LOS ANGELES, June 21, 2012 (GLOBE NEWSWIRE) -- U.S. citizens, residents and/or U.S. based entities that have $10,000 or more in foreign bank accounts or offshore financial accounts need to file an FBAR (Foreign Bank and Financial Accounts Report) form by June 30th. "It's estimated that millions of people have foreign bank accounts and don't know that they need to file this form," comments Brager Tax Law Group founder Dennis Brager, a tax attorney, who is a California Tax Specialist and former Senior Tax Attorney with the IRS. "This is especially true of immigrants, who live and work in the U.S., but may have financial accounts in other countries."
Anyone who has a financial interest in or signatory authority over a foreign financial account must file Form TD F 90-22.1, which must be received by the IRS on or before June 30th, unlike other IRS forms, which can be postmarked on the due date.
The penalties for failure to file an FBAR include hefty fines and, in some cases, jail time. Those who willfully fail to file an FBAR are subject to penalties as high as 50 percent of the total balance of the account. Each year of non-compliance results in a separate violation and penalty i.e. multiple 50 percent penalties, which can equal 300 percent of the foreign account amount.
For citizens, residents and/or entities that have failed to file the FBAR in the past, there are solutions. The Offshore Voluntary Disclosure Initiative (OVDI) was created for taxpayers who wish to comply with tax laws regarding their foreign accounts. Through OVDI, some taxpayers may be eligible for penalties as low as 5 percent, although most will be stuck with a 27.5 percent penalty. In order to participate in the program, taxpayers must file all original and amended returns (including payment of back taxes and interest) for up to eight tax years.
"There are other options," says Brager. "I encourage anyone who has a foreign financial account and who has not filed an FBAR in the past, to consult with a qualified tax attorney to consider whether or not to enter the voluntary disclosure program. If the IRS discovers the account first, the penalties can be severe."
Those who want to participate in the OVDI should not make a "quiet disclosure," where they file the FBAR and amend tax returns. According to the IRS, "quiet disclosures" risk being investigated and subjected to large civil FBAR penalties; however, the filers may be protected from criminal tax exposure.
Based in Los Angeles, the Brager Tax Law Group is a tax litigation and tax controversy law firm, which represents clients with tax problems and tax disputes with the IRS, the California Franchise Tax Board (FTB), the State Board of Equalization (SBE) and the Employment Development Department (EDD). All of the firm's tax lawyers were former trial attorneys with the IRS. They work with clients on available options for FBAR and the OVDI.
The Brager Tax Law Group logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=13397