– A Letter 3800 is also issued when there is evidence of a negligent violation by an individual (not a business) prior to October 23, 2004. – The examiner may determine that there was a violation but that penalties are not warranted in view of the facts and circumstances of the case. “The examiner may, after discussion with the group manager, issue an FBAR Warning letter, Letter 3800, if there is a violation of the FBAR requirements but no penalty is being asserted.
Rather, it is because even though the IRS determined there were violations, they decided to take mercy on you and waive the penalties.Īs provided by the Internal Revenue Service: When the 3800 letters issued, it is not because the IRS determined there were no violations (sorry for the double negative). Did you have unreported income as well?.Are you tax compliant in the country in which the accounts are maintained?.Did you respond truthful to the CPA or EA?.Did your CPA or EA send you questions in writing asking about Foreign Accounts or Income?.Is your CPA or EA experienced in international tax?.What types of investments do you have overseas?.How long have you been in the United States for?.Generally, if a person was unaware that there was a foreign account/foreign income/foreign asset reporting requirement, the client begins in the “non-willful” category, but more analysis is needed. It is a ‘ Totality of the Circumstances‘ test based on whether or not your specific facts and circumstances reflect that you knew, or should have known that you were required to disclose and report your foreign accounts and offshore income - and made the decision not to disclose. There is no bright-line test to determine willfulness. In order to obtain an FBAR Letter 3800 (warning letter in lieu of penalty) it is important that the taxpayer’s attorney submit a convincing statement to the IRS - that your failure to comply was non-willful. FBAR Letter 3800 Penalty WarningĪn FBAR Letter 3800 is issued when the IRS has determined that you are out of compliance in reporting your foreign accounts, but the IRS will take mercy on you, and not issue penalties against you rather, the IRS issues a “Warning Letter in Lieu of Penalties (aka FBAR Letter 3800). In recent years, the IRS has directed its focus to foreign accounts compliance and unreported foreign income.Īnd, while enforcement of FBAR penalties are on the rise, the IRS can still issue the FBAR Penalty Waiver Letter 3800 in lieu of penalty. The Letter is a 3800 Warning Letter in lieu of penalty. When it comes to the FBAR penalties, the IRS will sometimes forgive your misdeeds - and issue you a stern warning instead of all the horrible penalties it could if it wants to. And like high school, the IRS has its own permanent record in which the Internal Revenue Service tracks your misdeeds. 6 Golding & Golding: About Our International Tax Law FirmįBAR Penalties Waived IRS Letter 3800: The IRSis like one of your teachers in high school.5 Additional Offshore Violation Penalties.