- 1 FBAR Filing Deadline
- 2 Who Files the FBAR? (US Persons)
- 3 When is the FBAR Due? (October 15 Deadline)
- 4 What Form Do You File? (FinCEN Form 114)
- 5 Why File the FBAR? (To Avoid FBAR Penalties)
- 6 How to File? (Directly on the Website)
- 7 Avoid FBAR Quiet Disclosure
- 8 Late Filing Penalties May be Reduced or Avoided
- 9 Current Year vs Prior Year Non-Compliance
- 10 Avoid False Offshore Disclosure Submissions (Willful vs Non-Willful)
- 11 Need Help Finding an Experienced Offshore Tax Attorney?
- 12 Golding & Golding: About Our International Tax Law Firm
FBAR Filing Deadline
The FBAR refers to the Foreign Bank and Financial Account Reporting (aka FinCEN Form 114). Unlike other forms, the FBAR is not a tax form. It is a Title 31 (Money and Finance) form that requires US persons who have foreign bank and financial accounts to report the maximum value on the FinCEN Form 114 each year. Financial Accounts involve more than just bank accounts and can include stock accounts, investment accounts, foreign life insurance policies, and foreign pension/retirement plans. The reason why it is so important to file the FBAR timely is that the IRS (the agency tasked with FBAR enforcement) has significantly increased the assessment and enforcement of FBAR penalties – which can reach upwards of 50% maximum value in a willfulness scenario. With the FBAR due approaching, let’s take a look at a few important FBAR facts to remember.
Who Files the FBAR? (US Persons)
US persons are required to file the FBAR when the value of their foreign bank and financial accounts exceeds the $10,000 threshold for filing. The term US Person means more than individuals, but can also include certain entities.
As provided by the IRS:
A “U.S. person” means:
A citizen or resident of the United States;
An entity created, organized, or formed in the United States or under the laws of the United States, any State, the District of Columbia, the Territories and Insular Possessions of the United States, or the Indian Tribes. An “entity” includes but is not limited to, a corporation, partnership, trust, and limited liability company; or
An estate formed under the laws of the United States.
When is the FBAR Due? (October 15 Deadline)
Even though technically, the FBAR is due to be filed on April 15, the FBAR has been on an “automatic extension” for several years. That means the FBAR deadline has been extended to October without the taxpayer having to file an extension form (such as Form 7004 or 4868) to secure the extension.
What Form Do You File? (FinCEN Form 114)
The FBAR is technically an electronic form (aka FinCEN Form 114). It is filed electronically by submitting the form directly on the FinCEN (not the IRS) website. It is important to note that US persons who may not have to file a tax return may still be required to file an FBAR – and even if the person makes a treaty election to be treated as a foreign resident, the FBAR is still required.
Why File the FBAR? (To Avoid FBAR Penalties)
In recent years, the IRS has significantly increased the assessment and enforcement of FBAR penalties – including filing civil lawsuits against Taxpayers who have not properly paid the penalty. Even civil FBAR penalties can be brutal and case decisions are very disparate by circuit, on key issues such as whether non-willful penalties should be assessed per account or per form.
How to File? (Directly on the Website)
The FBAR is filed electronically and directly on the FinCEN website. The form itself is relatively straightforward in terms of the information required (maximum balance) and how it is submitted (directly on the FinCEN website).
Avoid FBAR Quiet Disclosure
If you missed filing the FBAR in prior years, your knee-jerk reaction may be to just go back and file for prior years without submitting to one of the approved amnesty programs (such as the Streamlined Filing Compliance Procedures), but this could lead to bigger issues such as willfulness penalties or even an IRS Special Agent Investigation – so Taxpayers should consult with a Board-Certified Tax Attorney Specialist first if they are considering this strategy.
Late Filing Penalties May be Reduced or Avoided
For Taxpayers who did not timely file their FBAR and other international information-related reporting forms, the IRS has developed many different offshore amnesty programs to assist taxpayers with safely getting into compliance. These programs may reduce or even eliminate international reporting penalties.
Current Year vs Prior Year Non-Compliance
Once a taxpayer missed the tax and reporting (such as FBAR and FATCA) requirements for prior years, they will want to be careful before submitting their information to the IRS in the current year. That is because they may risk making a quiet disclosure if they just begin filing forward in the current year and/or mass filing previous year forms without doing so under one of the approved IRS offshore submission procedures. Before filing prior untimely foreign reporting forms, taxpayers should consider speaking with a Board-Certified Tax Law Specialist who specializes exclusively in these types of offshore disclosure matters.
Avoid False Offshore Disclosure Submissions (Willful vs Non-Willful)
In recent years, the IRS has increased the level of scrutiny for certain streamlined procedure submissions. When a person is non-willful, they have an excellent chance of making a successful submission to Streamlined Procedures. If they are willful, they would submit to the IRS Voluntary Disclosure Program instead. But, if a willful Taxpayer submits an intentionally false narrative under the Streamlined Procedures (and gets caught), they may become subject to significant fines and penalties.
Need Help Finding an Experienced Offshore Tax Attorney?
When it comes to hiring an experienced international tax attorney to represent you for unreported foreign and offshore account reporting, it can become overwhelming for taxpayers trying to trek through all the false information and nonsense they will find in their online research. There are only a handful of attorneys worldwide who are Board-Certified Tax Specialists and who specialize exclusively in offshore disclosure and international tax amnesty reporting.
Golding & Golding: About Our International Tax Law Firm
Golding & Golding specializes exclusively in international tax, specifically IRS offshore disclosure.
Contact our firm today for assistance.