Many Indian-origin U.S. taxpayers receive IRS notices related to unreported Indian bank accounts, PPFs, FDs, or mutual funds, often because their previous CPA either didn’t ask or failed to understand FBAR and FATCA requirements. This creates stress, penalty exposure, and even audit risk.
At Kewal Krishan & Co, we’ve helped numerous Indian-American taxpayers handle such notices, file corrective forms, and use IRS relief programs like the Streamlined Filing Compliance Procedures (SFCP) to avoid penalties-saving thousands in back taxes and fines.
IRS Forms and Codes Involved
- 31 USC §5314 – FBAR reporting under Bank Secrecy Act
- IRC §6038D – FATCA Form 8938 reporting
- IRC §6662(j) – Accuracy-related penalties
- IRC §6651 – Failure to file penalties
- Revenue Procedure 2014-55 – Streamlined Filing Compliance Procedures
Common Types of IRS Notices
| Notice | Trigger | Purpose |
|---|---|---|
| CP15 | Penalty for not filing FBAR | Demands payment |
| CP2000 | Mismatch between IRS data & return | Proposes tax due |
| Letter 6173/6174/6174-A | Foreign accounts flagged | Warning or compliance enforcement |
| Letter 3709 | FBAR penalties | Warning before collection |
Typical IRS Triggers for Indian Taxpayers
- PPF/EPF/NRE account not reported
- Mutual fund income missed
- Form 8938 omitted despite high asset value
- Large foreign transfers flagged by banks
- Indian PAN linked accounts with interest or capital gains
Example Case
Neha, an Indian H-1B professional, received IRS Letter 6173 because her Indian PPF and FD balances (~₹30 lakh) weren’t reported. Her original CPA didn’t file Form 8938 or FBAR.
→ She contacted us at Kewal Krishan & Co.
→ We reviewed her 3 years of filings
→ Filed amended returns, FBAR, and certification under Streamlined Procedures
→ IRS waived all penalties
Step-by-Step Response Plan
Step 1: Do Not Ignore the IRS Letter
- Ignoring will escalate penalties and trigger further enforcement.
Step 2: Determine the Type of Issue
- Is it underreporting of income, or non-disclosure of assets?
- Did you miss FBAR or FATCA filing?
Step 3: Gather Foreign Account Documentation
- Indian bank/passbook statements (last 6 years)
- PPF/EPF/NPS summary
- Demat holdings, mutual fund folios
- Details of interest, dividends, TDS deducted
Step 4: Assess Eligibility for IRS Streamlined Procedure
- You may qualify if:
- You were non-willful
- Haven’t filed FBAR/Form 8938 but paid taxes correctly
- You are now willing to file/amend
Step 5: File These Forms If Required
| Form | Purpose |
|---|---|
| FinCEN 114 | FBAR for foreign accounts >$10,000 |
| Form 8938 | FATCA asset declaration |
| Form 1040X | Amended tax return |
| Form 14653 | Non-willful certification under Streamlined Procedure |
Step 6: Respond to the Notice
- Draft a cover letter with explanation
- Attach amended returns and forms filed
- Send via certified mail or upload to IRS portal if allowed
Consequences of Inaction
| Inaction | Potential Risk |
|---|---|
| Ignoring FBAR | $10,000+ per violation/year |
| Failure to file Form 8938 | $10,000 base + $50/day |
| Continued non-compliance | Criminal referral (in rare cases) |
| IRS Levy | Seizure of U.S. refunds or bank account freezes |
Conclusion
If you received an IRS notice about Indian financial accounts, take immediate action. Many Indian taxpayers have avoided heavy penalties by acting quickly, filing the right forms, and proving non-willfulness.
A notice doesn’t always mean you owe taxes-it often means you need to fix documentation. Act now and protect your peace of mind.
Call to Action
Anshul Goyal, CPA EA FCA is a licensed U.S. Certified Public Accountant and Enrolled Agent who represents clients before the IRS and specializes in India-U.S. cross-border compliance. If you’ve received a notice or want to assess your reporting obligations, we’re here to help.
About Our CPA
Anshul Goyal helps Indian-origin taxpayers navigate complex U.S. reporting for foreign accounts. He has assisted hundreds in filing FBARs, Forms 8938, 3520, 8621, and resolving IRS notices without penalties.
Disclaimer
This blog is for informational purposes only. IRS foreign asset reporting laws are complex and facts vary by taxpayer. Always consult a qualified tax advisor before taking action.
Top 5 FAQs
1. I received a Letter 6174A – do I need to respond?
No response is required, but we recommend filing missed forms to avoid risk.
2. Can the IRS waive FBAR penalties?
Yes, under Streamlined Filing, if your failure was non-willful.
3. How far back do I need to correct filings?
Typically, 3 years of tax returns and 6 years of FBARs are required.
4. What happens if I already paid tax in India?
U.S. tax is still due, but foreign tax credits (Form 1116) may offset liability.
5. Can I file Streamlined myself?
You can, but IRS scrutiny is high. It’s safer to file with a licensed cross-border CPA.