Marking ‘No’ on Schedule B, FBAR Filings and Streamlined Offshore

Marking ‘No’ on Schedule B, FBAR Filings, and Streamlined Offshore

Marking ‘No’ on Schedule B, FBAR Filings, and Streamlined Offshore

Schedule B, Form 1040, is an IRS tax form primarily used by taxpayers who earn a significant amount of interest and dividends, requiring them to break down the amount of interest and dividends from each institution on the form. However, there is an alternative use for Form Schedule B, which is for taxpayers who have ownership or signature authority in a foreign account and/or receive a foreign trust distribution during the tax year.

Especially with the foreign account/FBAR component of Schedule B, some taxpayers become unnecessarily concerned about mistakes on the form due to having been fear-mongered through online posts and ‘free’ initial FBAR consultations, in which they are led to believe a Schedule B FBAR mistake will cause them to become ineligible for a streamlined offshore disclosure — and that it may ultimately lead to the IRS believing that they were willful.

Is marking ‘No’ on Schedule B a big concern for taxpayers submitting to the Streamlined Procedures?

Taxpayers are Still Eligible for Streamlined Disclosures

The Internet is littered with nonsense and fear-mongering tactics used by some attorneys and tax professionals to make taxpayers believe that their situation is much worse than it is. The IRS has made it clear that if a taxpayer makes a mistake on Schedule B and does not identify that they have foreign accounts, when they do, this does not make the taxpayer willful. Likewise, suppose the taxpayer filed the FBAR but simply made a mistake in checking the box on Schedule B. In that case, this is clearly not an issue and not something taxpayers who are considering streamlined procedures should be concerned about.

If taxpayers are receiving information leading them to believe that these types of minor issues may disqualify them from making a streamlined submission, they should be sure that they are talking with a licensed board-certified tax law specialist who has significant experience with streamlined submissions.

*Taxpayers should be wary of any attorney claiming to be board-certified but is unable to show the taxpayer on which State Bar website it shows they are a licensed board-certified tax law specialist (even tax attorneys who practice exclusively in federal tax law must be board-certified by at least one State Bar).

Late Filing Penalties May be Reduced or Avoided

For Taxpayers who did not timely file their international information-related reporting forms, the IRS has developed many different offshore amnesty programs to assist Taxpayers with safely getting into compliance. These programs may reduce or even eliminate international reporting penalties.

Current Year vs. Prior Year Non-Compliance

Once a Taxpayer missed the tax and reporting (such as FBAR and FATCA) requirements for prior years, they will want to be careful before submitting their information to the IRS in the current year. That is because they may risk making a quiet disclosure if they just begin filing forward in the current year and/or mass filing previous year forms without doing so under one of the approved IRS offshore submission procedures. Before filing prior untimely foreign reporting forms, Taxpayers should consider speaking with a Board-Certified Tax Law Specialist who specializes exclusively in these types of offshore disclosure matters.

Avoid False Offshore Disclosure Submissions (Willful vs Non-Willful)

In recent years, the IRS has increased the level of scrutiny for certain streamlined procedure submissions. When a person is non-willful, they have an excellent chance of making a successful submission to Streamlined Procedures. If they are willful, they would submit to the IRS Voluntary Disclosure Program instead. But, if a willful Taxpayer submits an intentionally false narrative under the Streamlined Procedures (and gets caught), they may become subject to significant fines and penalties. 

Need Help Finding an Experienced Offshore Tax Attorney?

When it comes to hiring an experienced international tax attorney to represent you for unreported foreign and offshore account reporting, it can become overwhelming for Taxpayers trying to trek through all the false information and nonsense they will find in their online research. There are only a handful of attorneys worldwide who are Board-Certified Tax Specialists and who specialize exclusively in offshore disclosure and international tax amnesty reporting. 

*This resource may help Taxpayers seeking to hire offshore tax counsel: How to Hire an Offshore Disclosure Lawyer.

Golding & Golding: About Our International Tax Law Firm

Golding & Golding specializes exclusively in international tax, specifically IRS offshore disclosure.

Contact our firm today for assistance.