FBAR lawyers minnesota

FBAR Safe Deposit Box Reporting | FBAR Tax Lawyer & Attorney

One of the most common questions that US taxpayers have is regarding FBAR Safe Deposit Box reporting requirements. While the general answer is clear, there may be complications in certain cases.

General FBAR Safe Deposit Box Reporting Requirements

In general, a safe deposit box is not considered to be a financial account and, therefore, not reportable on FBAR.

This is a general rule and it is important to understand that it applies only to a safe deposit box – i.e. an individually secured container, usually held within a larger safe or bank vault. It is important to understand that the bank vault itself is NOT a safe deposit box. In fact, if you were to store gold in a bank vault with bank employees able to directly and legally access the contents of your storage, you would create a reportable account.

The most common example of accounts created by storing items in a bank vault are precious metals, particularly gold and silver (but also any other similar accounts, such as rare minerals accounts).

Exception: FBAR Safe Deposit Box Reporting May Arise If Custodial Relationship Is Established With Respect to the Safe Deposit Box

The great majority of cases are easily resolved under the general rule. However, as I hinted at above, an FBAR safe deposit box reporting requirement may arise if the owner of a safe deposit box enters into a custodial relationship with respect to this safe deposit box.

In such situations, a foreign financial institution is usually given direct legal access to the safe deposit box, is responsible for the safety of its contents and may change the contents according to the instructions from the box’s owner. Of course, in such a case, a safe deposit box can hardly be called in such a way and becomes very similar to a regular bank vault account.

This exception is very rare. I have personally encountered such exceptions only in the context of precious metals accounts.

Contact Sherayzen Law Office for Professional Help With Your FBAR Reporting Requirements

If you need professional help with your FBAR filings, or if you have not timely filed your FBARs for past years and need to resolve your past tax noncompliance, please contact Sherayzen Law Office. Our experienced legal team of tax professionals, headed by our international tax attorney Eugene Sherayzen, will thoroughly analyze your case, determine the US tax reporting requirements that may apply to your case, develop your voluntary disclosure plan and implement it.

Contact Us Today to Schedule Your Confidential Consultation!

Minneapolis FBAR Attorney | FATCA OVDP Tax Lawyer

If you are looking for a Minneapolis FBAR Attorney, a recommended suggestion would be to retain the services of Mr. Eugene Sherayzen of Sherayzen Law Office, PLLC (“Sherayzen Law Office”). Mr. Sherayzen is a Minneapolis FBAR Attorney and founder of Sherayzen Law Office.

Minneapolis FBAR Attorney: Sherayzen Law Office FBAR Specialization

Sherayzen Law Office specializes in international tax compliance, including voluntary disclosure of delinquent (i.e. late) FBARs. As a Minneapolis FBAR Attorney, Mr. Sherayzen has helped hundreds of US taxpayers worldwide to bring their tax affairs into full compliance with US tax laws.

The work of a Minneapolis FBAR Attorney is not limited only to FBARs. Rather, a Minneapolis FBAR Attorney needs to be able to deliver a variety of services and freely operate with experience and knowledge in all relevant areas of international tax law. For example, oftentimes, the calculation of FBAR penalties may depend upon certain legal and accounting interpretations which would allow one to determine whether one has an income-compliant account. These interpretations themselves may be highly technical in nature and may come from different determinations from other areas of the case.

Moreover, as part of an offshore voluntary disclosure, a Minneapolis FBAR Attorney often needs to amend US tax returns, properly prepare foreign financial statements according to US GAAP, correctly calculate PFICs, and innumerable number of other tasks.

Sherayzen Law Office Legal Team Provides Efficient and Cost-Effective Services

In order to make sure that his work as a Minneapolis FBAR Attorney is expeditious and cost-effective, Mr. Sherayzen built a team of tax professionals that he employs within his firm. Each member of the team is trained personally by Mr. Sherayzen and is assigned specific tasks. For example, an international tax accountant helps Mr. Sherayzen prepare the clients’ tax returns while his staff is trained in creating FBARs based on the information already verified by Mr. Sherayzen.

This team of motivated, intelligent and experienced tax professionals allows Sherayzen Law Office to provide an exceptional array of customized offshore voluntary disclosure and international tax compliance services which fully integrate the legal and accounting aspects of international tax compliance and offshore voluntary disclosures in an efficient and cost-effective manner.

Therefore, if you are looking for a Minneapolis FBAR Attorney, you should contact Mr. Sherayzen as soon as possible to secure Your Confidential Consultation!

New FBAR Deadline

There has been a lot of confusion surrounding the new FBAR deadline. Since the FBAR is one of the most important US international tax deadlines, it is important to clarify the change in the FBAR filing deadline.

What is “FBAR”?

FinCEN Form 114, commonly known as FBAR, is the Report of Foreign Bank and Financial Accounts. This form is used by US taxpayers to report their financial interest in or signatory authority over foreign financial accounts. Failure to timely file the FBAR may result in draconian IRS penalties.

Traditional FBAR Deadline

Until the recent change in the law, an FBAR for each relevant calendar year was required to be filed by June 30 of the following year. For example, the 2014 FBAR was due on June 30, 2015. No filings extensions were allowed.

New FBAR Deadline Under Surface Transportation and Veterans Health Care Choice Improvement Act of 2015

The bulk of the “Surface Transportation and Veterans Health Care Choice Improvement Act of 2015″ has nothing to do with tax law. Yet, some of the most important changes in the IRS filing deadlines were tucked into this innocuously sounding law.

One of the most important changes concerned the new FBAR deadline. Starting the tax year 2016, FBARs will be due on April 15, not June 30. Moreover, a six-month extension will be available until October 15.

2015 and 2016 FBAR Deadlines

Let’s put it all together. The most important issue here is not to confuse 2016 filing deadline for the year 2015 and the filing deadline for the 2016 FBAR. The 2015 FBAR will still be filed under old rules and it will be due on June 30, 2016.

However, the 2016 FBAR will follow the new FBAR Deadline of April 15, 2017 with the possible extension to October 15, 2017.

Contact Sherayzen Law Office for Legal Help with 2015 and 2016 FBARs

If you have any questions regarding the new FBAR deadline, 2015 FBAR or past unfiled FBARs, contact Sherayzen Law Office for professional legal and accounting help. Mr. Eugene Sherayzen, a Minneapolis FBAR lawyer, will review your case, identify your FBAR and other US tax compliance issues, determine the plan for further action and implement the proposed solution.

IRS Increases Use of John Doe Summons for Unreported Offshore Bank Accounts

Some time ago, in a joint statement before the Permanent Subcommittee on Investigations Committee on Homeland Security and Government Affairs of the United States Senate for a hearing on “Offshore Tax Evasion: The Effort to Collect Unpaid Taxes on Billions in Offshore Accounts”, Deputy US Attorney General James M. Cole and Assistant Attorney General, Tax Division, Kathryn Keneally detailed a number of enforcement actions targeting US taxpayers with undisclosed foreign bank accounts and the foreign banks in question.

The Internal Revenue Service and the U.S. Department of Justice utilize various tools to track and hold accountable individuals who evade their taxes and reporting obligations by sheltering money in undisclosed foreign bank accounts. One important law enforcement mechanism that has led to much success in gathering information about foreign accounts has been the use of John Doe summons. The IRS defines a John Doe summons as “[A]ny summons where the name of the taxpayer under investigation is unknown and therefore not specifically identified.” A John Doe summons, if authorized, allows the IRS request the identities of U.S. taxpayers who may have offshore bank accounts.

If you are an individual subject to U.S. taxes and you have an undisclosed foreign bank account, you should be aware that the odds are increasing each year that the IRS will eventually determine your identity. The penalties for not disclosing a foreign bank account are severe; if you have such an account you should seek the advice of a tax attorney. The experienced international tax law firm of Sherayzen Law Office, PLLC can assist you in these important matters.

John Doe Summons and Other Enforcement Mechanisms

In a previous article, we covered the IRS John Doe summons seeking records of the correspondent account at Wells Fargo for Canadian Imperial Bank of Commerce FirstCaribbean International Bank (FCIB), a Barbados-based bank with branches in eighteen Caribbean countries. The IRS has been utilizing John Doe summons frequently and will likely increase its use in the future. For example, in a recent high-profile case, the federal district court for the Southern District of New York entered an order authorizing the IRS to issue a John Doe summons seeking records for Wegelin Bank’s U.S. correspondent account at the Swiss bank, UBS.

According to the joint statement, on November 13, 2013, the same court, “[E]ntered an order authorizing the IRS to issue John Doe summonses seeking records of the Zurcher Kantonalbank and its affiliates (collectively ZKB) correspondent accounts at Bank of New York Mellon and Citibank NA for information relating to U.S. taxpayers holding undisclosed accounts in ZKB.” Several days later the court also issued an order that authorized the IRS to issue John Doe summonses seeking correspondent account records held by the Bank of N.T. Butterfield & Son Limited and its affiliates in the Bahamas, Barbados, Cayman Islands, Guernsey, Hong Kong, Malta, Switzerland and the United Kingdom at Bank of New York Mellon, Citibank NA, HSBC Bank NA, JPMorgan Chase Bank NA, and Bank of America NA.

In the joint statement, it was also noted that the DOJ has also “[E]nforced summonses and subpoenas for records that account holders are required to maintain concerning their foreign banking activities through the successful litigation of the applicability of the ‘required record’ exception to the production privilege under the Fifth Amendment.” The statement notes that every appellate court that has reviewed the issue has, “[R]ejected the argument that witnesses can refuse to comply with a subpoena for the bank records that are required by law to be kept and presented for inspection as a condition of maintaining an offshore account.”

Impact on U.S. Taxpayers with Undisclosed Foreign Accounts

John Doe Summons constitute a very useful technique for the IRS to find non-complying U.S. taxpayers with undisclosed foreign accounts. It is important to keep in mind that the enforcement mechanisms detailed in this article are in addition to other programs, such as the Offshore Voluntary Disclosure Program and the US-Switzerland Bank Disclosure program, among others. Moreover, with the continuous expansion of FATCA enforcement, the non-complying U.S. taxpayers are now running a very high risk of detection by the IRS.

The consequences for these non-complying U.S. taxpayers can be very grave. There are extremely high civil penalties as well as potential criminal penalties that may be applied in such cases.

Contact Sherayzen Law Office for Professional Help with Your Offshore Voluntary Disclosure

The analysis above means that, if you are a U.S. taxpayer with an undisclosed offshore bank account, you need to consider your voluntary disclosure options as soon as possible.

We can help you. At Sherayzen Law Office, Mr. Eugene Sherayzen an experienced international tax attorney will thoroughly analyze your case, estimate your potential FBAR exposure, create a plan for your voluntary disclosure and implement it (i.e. we will prepare all of the tax forms and legal documents that you need for the voluntary disclosure). We will guide you every step of the way and offer rigorous ethical representation before the IRS.

Contact Us to Schedule Your Confidential Consultation Now!

Quiet Disclosure: The Russian Roulette of FBAR Disclosures

There used to be a time when quiet disclosures with respect to offshore income and accounts were routinely recommended by accountants and even attorneys. Even as the tide turned against non-compliant U.S. taxpayers with offshore accounts in 2008-2009 with the spectacular IRS success in the UBS case and the announcement of the 2009 Offshore Voluntary Disclosure Program, these tax professionals persisted in advising their clients to follow the “quiet” course of action. Amazingly enough, even in March of 2014, I still see clients who have been advised to conduct quiet disclosures without adequate assessment of risks that such course of action entails.

In this article, I will argue that the era of quiet disclosures is over and a non-compliant taxpayer who embarks on this course is assuming the risks comparable to engaging in a game of a Russian Roulette with the IRS.

Definition of “Quiet Disclosure”

The definition of what constitutes “quiet disclosure” has changed over time; at some point, there were tax professionals who used it in such as a broad manner as to include something that we would not consider as quiet disclosure today but rather “reasonable cause disclosures” (also known as “modified voluntary disclosures” or “noisy disclosures”).

Today, the term generally refers to disclosures where a taxpayer would file amended returns, pay any related tax and interest (oftentimes, the payment of accuracy-related penalties is included in such a disclosure) for previously unreported offshore income, and file the current year’s information returns without otherwise notifying the IRS.

Note the two critical aspects of this definition that differentiate quiet disclosures from any other types of voluntary disclosures. First and foremost – “without otherwise notifying the IRS”. This is the “quiet” aspect of the disclosure. At no point is the taxpayer notifying the IRS about his non-compliance; he just simply hopes to pay the tax with interest without attracting IRS attention to his prior non-compliance.

The second critical aspect of quiet disclosures is compliance with current year’s information returns (such as FBARs, Forms 5471, et cetera), but not prior years’ information returns. Filing prior years’ information returns would imply providing IRS with evidence of prior non-compliance and, without adequate explanation, a set of penalties may be imposed on the taxpayer. This is why, in a quiet disclosure, the non-compliant taxpayer only files the current year’s FBAR.

Current International Tax Enforcement of FBAR Compliance; Impact of FATCA

It is my argument that, in the current international tax enforcement environment, the quiet discloser strategy is likely to have a counter-productive effect and may actually lead to disastrous results later. So, what is so different about today’s world versus the one in 2007?

Two words summarize the difference: “UBS” and “FATCA”. The IRS victory in the UBS case in 2008 marked a radical change to the worldwide tax compliance and completely overthrew the traditional conception of the bank secrecy laws (at least, with respect to U.S. taxpayers). The IRS proved that it can get to U.S. taxpayers wherever they have their accounts despite the sovereign objections of other countries; most shockingly, the IRS proved it in a country the name of which was synonymous with “bank secrecy” for centuries. This is one of the reasons why the 2009 OVDP, 2011 OVDI and the current 2012 OVDP programs proved to be such a success.

If the UBS case seriously crippled the bank secrecy laws in Switzerland, the enaction of the Foreign Account Tax Compliance Act (“FATCA”) by the U.S. Congress in 2010 dealt a death blow to the bank secrecy laws worldwide with far reaching consequences. FATCA not only swept away the bank secrecy considerations in Switzerland, but the great majority of other jurisdictions such as Liechtenstein, Monaco, Jersey Islands, Lebanon, Panama, the various Carribean islands, and other places where bank secrecy laws protected non-compliant U.S. taxpayers.

Moreover, by turning foreign banks into U.S. reporting agents who voluntarily report information on all of their U.S. accounholders, the IRS is gradually achieving its long-term goal of worldwide tax compliance with only a fraction of the costs that would otherwise be necessary if the IRS were to investigate each bank in the world individually (something that the IRS simply would not have the resources to do).

In such a tax enforcement environment, it is dangerously naive to expect prior FBAR non-compliance would not be discovered by the IRS – an assumption that forms the core of the quiet disclosure strategy.

Swiss Program for Banks; Willful and Criminal Penalties

In addition to the tectonic shifts in the international tax compliance as a result of the UBS Case and FATCA, the U.S. government pushed the concept of the “voluntary compliance” to the extreme through the U.S. Department of Justice (“DOJ”) Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks (the “Program”). In essence, this is a voluntary disclosure program for the Swiss Banks, where the Swiss Banks have to disclose information with respect to U.S. taxpayers in exchange for the DOJ”s promise not to sue them.

There is one particular aspect of the Program that I want to emphasize because of its relevance to the quiet disclosure strategy – the disclosure of U.S. accountholders goes back to August 1, 2008. This means that if a U.S. taxpayer with unreported Swiss accounts from 2008 made a quiet disclosure in the tax year 2009, his former non-compliance will be exposed by the Program.

Not only that, but, at this point, his prior non-compliance is likely to be considered willful and the prospect of gigantic willful civil and criminal penalties becomes almost imminent (especially, if his ability to enter the OVDP is hindered for one reason or another). See, for example, this passage from the FAQ instructions to OVDP: “When criminal behavior is evident and the disclosure does not meet the requirements of a voluntary disclosure under IRM 9.5.11.9, the IRS may recommend criminal prosecution to the Department of Justice” (see FAQ 16).

It is important to note that there are very good reasons to believe that the “Swiss Program for Banks” scenario is likely to be repeated elsewhere with uncertain look-back periods.

FBAR Quiet Disclosure Is Likely to Lead to Untenable Willful FBAR Non-Compliance in the Event of IRS Discovery

Now, we are approaching the core reasoning behind my earlier argument that quiet disclosure is similar to playing a Russian roulette. We have already established that the possibility of the IRS discovery of prior non-compliance has become increasingly likely under FATCA. We have also determined that willful failure to file an FBAR under the quiet disclosure strategy may lead to the imposition of willful civil and, possibly, criminal penalties. Finally, we also considered that a third-party disclosure (most likely, a bank that discloses under FATCA or the Program) is likely to prevent the taxpayer from entering the OVDP.

The effect of putting these three propositions together is obvious and explosive at the same time: engaging in a quiet disclosure policy may result in the discovery of prior FBAR non-compliance, such non-compliance is likely to be considered by the IRS as willful, and the taxpayer is likely to lose the safe harbor of the OVDP. The end result may be absolutely disastrous: FBAR willful civil penalties of up to $100,000 per account per year with potential FBAR criminal penalties (huge monetary penalties and incarceration).

The IRS has stated this openly in its FAQ instructions to the OVDP: “Taxpayers are strongly encouraged to come forward under the OVDP to make timely, accurate, and complete disclosures. Those taxpayers making ‘quiet’ disclosures should be aware of the risk of being examined and potentially criminally prosecuted for all applicable years” (see FAQ #15).

Contact Sherayzen Law Office of Professional Help With Your Offshore Voluntary Disclosure of Foreign Assets and Foreign Income

If you have undisclosed foreign account or other assets, do not fall prey to the Russian Roulette quiet disclosure solution.

Rather, you should contact the international tax law firm of Sherayzen Law Office. We are a team of experienced tax professionals who have an expertise in the voluntary disclosure of offshore assets and income. We can help you.

Contact Us to Schedule a Confidential Consultation NOW.