Offshore account and foreign reporting representation in Baltimore

Offshore accounts held by Baltimore residents and companies carry federal reports, and missing them can bring steep penalties. Here, the account may hold a doctor's savings from their home country, or pay a shipping firm's suppliers overseas. The reports are due even when an account earns nothing.

These reports are easy to miss until a foreign bank asks questions, a new accountant spots the gap, or an IRS letter arrives. Whiteford Tax Defense helps Baltimore households and businesses find what went unreported, correct it, and handle any dispute that follows.

The FBAR, FinCEN Form 114, is a Bank Secrecy Act report, not part of your tax return. You file it with the Treasury's Financial Crimes Enforcement Network for any year your foreign accounts together top $10,000 at any time. Form 8938, under the Foreign Account Tax Compliance Act (FATCA), goes in with your income tax return instead. Its thresholds vary by filing status and where you live.

In practice, many people owe both, and the two should match. Joint accounts, signing authority and foreign retirement plans need the most care. A lawyer's review ties each filing to your records rather than to guesses, and checks every new filing against the old ones.

Doctors, researchers and students from abroad

Did you come to Baltimore from another country to study, train or do research at a hospital or university? The accounts you kept at home start to count once U.S. tax law treats you as a resident.

A green card makes you a resident. So can the time you spend here, under a day-count rule called the substantial presence test. Some visas keep your days out of that count for a while. On a student visa, such as an F-1 or J-1, your days generally do not count for up to five calendar years. On a J-1 as a doctor, researcher or visiting scholar, that exception generally lasts two calendar years. An H-1B work visa has no such exception, so your days count from the start.

Once you are a resident, the bank and brokerage accounts you kept at home become reportable on the same terms as a citizen's. A pension or retirement fund there can count as well.

Companies that trade through the Port of Baltimore

The Port of Baltimore handles cargo from around the world. An importer, exporter or shipping firm here may keep an account abroad to pay suppliers or collect from buyers.

A company or trust formed in the United States files its own FBAR under the same $10,000 test. Signing authority adds a second duty. A U.S. owner, officer or employee who can move money in that account may need a personal FBAR, even if none of it is theirs. Narrow exceptions cover some officers and employees of banks, securities firms and publicly traded companies.

The Maryland side of a correction

Fixing your IRS filings does not settle your state taxes. Maryland requires the income and deductions on your state return to match your federal one. The Comptroller of Maryland says most federal changes will change the state return too.

So a correction that adds foreign income to past federal returns usually means amended Maryland returns on Form 502X. The Comptroller asks you to attach a copy of what you filed with the IRS. If you live in Baltimore City, your city income tax rises as well, because it is a percentage of Maryland taxable income.

Our Baltimore office prepares the IRS and state filings together and checks that the figures agree.

Ways to come forward, and the penalties at stake

The IRS names three ways to come forward about undisclosed foreign accounts and assets. If the failure was not willful, the Streamlined Filing Compliance Procedures may fit. Where it may have been willful, the route is the voluntary disclosure practice run by IRS Criminal Investigation. A third set, the delinquent international information return submission procedures, handles some late information returns.

Outside those routes, you can still file a late FBAR. If the IRS has not contacted you about it, and you are not under civil or criminal investigation, the IRS says to file it as soon as possible. FinCEN's form asks for the reason it is late. Talk to a lawyer before you file anything, though. What you send first can shape how the IRS reads your intent.

As for penalties, the maximums rise with inflation; these are FinCEN's figures from January 2025. A violation that was not willful can cost up to $16,536 for each year's FBAR, however many accounts it left out. A willful one can cost the greater of $165,353 or half the account balance at the time of the violation. The willful penalty is figured per account. Because penalties can stack across years, filing sooner generally costs less.

If the IRS reaches you first, for example with Letter 4265 to schedule an FBAR audit, some of these routes close. Our page on FBAR audits explains that process. A proposed penalty can usually go to IRS Appeals before it is assessed, and a court case can follow. See our pages on IRS appeals and tax litigation in Baltimore.