Attorney Janathan L. Allen Helps Taxpayers with IRS Offshore Disclosures and FBAR Compliance

According to a January 31, 2017, Accounting Today article, the Internal Revenue Service’s Large Business and International division is taking a new approach to tax compliance, with a series of campaigns aimed at cracking down on tax evasion. The continuing evolution of the Foreign Account Tax Compliance Act (FATCA) has brought global changes in banking, international financial cooperation and financial transparency.

“The U.S. Department of Justice has worked with the IRS and other government agencies to force offshore banks, financial institutions and even foreign sovereign tax authorities to disclose account information, balances and transactional details for U.S. taxpayers worldwide,” said attorney Janathan L. Allen, of Allen Barron, Inc. and Janathan L. Allen, APC. “To date, the IRS claims the program has resulted in the collection of more than $10 billion in related taxes, interest and penalties.”

The challenge for many taxpayers lies in the details of these complex disclosure alternatives. The programs offer relief from criminal prosecution as well as specified penalties for U.S. taxpayers who provide a full, complete, accurate and transparent disclosure to the IRS. The primary difference of the two programs relates to the intent of the taxpayer to avoid the payment of U.S. income taxes. “Specific details from the IRS regarding ‘willful’ or ‘non-willful’ conduct, as well as the application of FBAR penalties, remain purposefully vague,” added Allen.

The OVDP and streamlined procedures apply a penalty ranging from 5% to 50% to specific accumulated balances at the highpoint of each year for previously undisclosed accounts. “It was widely believed that these penalties would only be applied to accounts and balances that were previously unreported,” noted Allen. “Our office has defended several clients where the IRS has attempted to apply the associated FBAR penalty to all of the taxpayer’s offshore assets, not simply those reported in the disclosure(s).”

This serves as a warning for U.S. taxpayers with undisclosed offshore accounts and income as well as foreign nationals living and working in the United States who were unaware of the requirement to report offshore accounts and assets that existed before they arrived in the U.S. to live and work. American expatriates around the world face stiff challenges from the international banking community as well as the IRS.

“If you have offshore bank or investment accounts or undisclosed assets that exceed $10,000 in accumulated balances at any point in the year you are required to come into compliance with IRS FBAR and associated reporting,” concluded Allen. “The penalties can quickly exceed the existing balance of accounts and U.S. taxpayers must take action to protect themselves.”

About Janathan L. Allen, APC 

The law practice of Janathan L. Allen, APC provides insightful business, legal and tax-related services for San Diego and U.S. businesses which require experienced and insightful counsel in order to remain competitive in an ever-changing U.S. and global business environment. The firm helps clients to assess the impact of changes in U.S. business law, tax codes and regulatory requirements, in addition to legal services such as business contract, business formation, employment and operational legal services. When combined with the business advisory, accounting and tax preparation services of Allen Barron, the firm provides a single-source business partner resulting in a more extensive and valuable advisory and service offering while leveraging economies of scale. Its main offices are located at 16745 West Bernardo Drive, Suite 260, San Diego, CA 92127.

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