Time for Leniency on Late FBARS and Past Due Tax Returns Running Out
There are a wide variety of FATCA (Foreign Accounts Tax Compliance Act) developments which have taken place over the past year and continue to take place. New forms have been added as a mandatory legal requirement and foreign banks have been indicted for aiding and abetting international tax evasion. On top of that, the United States has entered into a large number of international foreign account information sharing agreements that are scheduled to go into effect in 2014.
While the bulk of these developments are geared toward identifying US Citizens and Green Card Holders with foreign financial accounts and holding them accountable for FATCA laws and US tax regulations, among them are also opportunities for non-compliant taxpayers to finally become compliant with United States tax and reporting obligations in exchange for an assessment of fewer financial penalties and the promise of avoiding criminal evasion charges. For the time being, these voluntary disclosure programs are active but for an indefinite period of time. As we approach the middle of 2013 the chances of their being terminated are increasing by the day.
What This Means to You
If you are a US Citizen or Green Card Holder who has held at least $10K worth of assets in one or more foreign accounts in previous years and you’ve not reported these accounts to the Department of Treasury on Form TD F 90-22.1 you still have a chance to ‘come clean,’ file your missing FBARs, and avoid paying excessive monetary fees and serving time in a federal penitentiary. If you wait until new FATCA regulations are in full swing and agents are swarming the globe tracking down leads provided by foreign governments, you will be facing a minimum fee of $10K per foreign financial account and a maximum fee of up to 50% of your foreign assets.
If you had foreign financial assets (whether or not they were held in foreign accounts) in 2011 or 2012 with a value of at least $200K at the end of the year or $300K at any time during the year (for US Expats – Stateside Taxpayer thresholds are $50K and $75K), you also will need to file Form 8938 for each year. Instead of filing Form 8938 with the Department of Treasury, however, it should be filed with the IRS along with past due tax returns if you haven’t already filed.
Filing Back Taxes with the IRS
There are many US Expats who owe back taxes to the IRS, and there are many more who simply need to file a tax return to either reflect no tax liability or qualify for a tax refund. You will only qualify for a refund on returns filed within 3 years of their original due date. Don’t just assume that since you wouldn’t have owed any taxes the IRS won’t come after you. The reason you wouldn’t have owed taxes is because there are a number of expat deductions available, but the IRS doesn’t consider anything at all for you besides a standard deduction when determining your tax liability based on your reported income. If you wait for the IRS to calculate your tax bill, you may be liable for much more than you bargained for.
Help Getting Back on Track
Taxes for Expats has helped hundreds of US Expats become compliant with new FATCA regulations, pay minimal fees, and avoid jail time. If you have missing FBARs or past due tax returns that need filed before the time for voluntary disclosure runs out, send us your information and let us help you for a flat and affordable fee.