{"id":362,"date":"2015-06-18T15:27:25","date_gmt":"2015-06-18T15:27:25","guid":{"rendered":"http:\/\/new.bronswick.com\/wordpress\/?p=362"},"modified":"2015-06-18T15:27:25","modified_gmt":"2015-06-18T15:27:25","slug":"irs-cracks-down-on-foreign-accounts-assets","status":"publish","type":"post","link":"https:\/\/bronswick.com\/2021\/2015\/06\/18\/irs-cracks-down-on-foreign-accounts-assets\/","title":{"rendered":"IRS Cracks Down on Foreign Accounts & Assets"},"content":{"rendered":"

By: Jonathan Benowitz<\/a><\/span> <\/span>
Bronswick Reicin Pollack, Ltd.<\/span><\/p>\n

While the IRS at large is shrinking, the enforcement arm at the IRS has been pursuing holders of unreported foreign bank accounts more aggressively than ever. <\/span>Thanks to the Foreign Account Tax <\/span>Compliance <\/span>Act (\u201cFATCA\u201d) the US is threatening banks (and their governments) all over the world to give up information on American account holders<\/span>. <\/span> <\/span>Many Americans hearing this think that the IRS is finally cracking down on those offshore tax-shelters in places like Swit<\/span>zerland and the Cayman Islands. I<\/span>ndeed, the <\/span>US now has agreements with <\/span>both the governments of <\/span>Swit<\/span>zerland and <\/span>the <\/span>Cayman<\/span> Islands<\/span>, but also<\/span> has agreements with or is negotiating with <\/span>much<\/span> of the rest of the globe<\/span> to have their financial institutions reveal their US account\u00a0<\/span>holders.<\/span> <\/span>However<\/span>, most American taxpayers holding foreign accounts, whether in Switzerland or <\/span>in <\/span>Canada, are not criminal tax evaders, but ordinary people holding these accounts for very ordinary reasons, such as an inheritance<\/span>, business, an employer\u2019s retirement account<\/span>,<\/span> or <\/span>simply <\/span>everyday banking <\/span>in an increasingly global world<\/span>.<\/span><\/p>\n

The law requires that all <\/span>U.S. <\/span>persons<\/span> with a financial interest in or signature authority over a foreign financial account<\/span>,<\/span> such as bank<\/span>, brokerage or investment<\/span> accounts and <\/span>certain insurance policies<\/span> must file <\/span>FinCEN<\/span> Form 114 if their total value exceeded $10,000 at any time during the year. <\/span>There are <\/span>extraordinary<\/span> <\/span>civil and criminal <\/span>penalties for failure to file<\/span>, often exceeding the value of the accounts themselves, sometimes by 300% or more<\/span>. <\/span>The fact of the matter is that there are millions of Americans with foreign bank accounts and only a few hundred thousand Americans file foreign bank account reports or \u201cFBARs\u201d ea<\/span>ch year<\/span>.<\/span> <\/span>M<\/span>any <\/span>Americans living overseas and even Americans <\/span>in the US <\/span>with such accounts are simply not aware of the FBAR requirement.<\/span><\/p>\n

The IRS, recognizing this fact, has been encouraging taxpayers with unreported <\/span>foreign bank accounts <\/span>to come forward, and those who<\/span>se failure was non-willful<\/span> may be eligible for a special \u201cStreamline<\/span>d<\/span>\u201d program with <\/span>greatly reduced or no<\/span> penalties<\/span>, and<\/span> the IRS<\/span> is even encouraging <\/span>late filing <\/span>\u201cquiet disclosure\u201d<\/span> for those who haven\u2019t underreported their income<\/span>. <\/span>In addition to FBARs, FATCA requires <\/span>other special reporting<\/span>. <\/span>I<\/span>nvestments in foreign mutual and hedge funds and <\/span>many types of <\/span>companies must be reported<\/span>.<\/span> Also, certain gifts and inheritances from foreign persons must be reported.<\/span><\/p>\n

BRP has long asked our clients <\/span>about<\/span> foreign bank accounts in our questionnaire and ha<\/span>s<\/span> followed up with clients who we suspect may have such accounts. We <\/span>annually<\/span> file <\/span>FinCEN<\/span> 114<\/span> for our clients with foreign bank accounts<\/span>. If you believe you have an account <\/span>that<\/span>\u00a0requires\u00a0reporting, including <\/span>pension and <\/span>retirement accounts, gifts, <\/span>foreign <\/span>inheritances, <\/span>funds held for others, <\/span>or <\/span>even <\/span>a small <\/span>non-interest-bearing <\/span>bank account for when you travel, please be sure to <\/span>contact your BRP professional for more details. <\/span><\/p>\n

Foreign Bank Account Reporting Facts<\/span>:<\/span><\/strong><\/p>\n