- 1 International Entrepreneur & Consultant Foreign Account FBAR Help
- 2 Schedule B Has No Threshold
- 3 FBAR/FATCA Aggregate Total Value Not Individual Account Value
- 4 Closed or Dormant Accounts are Reported by Entrepreneurs Too
- 5 Foreign Pensions and Life Insurance Owned by Entrepreneurs
- 6 FBAR Amnesty for Noncompliant Entrepreneurs
- 7 Can I Just Start Filing FBAR This Year Instead?
- 8 International Tax Lawyers Represent Clients Worldwide
International Entrepreneur & Consultant Foreign Account FBAR Help
International Entrepreneur & Consultant Foreign Account FBAR Tips: Our International Tax and legal specialist team has worked with entrepreneurs across the globe. Developing, building and expanding a business is exciting stuff — and oftentimes it takes all of an entrepreneur’s brainpower, time and resources o get that business idea off the ground. Taxes in general are not typically that important to an entrepreneur in the early phases of their business — because quite frankly there is no money, and hence no tax liability. Fast forward a few years later and the business is thriving — and possibly has expanded across the globe. In order to operate in many foreign countries, it benefits the entrepreneur to have a local accounts with local currency — these local accounts may act as the catalyst for the Taxpayer to have to file international information reporting form with the IRS. Especially in later years when there are significant sums of money in the foreign accounts, entrepreneurs have to be very careful to not run too afoul of the international information reporting form requirements — and if they are out of compliance to try to get back into compliance before too late.
Here are few tips for entrepreneurs and consultants with foreign accounts:
Schedule B Has No Threshold
Schedule B of Form 1040 is primarily used to report dividends and interest to the IRS — but there is an additional section, The bottom portion of the form also asks whether the individual has ownership or signature authority of a foreign account. It is important to note that the question is not ask how much — but rather simply whether it exists. Therefore, if an entrepreneur has foreign accounts or signature authority over foreign, then schedule B be maybe required.
FBAR/FATCA Aggregate Total Value Not Individual Account Value
Some of the information online can be confusing — and gives the false impression that only accounts with more than $10,000 have to be reported on international information reporting forms such as FBAR and FATCA. But in actuality, it is an annual aggregate total that exceeds the threshold value. In other words, if Michelle the entrepreneur has six accounts in five different countries and none of them exceed $10,000 — but on any given day of the year the aggregate total of all the accounts exceeds $10,000 — the FBAR is required.
Closed or Dormant Accounts are Reported by Entrepreneurs Too
Depending on which country the entrepreneur’s current businesses is focused on, they may have more active accounts in some countries and nd less active accounts or dormant accounts in other countries — still, all open accounts must be reported once the threshold requirement is met.
Foreign Pensions and Life Insurance Owned by Entrepreneurs
Two common types of foreign assets that many entrepreneurs have is foreign pension plans and foreign life insurance policies. For the most part, foreign pension plans are always reportable — and foreign life insurance may be reportable too when there is a surrender or cash value attached to the foreign life insurance policy.
FBAR Amnesty for Noncompliant Entrepreneurs
The FBAR Amnesty Programs are programs developed by the Internal Revenue Service to assist Taxpayers who are already out of compliance for non-reporting.
Some of the more common programs, include:
- Voluntary Disclosure Program (VDP or “New” OVDP)
- Streamlined Domestic Offshore Procedures
- Streamlined Foreign Offshore Procedures
- Delinquency Procedures
- Reasonable Cause
Can I Just Start Filing FBAR This Year Instead?
No, unless the current year is the first-year you had an FBAR Reporting requirement.
If you had a prior year reporting requirement, but only begin to start filing in the current year (Filing Forward) it is illegal. In the world of offshore disclosure, this is referred to as an FBAR Quiet Disclosure.
The IRS has warned taxpayers that if they get caught in a FBAR Quiet Disclosure situation, it may lead to willful penalties and even a criminal investigation by the IRS Special Agents.
International Tax Lawyers Represent Clients Worldwide
Our International Tax Lawyer team specializes exclusively in international tax, and specifically IRS offshore disclosure.
Contact our firm for assistance.