FBAR Filing For Previous Years
FBAR Filing for Previous Years: When a U.S. person has foreign accounts in which the balance exceeds the annual FBAR reporting threshold, they may be required to file an annual FBAR. The FBAR is the Foreign Bank and Financial Account Form (aka FinCEN Form 114). It is due to be filed when the taxpayer’s tax return is due, and is currently on automatic extension.
Oftentimes, when a filer learns that they missed the FBAR filing for previous years, their research leads them to believe they will undoubtedly get hit with foreign account penalties — but that is false.
While FBAR penalties can be bad, oftentimes they can be successfully mitigated through FBAR Amnesty; it’s all about the timing and effectiveness of the disclosure submission.
Here are five (5) important facts about FBAR filing for previous years:
FBAR Willful vs. Non-Willful
The most important element of the FBAR penalty analysis is to determine if the person was willful or non-willful.
There is no bright-line test to determine willfulness or non-willfulness — it is based on each person’s totality of the circumstance.
Do Not Mass Back-File for Prior Year FBARs
Some of the information written by other tax professionals is downright terrifying, right?
They scare you into believing that you will automatically get hit with a $500,000 penalty and 5-years in prison for missed or delinquent FBAR.
In turn, you get scared out of your wits, and immediately back file 20 FBARs.
Before submitting FBARs for prior years, you should review the basics of the different FBAR Amnesty programs to avoid unnecessary penalties.
Be Careful just Filing Forward
An alternative strategy for taxpayers is to simply begin filing in the current year, without filing the previous year FBARs.
This is not a recommended strategy.
That is because by doing so, you are intentionally omitting the prior year filings, which can be considered a Quiet Disclosure.
Not all Civil FBAR Penalties are the Same
FBAR penalties can range extensively, from a warning letter in lieu of penalties, all the way up to multi-year willful FBAR penalties.
Where you fall on the spectrum is determined by the totality of your circumstance.
Criminal FBAR Enforcement is Rare
The IRS rarely pursues criminal FBAR enforcement.
When they do, it is usually because the FBAR criminal violation is in addition to other criminal enforcement, such as money laundering or smurfing & structuring.
Our FBAR Lawyers Represent Clients Worldwide
Our FBAR Lawyer team specializes exclusively in international tax, and specifically IRS offshore disclosure.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe. Our attorneys have worked with thousands of clients on offshore disclosure matters, including FATCA & FBAR.
Each case is led by a Board-Certified Tax Law Specialist with 20 years of experience, and the entire matter (tax and legal) is handled by our team, in-house.
*Please beware of copycat tax and law firms misleading the public about their credentials and experience.
Interested in Learning More about Golding & Golding?
No matter where in the world you reside, our international tax team can get you IRS offshore compliant.
Golding & Golding specializes in FBAR and FATCA. Contact our firm today for assistance with getting compliant.