If you are a US resident with foreign bank accounts and foreign rental property, there is a hidden twist that may radically increase FBAR penalties. This problem usually arises when an individual inherits a foreign account and foreign rental property, or owns these items prior to moving to the US. Continue reading
On January 9, 2012, the IRS announced a new Offshore Voluntary Disclosure Program (“2012 OVDP”), which effectively extends (with several changes) the 2011 program that ended on September 9, 2011. Continue reading
What was formerly implied is now stated directly — there is now penalty relief for most US citizens residing in Canada or overseas who failed to file Treasury Forms 90-22.1. Continue reading
There are untold numbers of US citizens who have lived in Canada for many years. Most have never filed US tax returns and (because of the US foreign tax credit) owe no US tax. Nor have they filed FBAR Form 90-22.1 to report their “offshore” (i.e., Canadian) accounts.
One might intuitively view this as a “no harm no foul” situation. Guess again. The US civil penalties for failure to file Form 90-22.1 are prohibitive, and range from 5% to 50% of the account balance. Criminal prosecution is also possible.
Finally, there is tangible relief under IRS Internal Release 2012-65, which was issued June 26, 2012 and becomes effective on September 1, 2012. Continue reading
Reporting obligations for “offshore” accounts (including RRSP and RRIF accounts in Canada) have been expanded by the Foreign Account Tax Compliance Act (“FATCA”), which is codified at Sections 1471 – 1474 and 6038D of the Internal Revenue Code. Sections 1471 – 1474 apply to “foreign financial institutions,” and Section 6038D applies to US persons having offshore accounts.