- 1 FBAR Quiet Disclosure
- 2 FBAR Quiet Disclosure Risks
- 3 5 Reasons to Avoid FBAR Quiet Disclosures
- 4 You May Not Even be Subject to IRS Penalties
- 5 Intentional FBAR Quiet Disclosure Leads to FBAR Willfulness
- 6 You May be Criminally Investigated
- 7 You May Lose Immigration Status
- 8 You are Better off with Legal Offshore Tax Amnesty
- 9 Current Year vs Prior Year Non-Compliance
- 10 Avoid False Offshore Disclosure Submissions (Willful vs Non-Willful)
- 11 Golding & Golding: About Our International Tax Law Firm
FBAR Quiet Disclosure
FBAR Quiet Disclosure: An FBAR quiet disclosure to the IRS puts U.S. taxpayers at serious risk of fines and penalties. The FBAR is FinCEN form (114) that is used by U.S. persons who have foreign accounts, assets, or investments — and meet the threshold requirements for filing the form. When a person has not filed the form in prior years, there are offshore disclosure procedures in place to assist with filing. This is collectively referred to as FBAR Amnesty. If a person opts for a Quiet Disclosure in lieu of voluntary disclosure (tax amnesty) the person files the current year FBAR (usually along with previously unfiled FBAR forms) without filing under one of the proper amnesty programs:
FBAR Quiet Disclosure Risks
By making a Quiet Disclosure of previously unfiled FBAR forms, taxpayers are taking a major risk. The FBAR form is a deceptively dangerous offshore reporting form, due to the sheer magnitude of the penalties involved for late, incomplete or unfiled returns.
Making matters worse are the globs of bad information you will find online about offshore account penalties.
As you get lost in one rabbit hole after the next, you start to lose your nerve before realizing that most of the bad information is perpetuated by fear-mongers and inexperienced counsel trying to scare you into representation.
Are you automatically going to jail for five years? No.
Are you automatically getting hit with a 100% percent willful penalty? No.
Are you going to lose your immigration status? No.
5 Reasons to Avoid FBAR Quiet Disclosures
There are many reasons why it is never a good idea to make an FBAR Quiet Disclosure; here are 5 good reasons not to
You May Not Even be Subject to IRS Penalties
Here’s an example: Felicia is from Spain. She has foreign accounts that are worth $1 million. She never reported them because she never knew she had to report them.
Although she lived in the United States for many years, in 2017 she traveled back to Spain to be with her mother, and spent 350-days in Spain.
Felicia may qualify for the Streamlined Foreign Offshore Procedures (see below), in which she can legally fix her prior mistakes — and all penalties or waived.
Intentional FBAR Quiet Disclosure Leads to FBAR Willfulness
FBAR Willful penalties are bad. The floor penalty (lowest that it goes) absent very mitigating circumstances, is $100,000 per year.
If you were non-willful like Felicia above, but then went ahead and knowingly filed an FBAR Quiet disclosure, you have now taken a benign situation, and potentially turned it into a willful or even criminal situation.
Willfulness in the civil FBAR penalty arena does not mean the taxpayer acted with intent.
Two common situations with reduced willfulness
You May be Criminally Investigated
The Internal Revenue Service created various programs to assist people who are out of FBAR compliance. This includes people who were willful.
In other words, even if you knew you were supposed to file but didn’t, there are legal means for you to get into compliance. But, if you sidestep these responsibilities and the IRS finds your Quiet Disclosure, they have let it be known that they will pounce on your finances.
You May Lose Immigration Status
This is not common, but something to consider: if you were non-willful, there is almost no chance of any major catastrophe with your status. Under the current administration it is probably a bit tenser than it would otherwise be, but still…losing immigration status is not common.
On the flip side, if you knowingly commit fraud by submitting an FBAR quiet disclosure, you may be setting yourself up for more serious complications when it comes time to renew or change your status.
You are Better off with Legal Offshore Tax Amnesty
At Golding and Golding, we are 100% dedicated to getting you safely FBAR compliant.
Current Year vs Prior Year Non-Compliance
Once a taxpayer has 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 that 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.
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.