Foreign Bank Account Reporting
FBAR - (Foreign Bank Account Reporting)
Many high net worth individuals or business owners looking to get a tax break use offshore accounts to keep their financial assets secure. Though offshore accounts are a perfectly legal way to protect your money, they are considered less secure than federally insured funds housed in U.S. banks. In addition, there are many more Foreign Bank Account Reporting (FBAR) issues that need to be dealt with.
There are several circumstances when offshore banking may look favorable:
- Offshore corporations and limited liability companies are often set-up for international trading and asset protection and can help to manage taxes on foreign income. There are certain tax flexibilities and advantages that are allowed for these offshore accounts. It’s best to consult with an IRS attorney to find out what legal benefits these accounts can offer.
- Trusts that are set-up offshore are usually a part of an estate planning process and help to keep future and current creditors at bay. This is an ideal way to protect funds for family heirs and descendants. An offshore trust is advantageous, as it can remain confidential to other parties.
- Private foundations that are established offshore operate much in the same fashion as a trust, and operate similarly to a company. Offshore, they can be protected against excess taxation and the claims of creditors.
Due to the complexity of the FBAR requirements that are associated with having an offshore bank account, it is in your best interest to consult with an experienced IRS tax attorney. Strategic Tax Lawyers LLP is headed by a former IRS lawyer, Mouris Behboud, who represented the government for over 8 years. Now he’s here to offer you advice on your next financial move. Contact Mouris today to get answers to your offshore account questions.
Offshore account penalties:
Though offshore accounts may seem like a smart way to store some of your assets, if you use your offshore accounts to unlawfully hide your income or funds from the U.S. government, you could end up in a lot of hot water.
If you have an offshore account and have undisclosed foreign income or are accused of tax evasion, your money may remain untouched, but you can still face the possibility of criminal prosecution and additional fines.
Criminal charges possibly related to tax returns include:
- 5 years of prison and fine up to $250,000 for Tax Evasion (26 U.S.C. § 7201);
- 3 years of prison and fine up to $250,000 for filing a false return (26 U.S.C. § 7206(1);
- 1 years of prison and fine up to $100,000 for failure to file an income tax return (26 U.S.C. § 7203);
- 10 years of prison and fine up to $500,000 for failure to file an FBAR or the filing of a false FBAR (31 U.S.C. § 5322).
Do you have an offshore account that requires FBAR? Let one of our IRS tax lawyers help manage your assets and make sure that due diligence is completed. Any one of our IRS attorneys can provide you with a free one on one consultation to discuss your options and set up a plan that works for you. Contact us today. We can help. (800) 669-4775.
Find out what the IRS has to say in the IRS FBAR Financial Account FAQ. You can also check out the FBAR Filing Requirements FAQ from the IRS site. Check out Google to search your local state’s laws. Forbes has a helpful business article in the investment section on filing the FBAR for the first time.