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A Guide on When to Disclose Offshore Bank Accounts

Offshore Account Update

Posted in on January 31, 2020

Do you need to disclose your offshore bank accounts to the IRS? Do you need to disclose them to the Financial Crimes Enforcement Network (FinCEN)? When you hold foreign financial assets, you need to ensure that you have a clear understanding of your obligation to inform the federal government of your holdings, and the best way to do this is to work with a Virginia tax attorney who is experienced in offshore bank account issues.

Top 5 Considerations for Disclosing Offshore Bank Accounts

No information you find online can substitute for the advice of an experienced attorney. Failing to meet your voluntary disclosure obligations can lead to substantial penalties, and it can even trigger federal criminal prosecution. With these caveats in mind, here are five important considerations for addressing your offshore bank account disclosure obligations:

1. Do Your Offshore Bank Accounts Exceed the Threshold for Voluntary Disclosure?

Are your offshore bank accounts subject to voluntary disclosure? Under federal law, you do not need to disclose your offshore accounts to the government unless their aggregate value exceeds $10,000 at any point during the tax year.

2. Are You Delinquent on Your Voluntary Disclosure Obligations to the IRS or FinCEN?

If your foreign accounts are subject to voluntary disclosure (or if they were subject to voluntary disclosure in the past), then you must promptly determine if you are delinquent on your disclosure obligations. Remember, qualifying offshore bank accounts must be disclosed to the IRS and FinCEN.

3. Are You Eligible to Use the IRS’s Streamlined Filing Compliance Procedures?

If you have fallen behind on your reporting obligations, then one option you may have is to utilize the IRS’s streamlined filing compliance procedures. There are a number of eligibility criteria, the most-important of which is that your failure to file must have been “non-willful.” If you submit a streamlined filing and the IRS determines that you willfully failed to disclose your offshore bank accounts, then it may initiate an audit and impose full penalties for your disclosure violation.

4. Have You Received a FATCA Letter from Your Offshore Bank?

Offshore banks are required to disclose U.S. taxpayers’ holdings to the IRS as well. If you have received a FATCA letter from your offshore bank, you must promptly determine your current voluntary disclosure obligations and the extent of any past disclosure violations. If your offshore bank is the first to notify the IRS of your foreign financial holdings, this could significantly increase your risk of civil or criminal prosecution.

5. Have You Been Contacted by the IRS or FinCEN Regarding Your Offshore Bank Accounts?

If you have been contacted by the IRS or FinCEN regarding your offshore accounts, you may be tempted to immediately hand over all information you have, thinking that this is the best way to avoid prosecution. However, this could be a huge mistake. When dealing with the IRS or FinCEN regarding offshore bank account disclosures, you need to be extremely careful, and the best way to protect yourself is to promptly engage an experienced Virginia offshore bank account attorney. Call Attorney Kevin E. Thorn, Managing Partner at Thorn Law Group, at 703-752-3752 or email him for more information.

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