Can a Green Card Be Revoked for Missed FBAR? (3 Examples)

Can Your Green Card Be Revoked for Missed FBAR? (3 Examples)

Can Your Green Card Be Revoked for Missed FBAR? (3 Examples)

Taxpayers who are in the United States on either a visa or a green card are at a higher risk for deportation and removal than are taxpayers who have been naturalized. That is because once a person becomes a U.S. citizen, they have more rights and standing to challenge an action by the U.S. government seeking to remove their naturalization status. In general, it is very common for green card holders to maintain foreign accounts in countries outside of the United States, such as investment accounts, bank accounts, pension accounts, or fund accounts. Unfortunately, with the current administration making tax and immigration compliance a key enforcement priority, green card holders are under increased pressure to remain in compliance with U.S. tax rules.  One common question we receive is whether green card holders with FBAR non-compliance are at risk of deportation.

Let’s take a brief look at 3 case studies:

*For all examples, please note that the Taxpayers are U.S. persons for tax purposes who have not made any treaty elections to be treated as a Non-Resident Alien (NRA). Also, these examples are for illustrative purposes only and Taxpayers should consult with a Board-Certified Tax Law Specialist if they have specific questions about their reporting requirements and not rely on this article for legal advice.

Case Study 1: Mitchell the Green Card Holder

Mitchell is a lawful permanent resident of the United States who is three years into a 10-year green card. Ultimately, Mitchell wants to become a U.S. citizen and has been filing his tax returns timely. Because Mitchell previously lived and worked outside of the United States, he has multiple foreign accounts. English is not Mitchell’s first language, and he was unaware that he was also required to report his foreign bank accounts. Recently, Mitchell learned about the requirement and took steps to get into compliance. *Because Mitchell was non-willful and took steps to get into compliance, chances are his green card is not at risk.

Case Study 2: Bernadette the Green Card Holder

Bernadette is a green card holder and has been living in the United States for many years. She has been filing her tax returns timely and has been filing her FBAR to report her foreign bank accounts. Because Bernadette previously lived and worked in a foreign country, she also has pension accounts in that country. She was unaware that she was required to include pension accounts on her FBAR. Recently, Bernadette learned about her mistake, and she took immediate action to get into compliance.   *Because Bernadette was non-willful and took steps to get into compliance, chances are her green card is not at risk.

Case Study 3: Brian the Green Card Holder

Brian is a green card holder who has been filing his US tax returns each year. Brian has a significant amount of income generated from foreign investment accounts. Brian knows he is supposed to report the foreign accounts and the income, but because he does not want to report the income, he intentionally excludes both the foreign income and the foreign accounts from his tax return — and he willfully neglects to file the FBAR. Brian is audited by the IRS, in which the examiner believes Brian acted willfully, and the case is referred to the IRS special agents. He is ultimately charged and convicted of tax fraud as a result of willfully failing to report the foreign income and accounts. *Since fraud is a deportable crime, Brian May became subject to deportation and loss of his green card.

Late Filing Penalties May be Reduced or Avoided

For Taxpayers who did not timely file their FBAR and/or other international information-related reporting forms, the IRS has developed many different offshore amnesty programs to assist Taxpayers with safely getting into compliance. These programs may reduce or even eliminate international reporting penalties.

Late-Filing Disclosure Options

If a Taxpayer is out of compliance, there are various international offshore tax amnesty programs that they can apply to safely get into compliance. Depending on the specific facts and circumstances of the Taxpayers’ noncompliance, they can determine which program will work best for them.

*Below please find separate links to each program with extensive details about the reporting requirements and examples.

Streamlined Filing Compliance Procedures (SFCP, Non-Willful)

The Streamlined Filing Compliance Procedures is one of the most common programs used by Taxpayers who are non-willful and qualify for either the Streamlined Domestic Offshore Procedures or Streamlined Foreign Offshore Procedures.

Streamlined Domestic Offshore Procedures (SDOP, Non-Willful)

Taxpayers who are considered U.S. residents and file timely tax returns each year but fail to report foreign income and/or assets may consider the Streamlined Domestic Offshore Procedures.

Streamlined Foreign Offshore Procedures (SFOP, Non-Willful)

Taxpayers who are foreign residents may consider the Streamlined Foreign Offshore Procedures which is typically the preferred program of the two streamlined procedures. That is because under this program Taxpayers can file original returns and the 5% title 26 miscellaneous offshore penalty is waived.

Delinquent FBAR Submission Procedures (DFSP, Non-Willful/Reasonable Cause)

Taxpayers who only missed the FBAR reporting and do not have any unreported income or other international information reporting forms to file may consider the Delinquent FBAR Submission Procedures — which may include a penalty waiver.

Delinquent International Information Returns Submission Procedures (DIIRSP, Reasonable Cause)

Taxpayers who have undisclosed foreign accounts and assets beyond just the FBAR — but have no unreported income — may consider the Delinquent International Information Return Submission Procedures. Before November 2020, the IRS was more inclined to issue a penalty waiver, but since then this type of delinquency procedure submission has morphed into a reasonable cause request to waive or abate penalties.

IRS Voluntary Disclosure Procedures (VDP, Willful)

For Taxpayers who are considered willful, the IRS offers a separate program referred to as the IRS Voluntary Disclosure Program (VDP). This program is used by Taxpayers to disclose both unreported domestic and offshore assets and income (before 2018, there was a separate program that only dealt with offshore assets (OVDP), but that program merged back into the traditional voluntary disclosure program (VDP).

Quiet Disclosure

Quiet disclosure is when a Taxpayer submits information to the IRS regarding the undisclosed foreign accounts, assets, and income but they do not go through one of the approved offshore disclosure programs. This is illegal and the IRS has indicated they have every intention of investigating Taxpayers who they discover intentionally sought to file delinquent forms to avoid the penalty instead of submitting to one of the approved methods identified above.

Current Year vs. Prior Year Non-Compliance

Once a Taxpayer missed the tax and reporting (such as FBAR and FATCA) requirements for prior years, they will want to be careful before submitting their information to the IRS in the current year. That is because they may risk making a quiet disclosure if they just begin filing forward in the current year and/or mass filing previous year forms without doing so under one of the approved IRS offshore submission procedures. Before filing prior untimely foreign reporting forms, Taxpayers should consider speaking with a Board-Certified Tax Law Specialist who specializes exclusively in these types of offshore disclosure matters.

Avoid False Offshore Disclosure Submissions (Willful vs Non-Willful)

In recent years, the IRS has increased the level of scrutiny for certain streamlined procedure submissions. When a person is non-willful, they have an excellent chance of making a successful submission to Streamlined Procedures. If they are willful, they would submit to the IRS Voluntary Disclosure Program instead. But, if a willful Taxpayer submits an intentionally false narrative under the Streamlined Procedures (and gets caught), they may become subject to significant fines and penalties. 

Need Help Finding an Experienced Offshore Tax Attorney?

When it comes to hiring an experienced international tax attorney to represent you for unreported foreign and offshore account reporting, it can become overwhelming for Taxpayers trying to trek through all the false information and nonsense they will find in their online research. There are only a handful of attorneys worldwide who are Board-Certified Tax Specialists and who specialize exclusively in offshore disclosure and international tax amnesty reporting. 

*This resource may help Taxpayers seeking to hire offshore tax counsel: How to Hire an Offshore Disclosure Lawyer.

Golding & Golding: About Our International Tax Law Firm

Golding & Golding specializes exclusively in international tax, specifically IRS offshore disclosure.

Contact our firm today for assistance.