Prior to the new tax laws and requirements, a US expat who was not in compliance with Foreign Bank Account Reporting (FBAR) regulations could “roll the dice” in an attempt to avoid the FBAR Penalty and accuracy-related penalties by filing a delinquent FBAR and a qualified amended tax return. This was known as a “quiet disclosure.”

Since the implementation of the Offshore Voluntary Disclosure Program (OVDP) in 2012, filing delinquent FBARS and amended returns present significant risks, including civil tax penalties, and can prompt an investigation by the IRS Criminal Investigation division.

The U.S. Department of Justice recently informed taxpayers of the new Voluntary Disclosure Program (OVDP). This new program requires that foreign financial institutions disclose to the IRS the names and account details of all current and former account holders of expats living abroad or who have offshore accounts.

This puts US expat account holders at immediate risk if they are not found in compliance with reporting regulations. They could be at risk for IRS investigation and subject to severe criminal penalties including high fees and possible jail time.

IRS regulations requires that US expats with offshore accounts, including mutual funds, brokerage accounts, trusts or other type of foreign financial account valued in excess of $10,000 must complete the Report of Foreign Bank and Financial Accounts (FBAR) Department of Treasury Form FinCen 114. This form must be completed and filed electronically by June 30th every year to remain in compliance. The IRS does not grant extensions to file theses forms.

If you have failed to report foreign financial accounts or foreign income, you have important decisions to make. Going it alone when dealing with the IRS under the new regulations can lead to a wrong decision that can place you in serious civil or criminal jeopardy.

If the IRS can show that an expat had knowledge of FBAR regulations and did not comply, they can impose heavy fines and even a jail sentence in some cases. The bottom line is that an FBAR quiet disclosure is risky. But it’s important that you approach the IRS before they find you. It can help reduce some of the fees and avoid jail time.

It is imperative that U.S. expats consult with a U.S. tax attorney regarding a quiet disclosure FBAR. An attorney will diligently provide sound advice if you are facing tax problems and vigorously represent you in an IRS tax examinations or in litigation. When you retain a U.S. tax attorney, you will be able to better protect your rights and obtain the best possible outcome.