- 1 What Actions to Take if FBAR Penalties are Assessed
- 2 Letter 3709
- 3 Are the FBAR Penalty Values Accurate?
- 4 Non-Willful FBAR Penalties
- 5 Willful FBAR Penalties
- 6 Agents Have Discretion & Mitigation Factors
- 7 Consider Working with a Board-Certified Tax Law Specialist
- 8 Golding & Golding: About Our International Tax Law Firm
What Actions to Take if FBAR Penalties are Assessed
What to do if FBAR Penalties are Assessed: The FBAR is used to report foreign bank and financial accounts to the US Government. And, since the US Government is not very effective when it comes to putting US Taxpayers on notice of which international information reporting forms they are required to file — it should come as little surprise that many Taxpayers do not become aware of the FBAR filing requirement until after they have already been penalized — or received an IRS Notice of Intent to Penalize. Unlike tax penalties — or even assessable penalties – the FBAR is not even a tax form, which thereby limits the Taxpayer’s ability to fight the penalties in the same manner that they would otherwise dispute a tax liability or penalty. This is why it is especially important for Taxpayers who have been penalized for FBAR penalties to take timely and proactive action against the penalties — so that they can try to limit or minimize the damage. Here are a few actions to consider if you have been assessed FBAR Penalties:
Typically, the taxpayer will receive a Letter 3709 from the IRS if the Internal Revenue Service proposes to assess FBAR penalties. The letter 3709 allows the taxpayer 30 days to appeal the determination regarding the penalties.
So what do you do once you’ve received one of these 3709 Letters?
Are the FBAR Penalty Values Accurate?
The Internal Revenue Service makes mistakes (just like everyone else does) and it is important to evaluate the notice to determine whether or not the amount is accurate and not just take the amount on face value.
Non-Willful FBAR Penalties
If the Internal Revenue Service proposes to assess non-willful FBAR penalties, it is important to assess whether they are being issued per account or per year. If they are being assessed per account, per year — it is important to note that several cases have limited the IRS to only issue non-willful FBAR penalies to per year — and not per account, per year.
Willful FBAR Penalties
When the issue involves willfulness, Taxpayers should be careful to not make any proactive representations to the agent until they have fully flushed out the facts and circumstances surrounding their noncompliance so that they can make an excellent presentation to the IRS Agent (taxpayer may want to consider representation.)
Agents Have Discretion & Mitigation Factors
Whether a Taxpayer is willful or non-willful — the IRS agent has discretion to mitigate or eliminate penalties based on various factors set forth in the regulations and Internal Revenue manual. Therefore, even if a Taxpayer is feeling the heat — or overwhelmed — be sure to step away from all the absurd fear mongering you will find online, take a few deep breaths — and gather your thoughts.
Consider Working with a Board-Certified Tax Law Specialist
Fighting an FBAR penalty is a long and winding road — and if you are considering representation, then you should limit representation to Board-Certified Tax Law Specialists. Just because an attorney says there are a specialist or tout themselves as a “nationwide expert” — means absolutely nothing — and usually amounts to little more than an inflated sense of self. In the past few years, we have been inundated with requests for assistance to take over cases previously handled by “self-proclaimed experts“.
Golding & Golding: About Our International Tax Law Firm
Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure.
Contact our firm today for assistance.