FBAR Appeals Process: The FBAR appeals process is a complicated procedure. That is because the FBAR is not a tax penalty. Rather, it is a penalty for not “reporting” foreign accounts under IRC 5314 and 5321.
FBAR Appeals Process
Why is the FBAR Appeals Process so confusing? Because the IRS statute and corresponding FBAR penalties fall under title 31, instead of title 26. In addition, the statute of limitations for assessment and enforcement are also more limited than regular taxes; hence, the increased enforcement priority for the IRS.
Brief FBAR Overview
The FBAR is Foreign Bank and Reporting Account form. It is also referred to as “Reporting Foreign Bank and Financial Account Form” or FinCEN Form 114. U.S. persons with an annual aggregate total of more than $10,000 in foreign accounts is required to file the annual FBAR.
How Does the IRS Know if I Filed the FBAR?
The IRS Can used the FCQ or FinCEN Query System or the IDRS Integrated Data Retrieval System
What is the Statute of Limitations IRM (220.127.116.11.1)
The statute of limitations can be found in the IRM 18.104.22.168.1. The IRS has the same amount of time to enforce willful and non-willful penalties. The Internal Revenue Service is allowed 6-years to enforce.
Pre-Assessed vs. Post-Assessed Penalties
In an ideal situation, the U.S. account holder will seek to fight the penalties before they are formally assessed (proposed FBAR penalties). This provide the account holder more options, and there are more tools available. If the account holder waits until after they have been assessed, it can be more difficult.
As provided by the IRS:
Post-assessed FBAR cases in excess of $100,000 (excluding interest, penalties and administrative costs) cannot be compromised by Appeals without approval of the Department of Justice (DOJ). See 31 USC § 3711(a)(2) and 31 CFR § 902.1(a) and (b).
Once assessed, the penalty becomes a claim of the U.S. government.
Post-Assessment FBAR Appeals
The IRS makes a formal assessment on Form Letter 3708. This is a demand by the IRS to collect a debt. One important aspect is that the recipient may still request a post-assessment hearing. BUT, the account holder does not get a second hearing, if they already had a hearing in the pre-assessment stage.
FBAR & Federal Court
FBAR enforcement is not a “Tax” matter and is therefore not handled in tax court. Thus, post-assessed penalties can be disputed two ways:
- Wait to get sued by the IRS and counter-claim (noting, interest continues to accrue); or
- Pay the debt, and sue the IRS for refund.
With the former option, the DOJ has 2-years to initiate legal action from when the penalty assessed. Otherwise, the U.S. Government loses the right to enforce.
FBAR Attorney Team – Golding & Golding (Board-Certified)
We specialize exclusively in international tax, and specifically IRS offshore disclosure.
We have successfully represented clients in more than 1,000 streamlined and voluntary offshore disclosure submissions nationwide and in over 70-different countries. We have represented thousands of individuals and businesses with international tax problems.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe.
- Learn more about the Board-Certified Tax Lawyer Specialist credential
- Learn more about the Enrolled Agent credential
- Learn more about Golding & Golding’s Case Accomplishments
- Learn more about Golding & Golding Testimonials from prior clients
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants and Financial Professionals worldwide.
Less than 1% of Tax Attorneys Nationwide Are Certified Specialists
Sean M. Golding is one of less than 350 Attorneys (out of more than 200,000 practicing California Attorneys) to earn the Certified Tax Law Specialist credential. The credential is awarded to less than 1% of Attorneys.
Recent Golding & Golding Case Highlights
- We represented a client in an 8-figure disclosure that spanned 7 countries.
- We represented a high-net-worth client to facilitate a complex expatriation with offshore disclosure.
- We represented an overseas family with bringing multiple businesses & personal investments into U.S. tax and offshore compliance.
- We took over a case from a small firm that unsuccessfully submitted multiple clients to IRS Offshore Disclosure.
- We successfully completed several recent disclosures for clients with assets ranging from $50,000 – $7,000,000+.
How to Hire Experienced FBAR Counsel?
Generally, experienced attorneys in this field will have the following credentials/experience:
- Board Certified Tax Law Specialist credential
- Master’s of Tax Law (LL.M.)
- Dually Licensed as an EA (Enrolled Agent) or CPA
- 20-years experience as a practicing attorney
- Extensive litigation, high-stakes audit and trial experience
Interested in Learning More about Golding & Golding?
No matter where in the world you reside, our international tax team can get you IRS offshore compliant.
Golding & Golding specializes in FBAR and FATCA. Contact our firm today for assistance with getting compliant.
Sean holds a Master's in Tax Law from one of the top Tax LL.M. programs in the country at the University of Denver. He has also earned the prestigious IRS Enrolled Agent credential. Mr. Golding's articles have been referenced in such publications as the Washington Post, Forbes, Nolo, and various Law Journals nationwide.