December 22, 2013 | FBAR
FBAR IRS – Foreign Bank Records
Recently the Court of Appeals for the Fourth Circuit affirmed a lower district court, and ruled that two US taxpayers are required to supply foreign account bank statements under a FBAR IRS subpoena. This ruling is consistent with other Courts around the country who have held that one can not invoke your fifth amendment rights to avoid producing the documents. See also OVDP programs.
The rationale for the decision is based upon the Supreme Court case of Marchetti v. U.S. which held that there is a Required Records Doctrine exception to the Fifth Amendment rights where 1) the governments inquiry is essentially regulatory, 2) the information sought is required to be a preserved record that the regulated person has customarily kept, and 3) the records have assumed public aspects rendering them public documents. Taxpayers seeking to avoid production of the documents have had a very difficult time over coming the Required Records Doctrine. Therefore, one should consider an FBAR voluntary disclosure if you have undisclosed foreign accounts that have associated unreported income since the penalties for non-disclosure can be very high.
FBAR IRS background: The FBAR IRS report (The Report of Foreign Bank and Financial Accounts) is used to report a financial interest in, or signature authority over financial accounts in foreign countries. No FBAR IRS report is required when the account balance never exceeds $10,000 during the year. When filed by June 30th of each year, the reports become part of the Bank Secrecy Act database. The Bank Secrecy Act regulates offshore banking accounts and under that law contains various record keeping and inspection rights.