Are FBAR Settlement Programs Provoking Expatriation?


Since 2009 the IRS and some state governments have initiated settlement programs designed to encourage taxpayers with offshore financial accounts to come forward with the expectation that by doing so they will avoid criminal sanctions. The cost of coming forward varies by program, but for the IRS programs, the 2009 FBAR settlement was 20% of the highest aggregate foreign account balance during years 2003-2008. For the 2011 program the percentage changed to 25% and extended to years 2003-2010. By comparison the non-willful penalty for failing to file an FBAR timely is $10,000 per year in the absence of “reasonable cause”. The penalty for “willful” violations is the greater of 50% or $100,000 of the aggregate account balances per year. Some taxpayers are considering the costs of settlement offers as truly excessive in light of the nature of the non-compliance and are weighing giving up their U.S. citizenship (expatriating). Who are those taxpayers and why would they seriously consider expatriation.....

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Published In: Criminal Law Updates, Finance & Banking Updates, Immigration Updates, International Trade Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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