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Monday, May 4, 2015

Report Foreign Bank Accounts Streamlined Program

Let's say you have a foreign bank account and you've heard that you need to be reporting this account to the BSA and that there are huge tax consequences if you do not report them.

The first thing you need to look at when deciding the method of reporting offshore accounts is DID YOU REPORT ALL INCOME on your tax returns. If you have not reported the income related to your foreign bank account in question (i.e. interest, dividends, and income), you will have to choose between the Offshore voluntary disclosure program and the OVDP.

If you DID report all worldwide income on your tax returns and didn't know you have to file FBARs, you can simply file your late FBARs with a statement explaining why they are being filed late.

Should you use the Streamlined Program? 


Your decision to participate in the streamlined program or the offshore voluntary disclosure program hinges on one word: NON-WILLFUL. To use the streamlined program, you will need to file a certification stating that you are eligible for the streamlined program, that all required FBARs have now been filed, that the failure to report was NON-WILLFUL, and that the penalty payment is accurate.

Deposits, withdrawals, co-owners, and many other factors will be looked at to determine if this was a non-willful act or not. Of course, in the taxpayers eyes, they are non-willful. However, if there is any doubt in your mind as to whether this will be considered non-willful given all the information, use the offshore voluntary disclosure program instead.

The Streamlined program does not protect the taxpayer from criminal prosecution, the OVDP does.