IRS Says If You're Willful, Penalties Hit 100%, $10,000 If You're Not 

​What’s an FBAR? Now Called FinCEN Form 114, an FBAR is a non-U.S. bank account report. If you have non-U.S. bank accounts that aggregate over $10,000 at any time during the year, you need to file one. You must file if you are a signatory even if the money is not yours beneficially.

FBARs are distinct from tax returns. You must report any income from the accounts on your 1040, even though the bank does not send out Forms 1099 like U.S. banks. And you must file an FBAR. Although FBARs have been required since 1970, they were not widely discussed until 2008 when the UBS offshore bank scandal exploded.

FBAR penalty exposure—civil and criminal—is quite high, worse than tax evasion. FBARs have figured prominently in offshore account cases, netting the IRS big penalties. As a result, most people with undisclosed offshore accounts since 2009 have gone into the IRS Offshore Voluntary Disclosure Program (OVDP).​

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IRS AFter YOu?

IRS OFfshore Voluntary Disclosure Program Reopens  

Today, the Internal Revenue Service reopened the offshore voluntary disclosure program to help people hiding offshore accounts get current with their taxes.  Additionally, the IRS revealed the collection of more than $4.4 billion so far from the two previous international programs. The Offshore Voluntary Disclosure Program (OVDP) was reopened following continued strong interest from taxpayers and tax practitioners after the closure of the 2011 and 2009 programs. The third offshore program comes as the IRS continues working on a wide range of international tax issues and follows ongoing efforts with the Justice Department to pursue criminal prosecution of international tax evasion.  This program will remain open indefinitely until otherwise announced. Lance Wallach and his associates have received thousands of phone calls from concerned clients with questions about the prior programs. Some of Lance’s associates are still very busy helping people with the last program. Not a single person has been audited and most are pleased with the results and are now able to sleep easily without worrying about the IRS.  According to Lance, it requires years of experience to obtain a good result from the program.

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Is your bank account a Secret? 

June 30 2014 is the annual deadline for U.S. taxpayers, (including resident aliens) to timely reports of foreign financial accounts for year ending 2013.  (Note that the reports must be received by that date so we advise sending them in a couple of weeks prior to that date). The report form (TD 90-22.1) known as an FBAR is due if a U.S. taxpayer has direct or indirect control over an offshore financial account (such as a bank / brokerage account or other investment, broadly defined) that had an account balance/s in aggregate of $10,000 or more at any time during the calendar year.

Failure to file and for the IRS to receive an FBAR by June 30 may result in penalties which range from a warning letter (for reasonable cause) to $10,000 per year per account for "non-willful" violations (late but otherwise accurate filing not excused for reasonable cause), to the greater of $100,000 or 50% of the account balance per year per account for "willful" failure to file (knowing and intentional or willfully blind conduct) to criminal prosecution. There is an increasing likelihood that the IRS will seek the "willful" civil penalties for taxpayer's who have failed to file FBAR for years prior to 2012 and who have failed to come forward and enter the Offshore Voluntary Disclosure Program. 

​The reasons for this are as follows:First, since 2009 there have been three (3) formal opportunities for U.S. taxpayers to come forward.  There was the 2009, 2011, 2012 and now the 2013 programs.

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IRS FBAR Voluntary Disclosure Program updates

For years the IRS has been pursuing - the disclosure of information regarding undeclared interests of U.S. taxpayers (or those who ought to be U.S. taxpayers in foreign financial accounts. 

Originally appeared on

by Lance Wallach 

On June 26, 2012 the IRS released IR-2012-64/65 and updated Frequently Asked Questions (FAQs) providing updated guidance regarding the currently pending offshore voluntary disclosure program (the initial terms of the 2012 OVDP were set forth in IR-2012-5 released on January 9, 2012). The OVDP follows on the success of the 2009 Offshore Voluntary Disclosure Program (the 2009 OVDP) and the 2011 Offshore Voluntary Disclosure Initiative (the 2011 OVDI), which were announced many years after the 2003 Offshore Voluntary Compliance Initiative (OVCI) and the 2003 Offshore Credit Card Program (OCCP). 

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Jail time for failure to file TD F 90-22.1 Report of Foreign Bank and Financial Accounts

   A former UBS, AG ("UBS") client from Miami Beach, Florida was sentenced to four months in federal prison for willfully failing to file a Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts ("FBAR"), for the UBS account the man held with as much as $4,000,0000 in it. This information was released by the U.S. Attorney for the Southern District of Florida on July 25 2012.

   The former UBS client paid a civil penalty of $2,000,000 related to the $4,000,000 high account balance stemming from tax year 2006. Additionally, the former UBS client was sentenced to four months in federal prison, three years of supervised release, 250 hours of community service and a $20,000 criminal fine.
   The UBS account related to two offshore corporations owned by the man, one in the Virgin Islands and one in the Republic of Panama. These corporations opened accounts at UBS. The man was not named as the direct owner but instead he was deemed only the "beneficial owner." The accounts with UBS were opened from tax years 2005 through 2007.
   It is stated that the man was aware of the obligation on the FBAR to report as he had previously filed FBARs for other offshore corporations. An FBAR is required to be filed by both U.S. citizens and residents who have a financial interest in or signatory authority over a non-U.S. financial account with a value of more than $10,000 at any point during the tax year. The $10,000 amount is an aggregation of all non-U.S. financial accounts and not just an analysis on an account-by-account basis.
   The information on the former UBS client was turned over after UBS agreed in February 2009 to pay $780,000,000 under a deferred prosecution agreement to settle the claim that UBS conspired to defraud the U.S. by impeding the Internal Revenue Service ("IRS"). UBS also agreed to turn over information to the U.S. Department of Justice on 300 account holders. 
   A US citizen or resident that held an account with UBS or any other institution that has not filed the necessary FBARs for the last eight tax years, should immediately reach out to get help to discuss any potential issues they may have and their alternatives. Filing for amnesty and then opting out are two options that our former IRS agents have 
successfully done for our clients. If not done properly it can be a disaster. We suggest you use a CPA with prior experience with the IRS international division.


Originally appeared on in August 2011by Lance Wallach

​The FBAR deadline is here. Filing deadline for the IRS's offshore tax amnesty(called the Offshore Voluntary Disclosure Initiative). If you don't properly comply you will get caught. For those with current offshore accounts, the deadline to file the annual Report of Foreign Bank and Financial Accounts is here

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International Tax 


FBAR OVDI Want to go to Jail? 

The federal government is aggressively pursuing taxpayers with undisclosed foreign accounts and unreported foreign income using information furnished from the foreign banks and other sources. If you have not yet applied for hte OVDP you are at risk. Many individuals iwth UBS accounts(and elsewhere) have recently been convicted.

1. Jan. 30, 2012 - Stephen M. Kerr, Michael Quiel and Christopher M. Rusch were charged in Phoenix, Ariz., with conspiracy to defraud the IRS for concealing millions of dollars in assets in numerous secret Swiss bank accounts held at UBS and elsewhere. 

2. Jan. 20, 2012 - Kenneth Heller, of New York, N.Y., was sentenced to 45 days in prison and two years of supervised release. Heller pleaded guilty to income tax evasion in June 2011 and admitted to hiding more than $26.4 million in a bank account at UBS AG. He has agreed to pay a civil penalty of over $9.8 million. 

3. Jan. 11, 2012 - Michael Reiss, a doctor, professor and medical researcher, of Princeton, New Jersey, was sentenced to eight months in a community confinement center for failing to file FBAR's with the IRS. Reiss pleaded guilty in August 2011 and agreed to pay back taxes of at least $400,000 and to pay a civil penalty of over $1.2 million. 

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