News & Events

Do you own an offshore bank account? If you are a U.S. taxpayer with offshore bank accounts, it is imperative that you know and understand the importance of filing Foreign Bank Account Reports (FBARs). Additionally, if you are a taxpayer who has failed to file FBARs for past years, you must know how to deal with delinquent FBARs.

Fortunately, U.S. taxpayers have options. New Jersey international tax attorneys like Kevin E. Thorn can help overcome any problems with delinquent FBARs.

Consequences of Delinquent FBAR Filings

Officially known as a Report of Foreign Bank and Financial Accounts, an FBAR must be filed with the Financial Crimes Enforcement Network (FinCEN), which is a bureau within the Treasury Department. The FBAR must be filed by a taxpayer holding any offshore accounts with an aggregate value over $10,000 at any time during the tax year.

The consequences for failing to timely file FBARs differ depending on the scenario. Some common scenarios are as follows:

• FBAR Delinquent but No Unreported Income: In this situation, the taxpayer’s FBAR was delinquent, but they did not fail to report any foreign income. The taxpayer may either (1) have already reported the income or (2) not have had any foreign income in the first place. This scenario is generally the least problematic for the taxpayer.
• Reasonable Cause for Delinquent FBAR: Here, the taxpayer has a delinquent FBAR, undisclosed foreign income and reasonable cause for failing to file their FBAR. The taxpayer must file a reasonable cause statement along with their delinquent FBAR.
• Non-willful Failure to File FBAR: For this scenario, the taxpayer failed to file an FBAR and has undisclosed foreign income, but they are not claiming reasonable cause for this failure. However, the taxpayer can still claim that the failure to file a timely FBAR was non-willful.

Our trustworthy New Jersey international tax attorneys can advise as to which of these options is best for you. In fact, failure to consult with an experienced tax lawyer could result in severe repercussions. The tax law in this area is complex and taxpayers with offshore accounts need guidance to avoid or minimize penalties.

Dealing With Delinquent FBARs

For willful violations, the taxpayer will generally be better off seeking to avoid criminal liability by utilizing the 2018 Updated Voluntary Disclosure Program. Even for non-willful FBAR violations, the penalties can be thousands of dollars for each violation.

Submitting a reasonable cause statement comes with its own risks. The IRS has more discretion in how it assesses penalties for those taxpayers claiming reasonable cause. This means the taxpayer could end up paying more penalties than if they had simply claimed that their failure to file an FBAR was non-willful.

International tax lawyer Kevin Thorn will be able to guide a taxpayer in the right direction for their situation.

Work With Proven New Jersey International Tax Attorneys to Resolve Your Delinquent FBARs

If you have previously undisclosed offshore accounts and need to file delinquent FBARs, speak with one of the top New Jersey international tax attorneys at the Thorn Law Group. Contact Kevin E. Thorn, Managing Partner, at 201-355-8202 to set up a consultation.