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9191 Broadway
Merrillville, IN, 46410
United States

219-769-1313

Burke Costanza & Carberry LLP your smart choice for lawyers in Northwest Indiana. Our full-service law firm has offices in Merrillville and Valparaiso Indiana as well as one in Chicago Illinois. At BCC, our lawyers pride themselves on being able to provide a wide range of legal services to our clients, who benefit from the depth and experience we provide from top to bottom.

The main practice groups at Burke Costanza & Carberry LLP are: Alternative Dispute Resolution, Commercial Services, Civil Litigation, and Business and Personal Services.

Our attorneys represent businesses and government entities in the following areas: Business Planning, Commercial Law, Construction, Labor & Employment, Governmental Entities, Healthcare, Labor, Pension Profit-sharing & Employee Benefits, Real Estate, Taxation, and Worker's Compensation.

Our lawyers also represent individuals in matters such as Estate Planning, Wills and Trusts, Immigration, Family Law, Probate Administration, Real Estate, and Taxation.

Burke Costanza & Carberry LLP is a well-rounded firm with strong roots in Northwest Indiana that is focused primarily on our lawyers providing clients with the highest quality legal service in a broad range of practice areas.

Business & Personal Services Blog

IRS Cracking Down on Reporting of Foreign Bank Accounts

Dana Rifai

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The IRS is cracking down on U.S. persons who do not report their foreign financial accounts abroad.  A U.S. taxpayer having an ownership interest in a foreign account must file with the IRS a Report of Foreign Bank and Financial Accounts (FBAR) and IRS Form 8938, Statement of Specified Financial Assets, if the reporting threshold is met.  Both the FBAR and Form 8938 are informational returns to help the IRS identify persons who may be using foreign accounts to circumvent tax payment.

The FBAR must be filed by a U.S. person having a financial interest in or signature authority over at least one foreign account, and the aggregate value of all foreign accounts in which he has such an interest exceeds $10,000 at any time during the tax reporting year.  The FBAR does not have to be filed with the income tax return, and its deadline is on June 30th of the year following the reporting year.

IRS Form 8938 is a new IRS reporting form required in the 2011 tax reporting year and all future years.  The form must be filed if a U.S. person has a foreign financial account that contains at least $50,000 on the last day of the tax year or $75,000 at any time during the tax year.  Form 8938 must be filed with the income tax return or by the extension of the income tax return.

Harsh civil and criminal penalties apply to U.S. persons who have not filed these forms nor have paid taxes on foreign accounts.  The Offshore Voluntary Disclosure Program is being offered by the IRS to allow U.S. persons who have not reported income from foreign accounts to now disclose such accounts, amend past tax returns, and become current on their taxes.  Those taxpayers who choose to enter the program are subject to reduced penalties than had the taxpayer not voluntary disclosed.  The program has a look back period of eight tax years from which the tax reporting due date has already passed.  Although the IRS offers reduced penalties and interest for those who are accepted into program by the IRS, significant costs do exist to the taxpayer.  The IRS has reportedly collected $5 billion in back taxes, interest and penalties from 33,000 voluntary disclosures made under its first two programs in 2009 and 2011 alone.  The IRS has open ended its 2012 program as a result of its success.

Further incentive to enter the Offshore Voluntary Disclosure Program is the Foreign Account Tax Compliance Act (FATCA) which became effective on December 12, 2012.  Under this law, non-U.S. foreign financial institutions (and certain non-financial entities) must identify and disclose their U.S. account holders and members, or otherwise become subject to a 30% U.S. withholding tax on any payment of U.S. source income and proceeds from the sale of equity or debt instruments of U.S. issuers.  A foreign entity with whom a taxpayer has an account may therefore report the taxpayer to avoid this tax without the taxpayer’s consent or knowledge.  At that point, the taxpayer will become subject to severe tax penalties, criminal and civil charges and may no longer have the opportunity to enter into the IRS voluntary disclosure program.

For more information on the Offshore Voluntary Disclosure Program or any other matter in this article, please do not hesitate to contact Burke Costanza & Carberry LLP.