Those with assets in foreign bank accounts of over $10,000 are required to file the proper documentation with the IRS, including a Report of Foreign Bank and Financial Accounts(FBAR). Failure to do so leads to numerous penalties. Even the most business-savvy individuals can instantly find themselves facing unexpected issues related to compliance with the Foreign Account Tax Compliance Act (FATCA) when they fail to make FBAR disclosures.
What Options Are Available?
Taxpayers can take advantage of either the Offshore Voluntary Disclosure Program (OVDP) or the Streamlined Filing Compliance Procedures (SFCP) in an attempt to mitigate consequences. There are significant differences between the OVDP and the SFCP, including:
Reporting Willfulness Of Failure To Disclose Assets
- OVDP: No requirements related to reporting intent of failure to report
- SFCP: Must certify that failure to report was nonwillful
How Many Subprograms?
- OVDP: None. One disclosure program for everyone
- SFCP: Two. One program for U.S. residents and one for nonresidents
Severity Of Penalties
- OVDP: Higher penalties
- SFCP: (Generally) lower penalties
Length Of Disclosure Period
- OVDP: Eight-year disclosure period
- SFCP: Three-year disclosure period
Which Is Right For You?
Which disclosure option will work best for your situation? That depends on a wide variety of factors and is best discussed in person with a member of our tax litigation team. Whether your situation is best-suited to using the Offshore Voluntary Disclosure Program (OVDP) or the Streamlined Filing Compliance Procedures (SFCP), or any other program, the experienced team at our firm can help you with your tax compliance issues.