Offshore Voluntary Disclosure & Foreign Bank Account Reporting - why important for US residents?
General
Author : Manendra Kothari
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FBAR & OVDI what one needs to know and why it is very important to to take an action now?
After grand success with UBS case, IRS started digging out information about unreported foreign assets and income. FBAR rules required residents and citizens to report foreign bank and securities accounts annually to IRS if aggregate balance of all accounts is in excess of $10,000 on any single day during the calendar year. Minimum penalty for failure to file FBAR forms (other than regular tax returns) is $10,000 for one year if it is unintentional. If it is willful, it can run up to $500,000.
If you had any income from those bank, security, or brokerage accounts, one might face criminal prosecution and can get detection from IRS. You can read about FBAR requirements here: http://sktaxes.com/?p=87
For second time (probably last time) IRS has taken voluntary disclosure initiative. For more info on who can participate and the limited penalty structure and how we can help read here: http://sktaxes.com/?p=391
I suggest if you know anyone with good net worth and are resident or citizen of US and have still some connection in India - possibly he / she might be subject to these filing requirements and if they failed to file so in the past - this is the time they should come clean with IRS least painfully. One thing they should NOT do now is to take NO action.
Recent developments with HSBC and Citi Bank: http://www.cnbc.com/id/42477908/Justice_Dept_Goes_After_HSBC_To_Name_Possible_US_Tax_Dodgers_In_India
Manendra Kothari, CPA
MKothari@SKTaxes.com
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