FBAR in Anaheim

Anaheim is the most populous city in Orange County, California and the 10th most populous city in the state. Anaheim is also one of the oldest cities in the Orange County area, being founded in 1857. The long history and diverse population in the area has created a vibrant community which includes many distinct districts of the city. Anaheim Hills is a planned community in the city’s east that is home to many sports stars and international executives. The Anaheim Resort is a commercial area of the city where visitors from throughout the United States and world come to see Disneyland and the many other tourist attractions. The Platinum Triangle is an area of redevelopment near Angel’s Stadium that is transitioning from low-density industry to high-density housing.

Anaheim is an area with deep roots in American history, but it is also one that is thoroughly connected to the increasingly international character of life and trade today. For many residents of Anaheim, this may mean holding a foreign bank account or otherwise having overseas assets. Some residents may even spend long stretches of time in Asia or Europe and may only return to the city periodically. Regardless of whether you live in Anaheim all year around or if you only return to the city periodically, you should understand your FBAR filing obligations. Working with a dedicated tax professional can provide peace of mind by discussing your level of compliance with the disclosure law.

When must a US taxpayer file FBAR?

The duty to file FBAR, Report of Foreign Bank and Financial Accounts applies to US persons. Those considered to be a US persons include US citizens, green card holders, and others with more than a fleeting physical presence in the United States. In general, a US person has an obligation to file an FBAR if he or she holds an interest in or signature authority over a foreign financial account and the balance of the account or accounts exceeds $10,000. The $10,000 filing threshold only needs to be exceeded momentarily for the filing obligation to exist. Stated differently, even if you are under the $10,000 filing threshold for 99.99% of the year, you will still be required to file FBAR because you exceeded the account balance reporting threshold.

What happens if I fail to file FBAR?

A failure to adhere to one’s FBAR filing obligation can lead to very different outcomes depending on the approach taken after discovering the tax compliance issue. First, consider a situation where a taxpayer discovers that he or she may have failed to file FBAR for the past two tax years when it was required. This taxpayer immediately schedules an appointment with an experienced tax attorney who explains the potential consequences and solutions clearly and concisely. One of the options a lawyer may suggest is a version of the Offshore Voluntary Disclosure Program (OVDP).

To qualify for OVDP, you come forward and voluntarily disclose past tax problems – including FBAR failures – to the IRS. In exchange for coming forward voluntarily, the IRS permits you to pay a penalty rate that represents a significant discount over the civil or criminal penalties that can be imposed. Furthermore, in situations where OVDP is appropriate, the IRS will not pursue criminal tax charges against the filer.

However, if the tax filer decides to test his or her luck and bet that the IRS will not detect the unfiled FBARs the outcome could be significantly different. Once the IRS detects the tax problem and starts its investigation, OVDP will no longer be available because a disclosure would no longer be voluntary. If the failure to file FBAR is believed to be non-willful, then a penalty of $10,000 could apply for every violation. If the FBAR filing failure is due to a voluntary or intentional disregard of a known legal duty – a willful violation – then a penalty of the greater of $100,000 or 50% of the account balance can be imposed. A willful FBAR penalty can exceed the value of the original foreign account and criminal tax charges, which carry a federal prison sentence. If you took steps to attempt to conceal your reporting failures, a criminal investigation is even more likely.

Seek an experienced tax professional if you’re facing FBAR problems

Facing FBAR problems can be extremely frightening and can cause intelligent people to make rash and unwise decisions that further compound their tax problems. To discuss your tax concerns confidentially, call 800-380-TAX-LITIGATOR or contact us online today.

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