Avoid FBAR & FATCA by Closing an Offshore Bank Account?

Avoid FBAR & FATCA by Closing an Offshore Bank Account?

Avoid FBAR & FATCA by Closing an Offshore Bank Account?

Avoid FBAR & FATCA by Closing an Offshore Bank Account? If only life was that easy, right? When a U.S. Person with an offshore bank account (or several accounts) learns about FBAR & FATCA, it is an unfortunate wake-up call. 

FBAR is Foreign Bank and Financial Account Reporting (FinCEN Form 114). FATCA is the Foreign Account Tax Compliance Act (Form 8938 for most U.S. person filers).

The first instinct for many taxpayers is simply to close the account. While closing an offshore bank account will help the U.S. person avoid foreign account reporting in future years, it does not erase the past.

Closing the accounts to avoid past reporting is dangerous.

In recent years, the IRS has taken an aggressive position on foreign accounts compliance, so timely reporting is important. 

If you missed the reporting due date, there are various offshore amnesty programs available to assist you.

Timing the Account Closing Example

Peter has five offshore bank accounts in the U.K.

On June 10, 2010, he closes his five accounts.

When it comes time for Peter to file his 2019 FBAR (due in 2020), Peter will report the accounts on the FBAR (and usually Form 8938 as well). 

Why?

Because even though the accounts were closed in 2019, the accounts we also open for part of 2019. Therefore, they are reportable on the 2019 FBAR, which is due in 2020.

In 2021, sine accounts were not open during 2020, Peter will not need to report the accounts.

*The rules differ for dormant accounts.

Closing an Account to Avoid Past FBAR & FATCA Reporting

Simply closing the account does not eliminate the reporting requirement.

First, after you closed your bank account, it may be much more difficult for you to obtain all the necessary account information that you will need to get into compliance.

Moreover, the bank will no longer send you statements, so if the bank is predisposed to send you out a FATCA letter before reporting the account information to the IRS, you may not be on any notice (and you may miss the opportunity to voluntarily disclose.)

Golding & Golding: About Our International Tax Law Firm

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

We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe. Our attorneys have worked with thousands of clients on offshore disclosure matters, including FATCA & FBAR.

Each case is led by a Board-Certified Tax Law Specialist with 20 years of experience, and the entire matter (tax and legal) is handled by our team, in-house.

*Please beware of copycat tax and law firms misleading the public about their credentials and experience.

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 Offshore Counsel

Generally, experienced attorneys in this field will have the following credentials/experience:

  • 20-years experience as a practicing attorney
  • Extensive litigation, high-stakes audit and trial experience
  • Board Certified Tax Law Specialist credential
  • Master’s of Tax Law (LL.M.)
  • Dually Licensed as an EA (Enrolled Agent) or CPA

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.

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