

To get more information on the FBAR, please contact Kevin E. Thorn at the Thorn
Law Group in Washington, D.C.

Kevin E. Thorn is the Managing Partner and experienced advocate in all stages of
civil and criminal tax controversies including, civil examinations, criminal
investigations, IRS administrative appeals, collection alternatives, ethics
investigations, and other types of complex civil litigation.

								
To top