FBAR Amnesty 2013


On one hand, you have thousands of US taxpayers with unreported foreign accounts. On the other hand, the IRS believes that most of this is because of intentional tax evasion. What we are actually finding is that the reason they are unreported is because of ignorance, not criminal intent. Some of those who never filed an FBAR form had no idea that the US is one of the only countries that taxes its citizens on its worldwide income. Others didn't even know they were US citizens.


Take for example:


Roy, 37, a lifelong Canadian resident and citizen whose dual-national mother fears the U.S. tax authorities will target the modest savings account the Canadian government provides him as a developmentally disabled adult.


Jonathan, 34, a teacher whose American parents migrated to Canada 39 years ago. He considers himself 100 percent Canadian — a maple leaf is tattooed on his back — and believed until last year that he did not need to file a U.S. return. Tax advisers now tell him he must file eight years’ returns, at a cost in fees and fines in the thousands, lest an eventual U.S. inheritance be jeopardized.


The teenage children of Peter Hallworth, a Briton married to a Swede living in Malmo, Sweden; the children were born in the United States but lived there only as infants. Mr. Hallworth, having heard horror stories, now expects to urge his children, when they reach adulthood, to renounce the U.S. citizenship that up to now he had treasured.


The problem is, the IRS has invested billions of dollars into catching and prosecuting those who intentionally evaded taxes with the help of unreported offshore accounts. But those types of criminal taxpayers simply aren't there, at least in the numbers the IRS thought were there. It looks like the IRS vastly overestimated the amount of intentional tax evasion, and now the innocent are paying for that error.


So… what to do about FBAR compliance?


The IRS says the only way to avoid issues and steep penalties is by making a voluntary disclosure…even if the case is small and the mistake honest. And that is the advice we give as well. Why? It is only by chance that the guiltiest are the most severely punished, and that the most severe punishments are handed to the guilty. Perhaps the rules are different in heaven, but here, in these United States, it is those who are partially at fault, who become the biggest target and take the biggest fall. If you need assistance understanding if you should come into compliance, contact us. We can help.