The Internal Revenue Service (IRS) has taken the failure to disclose foreign assets very seriously. Taxpayers that neglect to disclose this information can face serious fines and potential criminal charges.
Who needs to file and FBAR? The United States government requires taxpayers with ownership or signature authority over a foreign asset that was valued above $10,000 at any point during the tax year file the Report of Foreign Bank and Financial Accounts (FBAR). This form is due June 30.
The form is not uncommon. The IRS' most recent data reports 1,163,229 FBARs were filed in 2015.
What if a taxpayer has yet to report foreign assets to the IRS? Taxpayers that failed to disclose foreign assets in the past have an opportunity to come into compliance. The IRS offers an Offshore Voluntary Disclosure Program (OVDP). This program offers taxpayers an opportunity to voluntarily bring these assets into compliance with applicable tax laws. In exchange for stepping forward and coming into compliance, the IRS will reduce any potential penalties that would accompany non-compliance.
The agency recently announced the program will be coming to an end. The government has scheduled to OVDP to sunset on September 28, 2018. In some cases, the failure to comply is the result of a lack of awareness of the requirement, in others taxpayers may have hoped to avoid tax obligations. Regardless of the reason, it is wise for those who are not in compliance to review their options and move forward with compliance efforts before the OVDP comes to a close.